Major liquor retailers Coles Group and Endeavour Group have revealed subdued sales for the third quarter of 2024 as the cost-of-living crisis deepens in Australia.
It is a challenging time for drinks retail, as Retail Mosaic recently noted: “Liquor is going through a mean reversion and weak growth is likely for most of 2024.”
Australian retail turnover fell 0.4% (seasonally adjusted) in March 2024, according to figures released today by the Australian Bureau of Statistics (ABS).
This followed a rise of 0.2% in February 2024 and a rise of 1.0 per cent in January 2024.
Ben Dorber, ABS head of retail statistics, said: “Consumers pulled back on retail spending in March as cost of living pressures remained high.
“Underlying retail turnover has been flat for the past six months and was up only 0.8 per cent compared to March 2023. Outside of the pandemic period and introduction of the GST, this is the weakest growth on record when comparing turnover to the same time in the previous year.
“Retailers told us that overall trading conditions remain challenging with consumers being cautious in their discretionary spending.”
Australian Retailers Association (ARA) CEO Paul Zahra said retail spending in March remained subdued despite Easter celebrations, holiday spending and the additional 1 million Australians spending over the easter break compared to the previous year.
“In previous years Easter has occurred in April – this year we celebrated Easter at the end of March which helped prevent overall trading from falling into decline,” he said.
“The ongoing cost-of-living pressures and interest rate ramifications are making it a challenging period for those in the discretionary retail sector.
“Whilst we are hopeful of a rate cut in the near future, for retailers we anticipate the pressure of a slowdown in discretionary spend coupled with cost of doing business pressure, remaining in place for most of this year.
“More than six million Australians are paying mortgages, and this remains the biggest financial stressor for these households.
“Whilst interest rates remain elevated, discretionary spending will suffer.”
Endeavour Group sales flat
Endeavour Group has revealed its retail sales for the third quarter of FY24 were $2.4 billion, up 2.4% on the corresponding period last year.
On a comparable store basis, sales for BWS and Dan Murphy’s were flat compared to the same period last year.
After a slow start to the quarter in January, trading conditions improved slightly in February and March, but remained
subdued relative to the first half.
The company said customers were shopping more selectively and prioritising value, with market conditions remaining subdued to date in Q4.
Coles customers abandon premium drinks
Coles Group announced its third-quarter results earlier this week, which reveal its liquor sales revenue declined by 1.9% to $786 million as customers reduced their discretionary spending.
Sales fell 3.1% on a comparable basis, compared with analyst predictions of a 0.5% fall.
Coles Group CEO Leah Weckert said 30% of shoppers were cutting back in purchases across its Liquorland, First Choice Liquor Market and Vintage Cellars shops. Early fourth quarter sales have also been broadly in line with the March quarter. results
“We’re seeing people trading into low-cost alternatives, so, for example, out of champagne into things like prosecco or Australian sparkling,” she said.
After a long period of falling sales in the category, Werkert said there had been a shift back into beer.
“People are moving back into beer because this tends to be a category where there are cheaper alternatives,” she said.
International spirits brands have been hard hit as shoppers turn to cheaper RTD options.
“The flow on effect from that is what we are seeing is that RTDs are now continuing to grow because customers are trading out of those full bottle of spirits into more affordable options, like RTDs,” she said.
US spirits market slumps
Australia is not alone in its retail decline. Vodka, rum and US whiskey demand has slumped in the United States over the last 12 months according to figures from the National Alcohol Beverage Control Association (NABCA).
Rum fell 11.5% in volume terms and 9.2% in value. Vodka and US-whiskey volumes dropped 5.6% and 4.3% respectively, while vodka’s value dropped 4.9% year-on-year and US whiskey remained fairly flat, dropping 0.1%.
RTDs and Tequila bucked the trend, growing in volume and value – the former jumped by 14.3% in volume to 232,000 nine-litre cases and 14% to $20.28million in value.