Endeavour Group CEO Jayne Hrdlicka has warned at today’s The Australian’s Global Food Forum that rising inflation and fuel prices will impact the company’s bottom line.
During a conversation with The Australian‘s Perry Williams, Hrdlicka said: “So for transport in our supply chain, those costs are going up.
“The transport providers can’t be expected to bear the full cost of significant increases in fuel so that will flow through to us, especially to smaller operators.
“They need to be really carefully managed through this process because they just can’t afford and have the financial resilience to bear that cost because it’s a step change for them.
“So the costs are definitely going up. Our energy costs will go up, the transport costs will go up. It has knock-on consequences into the agricultural sector with the cost of transportation but also cost of fertiliser, availability of fertiliser.”
Hrdlicka said she also expects Dan Murphy’s and BWS customers will trade down as they battle cost-of-living pressures, however she intends to remain focused on Dan Murphy’s being a price leader.
“We’re very clear about what customers expect from Dan Murphy’s and from BWS and it’s our job to deliver that,” she said.
“It just means that we’ve got to be better in how we manage our costs and we’ve got to be very focused on ensuring that we’re bringing the energy and the fun back into our stores so that customers really want to come and experience a shopping trip.”
Changing consumption habits
Hrdlicka said COVID-19 lockdowns had led to younger consumers being less social.
“There are definitely clusters of kids that didn’t get the socialisation experience that we all had because of Covid,” she said. “So there are kids who aren’t going out and or who are going out differently.”
She said it was up to businesses to innovate to meet changing patterns.
“If that means we need to put more innovation into low alcohol and no alcohol beverages, well, that’s what we need to do to ensure that we’re bringing the energy into the category and there’s always something to engage with. And that’s on us.”
Wage rises impact on-premise
Restauranteur Neil Perry told attendees at The Australian’s Global Food Forum that the rising cost of living was driving people away from restaurants.
“The inflation rate is getting well above where real wages are growing but all of that is just adding to the inflation pot but at the moment – we’re in the middle of this energy crisis but people will decide not to eat out,” he said.
He also predicted the price of a cup of coffee would rise to around $12 in about five years time, due to wage increases making it “incredibly expensive to have young baristas”.
“We’ve seen since Covid, pretty much a 5% increase in the basic award every year and that just has a knock-on effect,” he said.