Coles Liquor focuses on local as sales grow

Coles Liquor has identified both private label brands and local suppliers as areas of future growth in its parent company’s latest report.

Coles Group, the owner of Liquorland and First Choice bottleshops, posted its annual results to the ASX yesterday.

Sales in its liquor group grew 2.5 per cent to $3.6 billion, which the group said showed 18 per cent growth over the past three years. EBIT, however, declined 1.2 per cent to $163 million.

Total sales revenue at Coles Group grew 2 per cent to $39.4 billion, with strong online performance in supermarkets and liquor.

EBIT reached $1.9 billion, a slight 0.2 per cent decline, but net profit after tax rose 4.3 per cent to $1.05 billion.

COVID-19 costs of $240 million and project implementation operating costs were blamed for the EBIT decline, although these impacts were largely borne by its supermarkets business while liquor only comprised a “minor component”.

Liquor sales remained elevated in the first half with the closure of on-premise venues in a number of states, however COVID-19 sales impacts tapered over the year as restrictions eased. Ready to drink and spirits were the key drivers of growth, it said.

The group blamed Omicron for “limited social gatherings” in the second half, and suggested that customers still preferred larger pack sizes.

Availability was also impacted as a result of liquor and team members having to isolate.

Local suppliers and private label

According to Coles, it differentiated its liquor offering throughout the year via strong growth in “Exclusive Liquor Brand [ELB] and local sales”, whilst online sales grew 49 per cent.

Coles Liquor highlighted its aim “to build relationships with local suppliers across all channels and formats”. Local product contribution grew strongly, it said, delivered through improved range planning.

With strong Christmas and Easter trading periods, Liquorland was the strongest-performing portfolio brand. It saw 191 ‘Black and White’ Liquorland renewals, which provided customers with “an enhanced range of local wines, craft beers and boutique spirits”.

The Liquorland renewals fit in with Coles Liquor’s aims of becoming a “simpler, more accessible and locally relevant drinks specialist”, it said.

However, the division is also aiming to grow its Exclusive Liquor Brands range, following major awards success during the year. Like Pinnacle Drinks, ELB is aimed at developing private label brands for Coles Liquor.

Its ELB division introduced 170 new products, in contrast to Endeavour Group’s similar division, Pinnacle Drinks, launching 479 products in the same period. This brings ELB brands to around 1,400, it said.

However, unlike Endeavour which has largely moved away from a focus on local suppliers which was a hallmark of its marketing during the COVID-19 pandemic, Coles Liquor has still placed a focus on local suppliers.

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