Coles Liquor invests in local as revenues rise

Coles Liquor, owners of Liquorland, reported a rise in revenue as COVID-19 lockdowns, 100 local supplier additions and a focus on its online presence aided growth.

Coles Liquor owns 910 bottle shops nationally under the Liquorland, First Choice Liquor Market and Vintage Cellars brands.

It reported in parent company Coles Group’s annual results published to the ASX today that full year sales reached $3.3 billion, up from $3.2 billion the year before.

Earnings before interest and tax (EBIT) rose to $138 million from $133 million the year before, an increase of 3.8 per cent.

The Coles Liquor segment has been under a new leadership team this year headed by Darren Blackhurst, who joined in January 2020.

It was his aim to “reset the Liquor strategic framework to become a simpler, more accessible, locally-relevant drinks specialist with a differentiated offer”.

Blackhurst’s plan to simplify and refocus the Liquor operating model was accelerated by COVID-19, providing an opportunity to clear slow-moving and deleted stock more quickly, it said.

Coles reported that both supermarkets and liquor experienced a trading uplift in the latter part of the year from increased demand from in-home consumption, with a spike in trade from customer pantry stocking amid growing concerns of a global pandemic, as has been previously reported.

Liquor sales remained elevated throughout the fourth quarter according to Coles as government restrictions on the opening of hotels, pubs, clubs and licensed venue operators remained in most states.

The retailer also saw major upturns in its online liquor sales with 40 per cent growth online across the whole year. This was aided by a massive 70 per cent hike in online alcohol sales in the fourth quarter, which Coles said was driven by changing customer preferences towards online shopping alternatives during COVID-19.

Supporting local?

Coles said that the closure of on-premise venues as a result of COVID-19 accelerated these plans and provided the opportunity to “support and engage with over 100 new local suppliers listing over 300 new local product lines during the fourth quarter”, putting a spotlight on the evolving relationship between independent beer and major retailers.

The Coles liquor segment focused on what it called ‘Exclusive Liquor Brands’ and local brands in the second half of the year following range reviews, and saw “encouraging results” across its gin, craft beer and rosé wine categories. During the 12-month period, Coles also announced a mixed pack with craft accelerator Founders First.

However Coles has been trademarking craft brands such as Tinnies, and SB Smithy’s Easy Drinking Beer.It’s not alone in this, with Endeavour Drinks Group also filing trademark applications for beer brands including Initial Brewing and Block Brewing.

While not an unusual practice, this and Coles’ earlier legal dispute over independent retailer The Beer Drop’s trademark highlights the complex relationship between the craft beer industries and major retailers.

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