Endeavour Drinks local initiatives pay off

Endeavour Group’s total sales increased by 9.9 per cent this year up to $9.3 billion after sales increased “dramatically” during the early COVID-19 period.

In the last quarter alone, which covered the COVID-19 lockdowns, total sales grew 23.2 per cent due to higher in-home consumption following government venue restrictions.

Earnings before interest and tax (EBIT) reached $569 million for the division of the Woolworths Group, up from $538 million last year, according to its parent company’s full year financial results.

The group, which owns the BWS and Dan Murphy’s retail chains, said the strong sales growth from the end of March came in contrast to a “softer” pre-COVID performance, which was impacted by bushfires in NSW and Victoria and led to a “subdued trading environment” earlier in the year.

Endeavour, which is in the process of being separated from the Woolworths Group, said it has responded to the crisis by moving hotel staff to retail stores, adjusting product supply arrangements including bringing in local suppliers and shortening payment terms for small suppliers which has been extended to 30th September, when it will be reassessed.

It said that as a result, it has brought on 400 new suppliers offering 4,000 products online and in stores to date.

In its analysis of drinks trends over the year, Endeavour said that following the COVID-19 crisis as well as the bushfires, an “overwhelming number” of Australians had turned to locally-made brands to support their local producers.

Gin was the fastest-growing spirits category and gin drinkers were “particularly parochial”, preferring their gin distilled as locally as possible.

Craft and premium beer remained popular, it said, despite early indications that budget options had surged, and sales of non-alcoholic drinks more than doubled in the last year, peaking in July, Christmas and late March.

Online sales were a huge area of growth for the business following investment in digital and fulfillment capabilities. It saw a normalised online sales growth of 28.6 per cent to $637 million for the full year, growing 47.8 per cent in the last quarter alone.

Sales for continuing operations at the Woolworths Group as a whole reached $63 billion. Group EBIT reached $2.6 billion, a decline of 8 per cent year on year due to the massive declines in revenue in its hotels business, which also saw EBIT decline during the year due to lockdowns, dipping to $172 million from $351 million in 2019.

In the announcement, the group said it was committed to the separation of Endeavour Drinks Group from Woolworthswhich it hopes to complete in 2021. It has invested $230 million in the transformation of the Endeavour Group to prepare it for the split.

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