Private label boosts Endeavour Group

In its first annual results as a listed business, Endeavour Group has reported rising sales and earnings, highlighting the role of its private-label business Pinnacle Drinks.

Managing director and CEO Steve Donohue said it had been an “eventful year”, in which group sales rose 9.3 per cent to $11.6 billion, according to its accounts released to the ASX today.

The Endeavour Group was created following the demerger with Woolworths which became official in June this year. It consists of the supermarket giant’s former hotel business ALH Group, as well as its chains of 1,643 bottleshops across its BWS and Dan Murphy’s brands.

At its retail business, sales rose 9.6 per cent to a “record” $10.2 billion, and earnings before income tax (EBIT) grew 17.6 per cent to $669 million.

In an investor presentation yesterday, Donohue hailed the growth of Pinnacle Drinks, Endeavour’s private label arm as a key factor in aiding its growth.

Pinnacle, which focuses on developing private label brands, has added 530 new products to its portfolio and has acquired companies during the year such as Paragon Wine Estates, Endeavour said.

Donohue said that Pinnacle was creating “compelling customer propositions in the form of the products flowing through”.

“[There has also been a] significant swing to premium, played out most actively in Dan Murphy’s business,” said Donohue in an investor call this afternoon.

While Endeavour has been heralded for initiatives such its ‘Local Luvva’ campaign, with Donohue saying that the group had allowed smaller suppliers to access its marketplace platform “which was positive for them and us”, Private label beer at bottleshops has been a point of contention in the wider beer industry.

Private label brands have gained traction and award win recognition in recent years, with some suggesting that imitation craft beer brands could be taking sales away from smaller independent players which are forced to sell at higher price points.

Retail and hotels

Inevitably, the shift to in-home consumption has aided Endeavour and even the performance of its hotels business has improved.

For the year, group online sales rose 34.7 per cent, and earnings before income tax grew to $899 million, a rise of 22.1 per cent. It did not have a comparative figure for the previous year, but profit after tax reached $445 million.

Its hotel business grew to $1.4 billion in sales, an increase of 7.3 per cent on the year before, admittedly also impacted by COVID-19. It said that in the full year, there were 169 days when at least one hotel in the group was closed, with Victorian and Queensland closures “having the most material impact”.

For the next year, it is expecting retail and hotel sales for the first 8 weeks to be lower, down 1.7 per cent in retail and 7.3 per cent in hotels.

Increased confidence has been tempered by the resurgence of the Delta strain post-year-end, according to chief financial officer Shane Gannon.

This continues a trend of moderating growth, which has been echoed in the results of smaller competitor Coles Liquor last week.


In addition to the growth in its private-label lines, the trend towards spirits continued, particularly gin, growing at more than 20 per cent in the year following similar growth in the prior 12 months. It also highlighted strong growth in craft beer, specifically its no-alcohol and low-alcohol alternatives.

The growth of demand in gin would have once been a problem for them and they usually get a higher margin from wine than spirits, said Donohue, but there has been an explosion in gin suppliers.

“Ordinarily that would provide a problem [and the most] premium gin we would have had might have been Tanqueray, but now we have boutique and craft gin, pricing upwards of $100 a bottle.”

Endeavour also highlighted its attempts to be Australia’s most responsible drinks retailer and hotels operator” and its initiatives including ID25, “Don’t Buy it for them” and “Choose to Drinkwise”, as well as domestic and family violence awareness training for its more than 28,000 staff.

Endeavour Group’s share price sat at 7 cents per share at the time of writing, giving the company a market capitalisation of $12.9 billion.

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