Coles Liquor has announced an off-premise sales surge of 8% in FY20 to $3.3billion, with comparable sales growth of 7.3%.
For the fourth quarter, liquor sales revenue increased by 20.3% and comparable sales growth was 20.2% relative to the prior year due to strong performance across First Choice, Liquorland and Vintage Cellars as a result of COVID-19 and government imposed restrictions on hotels, pubs, clubs and licensed venue operators.
Coles CEO Steven Cain described Liquor as the “star performer” in the Group’s FY2020 results.
Trading at CBD and shopping centre liquor stores was negatively impacted. However, First Choice Liquor Market’s contribution to off-premise sales increased, with customers preferring to shop in bigger format stores.
Online sales were also strong, with growth of 40.3% for the year and 70% in the fourth quarter.
Customers moved towards more value-oriented larger pack sizes in beer and spirits, impacting margins.
Liquor also incurred incremental COVID-19 related costs of approximately $5 million, including thank you payments to team members, of which approximately $2 million are non-recurring in nature.
The result also includes a $4 million charge as a result of the Award covered salaried team member review.
New leadership team completes operations review
The new leadership team under Darren Blackhurst, who joined in January 2020, has now completed a review of operations.
Coles said the team had “reset the Liquor strategic framework to become a simpler, more accessible, locally relevant drinks specialist with a differentiated offer”.
“The new Liquor Strategy will create a more relevant and accessible offer for our customers, delivered through improved service,” Coles said. “It will be implemented over the three horizons of ‘Simplify and Refocus’, ‘Differentiate’ and ‘Grow’.
“A plan to simplify and refocus the operating model has been accelerated by COVID-19, providing an opportunity to fast-track clearance activity for slow moving and deleted stock, which is now largely complete.”
Range reviews in the second half of the year were completed with a greater focus on more local and Exclusive Liquor Brands (ELB) ranges with “encouraging results across gin, craft beer and rosé wine categories”.
ELB continued to perform strongly reporting sales growth of 7.5% for the year and 17.7% for the fourth quarter. Overall, 74 new ELB lines were launched during the year, including Vintage Cellars Collaborations range in partnership with leading Australian wineries.
A total of 372 medals and awards were also received during the year.
New formats for First Choice & Liquorland
The First Choice Liquor Market conversions continue to perform strongly with the format now rolled out to 61% of the First Choice network.
Following extensive customer-led research, a refreshed Liquorland trial concept store was developed and launched in Oakleigh in May. It’s the first rebranding in decades and is designed to take the chain slightly more up-market.
It features a more modern black and white “topography” design throughout store, a departure from the signature yellow and red.
The newly refreshed Liquorland also has more clear pricing – with whole bays marked out by single price, a more spacious layout and a range emphasis on local producers.
Coles said the concept store will help inform the next evolution of the Liquorland renewal program over the coming years and if successful it will be rolled out to its 800 store network.
It said the Vintage Cellars trial concept store in Ashburton also continues to show positive signs.