At Endeavour Group’s half-yearly Supplier Forum on Wednesday, the company addressed ongoing supply chain pressures, looming price increases and the future of innovation.
Supply Chain & price increases
Endeavour Group MD and CEO Steve Donohue said, “Like everybody, we are experiencing pressure in the supply chain and that manifests in both impact on availability and costs. Together, we have managed to wade through the availability challenge, and we are genuinely grateful for everybody’s efforts in trying to put stock on shelves and moving through the supply chain, but it’s costing more than ever before.”
Mr Donohue assured suppliers that the company was doing everything it could to hold off any cost increases for as long as possible.
“What we have done is try to hone in on exactly how much it is costing us at the moment, and therefore what the cost increases for us look like. One of our intentions is to try to continue to hold that cost which we view as an investment in trying to facilitate stock movement for suppliers for as long as we can, but we’re also going to start sharing that information with suppliers to give everybody some visibility on what it is costing at the moment to move things around,” he added.
The company will also extend the temporary 14 day payment terms until June 2023. They were first introduced in April 2020 to allow faster payment to small suppliers.
“We are committed to supporting our suppliers through these never-before-seen circumstances and we recognise the economic challenges faced by small suppliers over the last two years,” Endeavour Group’s General Manager Merchandising Tim Carroll said.
“In a world with so much uncertainty right now, we know how much stability and certainty means.”
Mr Dononhue also discussed innovation, sharing the advice that 40 percent of the products that the company retails today did not exist eight years ago, and he encouraged suppliers to innovate. In fact, in the last 5 years alone, 85 percent of sales growth for the company has come from New Product Development NPD .
“What customers are looking for increasingly is more discovery, more interesting stuff, more new things and more convenience,” Steve said.
The majority of NPD products have been spirits based products, beer products and associated products. For example, seltzers – which did not exist two years ago in Australia – and now make up 10 per cent of pre-mix sales for Endeavour Group.
Steve emphasised the opportunity for the wine category to innovate in order to meet the constantly changing needs of customers as their tastes, attitudes and lifestyles evolve.
“The wine category needs to keep pace with changing customer expectations; lower alcohol, no alcohol, smaller format, easier format, something new, something different, something I’ve never seen before,” Mr Dononhue explained.
“All of these trends are part of the expectation of the younger consumer in particular, and unfortunately, we’re finding that the wine category is struggling to keep pace with that. We’re really committed as a team and as wine producers ourselves, to tapping into that consumer need, and we want to partner with suppliers to do it,” he added.
Endeavour Group’s Supplier Forum takes place every six months, with the aim of connecting trade partners with senior leaders across the business. Wednesday’s presentation was a virtual event so that it was as accessible to as many people as possible.
Endeavour Group’s inaugural Supplier of the Year Awards will take place on the 12th of May 2022 at the Timber Yard in Port Melbourne.