The conversion of its First Choice chain to First Choice Liquor Market has been credited with driving sales growth for Coles Liquor in FY2019.
Coles Liquor reports sales revenue for FY2019 was up 1.9% on the prior year to $3.1 billion.
Comparable growth was 1.2%. For the fourth quarter, liquor sales revenue increased by 2.2% and comparable sales growth was 1.5%.
Coles noted: “The performance in Liquor was positively impacted by the benefit of the First Choice Liquor Market roll-out during the year and growth in online, partially offset by moderating growth in the broader retail liquor market.
“The refreshed format is generating some early wins, with sales performance being ahead of the rest of the fleet.”
The result dovetails with First Choice Liquor Market winning 2019 Store Design and Fit-Out of the Year at the Australian Retailers Association Retail Awards last week.
The judges were impressed by the First Choice Liquor Market transformation program, which includes a full in-store transformation, including new hardware, lighting, signage and point of sale.
Coles has now converted 33 First Choice stores to the First Choice Liquor Market format – a third of the total fleet. The roll out continues with a further 12 stores to be converted before Christmas.
The first Liquor Market store opened in Ringwood, Victoria, as a trial in 2016. Since that time Coles Liquor has been fine-tuning the offering to provide a broader range of products, while retaining a low-cost operating model.
In 2018, Coles Liquor decided to combine the best of the Liquor Market offering with First Choice to create First Choice Liquor Market, with a hand-selected range of wines, beers and spirits, including exclusive products not available from any other Australian retailer.
Renewal focus turns to Vintage Cellars
Coles reports Liquorland continued to grow during the year, “albeit at a lower rate as its renewal program neared completion”.
FY20 will see the commencement of the next evolution of the Liquorland renewal program.
Progress has also been made in developing a Vintage Cellars trial store concept, which will commence the renewal program for Vintage Cellars, expected to launch in the first half of FY20.
Private label continues to boom
Exclusive liquor brands now contribute to 17.9% of sales for Coles Liquor.
Across all banners, Coles reports exclusive liquor brand sales in the wine category continue to be strong, with sales growth more than double the rate of the rest of the Liquor business.
There were 64 new exclusive liquor brand lines launched and a total of 189 medals and awards received over the year.
Gross margin increased by 41 bps to 22.3% due to “margin improvements from exclusive liquor brands and improved supplier collaboration”.
Joint venture success with AVC
Coles noted it had entered into an incorporated Joint Venture with Australian Venue Co in relation to the Spirit Hotels business, formerly operated by Coles and Coles’ associated retail liquor business.
The transaction was completed in April 2019. AVC now focuses on the operations of the hotels business while Coles focuses on the operations of its retail liquor businesses under the Liquorland, First Choice and Vintage Cellars brands.
“Since completion, Queensland Venue Co has expanded its hotel portfolio providing future expansion opportunities in retail liquor,” Coles said.
Recent acquisitions include Brisbane venue Riverland (pictured above).
Australian Venue Co CEO Paul Waterson said Riverland was an exciting addition to the Queensland Venue Co joint venture.
“Riverland is a great business with a premier location,” he noted. “This acquisition allows us to grow our pub footprint in the Brisbane market while also giving Coles Liquor the opportunity to expand their retail liquor presence in Queensland as part of our joint venture.”
Overall, full-year Coles Group sales revenue (excluding fuel sales and hotels) increased by 3.1% to $35 billion.
Group EBIT was down 8.1% due to lower Express fuel volumes and corporate costs associated with being a standalone ASX company.
The Group also celebrated its first operating profit for online sales, which grew 30% and generated $1.1 billion in sales revenue.