Endeavour Drinks reveals strategy to stay on top in 2019

Woolworths has revealed its plans to retain and grow Endeavour Drinks' market share in 2019, with local ranging and streamlined delivery among the key strategies. 

The company held its annual general meeting in Sydney today, with CEO Brad Banducci telling shareholders: "Our priorities for F19 remain largely consistent with F18 and we see enormous opportunities to improve our business and we are working very hard to deliver on these opportunities.

"For Endeavour Drinks, it’s about continuing to evolve the experience, not only to offer more convenience for our customers but also around delivering the right range in the right store and engaging our customers."

Woolworths noted that Endeavour Drinks sales increased by 4.5% to $8.3 billion in FY18 with comparable sales increasing 3.6%.

Dan Murphy’s maintained its market leading NPS and Dan Murphy’s and BWS both strengthened key VOC metrics
during the year.

Dan Murphy’s sales growth was supported by eight new stores and strong double-digit sales growth in online.

Endeavour Drinks sales per square metre increased by 1.3% with total sales growth of 4.5%, offset by net average space growth of 3.2%.

Endeavour Drinks’ gross margin was flat at 23.1% with margin improvements in BWS wine and spirits categories offset by a change in sales mix and a minor reclassification of costs between gross margin and CODB. CODB as a percentage of sales increased by 13 bps but was broadly flat compared to the prior year excluding the $8.4 million gain on the sale of a business in FY17. EBIT increased 2.8% to $516 million in FY18, and excluding the prior year gain on sale, EBIT growth was 4.7%.

Enhanced customer experience

During the year, BWS completed the rollout of "Customer 1st Ranging" across all categories, with a tailored range now available in every store based on the local customer base.

This approach to refining the range means stores have introduced products sourced locally, giving customers access to new ranges including craft beers.

Dan Murphy’s continued to evolve its tasting tables to experiential zones, including the rollout of training programs for team members to create a more personalised and unique experience for customers.

The in-store experience for both BWS and Dan Murphy’s has also been a focus for the year, assisted by 48 store renewals for  BWS, with the new attached BWS format at Marrickville Metro being cited as a "particular highlight". 

Expanding online and pick-up convenience

During the second half of the year, Dan Murphy’s launched a new website with the aim of allowing customers faster and easier access to improve the overall user experience.

To evolve its convenience offer, Dan Murphy’s also introduced trials of new ways to pick up orders such as ‘walk-in’, ‘drive-up’ and ‘drive-thru’.

During the year Dan Murphy's piloted a drive-thru Pick up service in Miami, Queensland, and an enhanced walk-in

offer at Guildford, New South Wales. These pilots proved "very successful" and Dan Murphy's will commence rolling out an "innovative pick-up service" in Sydney in November 2019.

Endeavour Drinks acquired Jimmy Brings in December 2017, which delivers a curated range of drinks to customers in under 30 minutes. Since acquisition, it has launched in Victoria, and has seen an average of 10% compound monthly growth in orders for the past six months.

BWS’ customer convenience offer continued to evolve in FY18, with the launch of BWS On Demand. At these sites, customers can purchase drinks both in-store and online and have it delivered at a convenient time and location, including express within one hour from the chosen BWS store.

At the end of the financial year, over 340 stores were offering this service and approximately 30,000 deliveries were completed.

Currently BWS delivers in six cities around Australia (Sydney, Melbourne, Perth, Brisbane, Gold Coast and Adelaide) with expansion into Canberra set for July next year.

"Our drinks business also worked hard on convenience with BWS expanding its On Demand offer, with plans to be in over 500 stores by Christmas," Banducci concluded. 

Focus on responsible gaming

Chairman Gordon Cairns, who was re-elected at the meeting, used his address to stress the retailer's "community credentials", which included an assurance to keep a closer eye on its hotels group, ALH.  

"As we move forward with our JV partners in ALH we are committed to better governance and better operational management, to ensure we live up to our commitment to be Australia's most responsible operator of gaming machines," Cairns said. 

"As the owner of the largest number of poker machines in Australia, we are also committed to harm minimisation. During the year we completed two external reviews into responsible gaming practices.

"The first was undertaken to compare ALH’s current practice to international best practice and the second was in relation to specific whistleblower complaints. We have implemented a number of changes following these reviews.

"As we move forward with our JV partners in ALH we are committed to better governance and better operational management, to ensure we live up to our commitment to be Australia’s most responsible operator of gaming machines."