ALM CEO Scott Marshall Highlights Growth Opportunities for Trade

Metcash Limited’s FY16 results in June represented a significant turn around for the business, with post tax profits of $216.5m – a major improvement on from its $384.2m loss in FY15. The results were driven by the company’s liquor business, which increased its total sales by 3.7 per cent to $3.2bn. Metcash’s liquor business has two divisions, including Australian Liquor Marketers (ALM) and Independent Brands Australia (IBA).

ALM is Australia’s largest broad range liquor wholesaler, servicing over 12,000 hotels, liquor stores, restaurants and other licensed premises. Here, drinks bulletin interviews CEO of ALM, Scott Marshall, about what his view is of the market, where he sees opportunity for growth and what trade can expect at this year’s ALM conference.

drinks bulletin: FY16 results were extremely positive for the Metcash business and well supported by growth from the liquor business. Were you expecting this result?

Scott Marshall: The group has achieved good results in a flat market. ALM has exhibited steady growth for the last few years off the back of really strong customer loyalty, and I’d like to say thank you to our shoppers for that. We’re getting really rewarding growth from both retail and the on-premise.

Our bottom-line has also been driven by really strong cost control across the logistics part of the business.

DB: How has ALM been working to help grow the liquor business over the last 12 months?

SM: We keep working hard with our retailers and suppliers to deliver the best local offer there is to our shoppers. On the back of that, there are supplier plans and more strategic, mutually beneficial partnerships in place, and we see opportunity for future growth within those.

DB: What plans are in place to help support this growth in the next financial year?

SM: We have a continual focus on the cost of doing business and supply chain improvements. The step change for us in growth is the shopper research we’re doing and matching our retail offer to the shopper.

DB: What trends are you seeing currently from shopper research?

SM: We are seeing continued change in consumption trends. People are drinking less, but better quality and it is important how we match this through the retail offer.

DB: What is ALM’s view of the overall liquor market and its performance?

SM: I think that the top line of the market will stay flat in terms of consumption, but the dynamics within it will continue to change. In today’s market, there are definitely more convenience based shoppers and we need to support those shopping occasions.

DB: What challenges are facing the on and off-premise channels?

SM: I think the biggest challenge we all face is low top line growth and low inflation. Both of those factors put pressure on everyone’s fixed costs and cost base, and we need to have a greater focus on how we can improve those areas.

I think that our customer base is made up of great individual business people. So as long as we’re focused on those areas, I believe that they’ll find the right solutions to make it work.

DB: Are there any sectors within the liquor market that are performing better than others?

SM: There are definitely varied results by state, but I’d say that businesses in each sector are in growth. I don’t see one being better than the other, although I would say that there is growth being seen amongst the more niche on-premise offers.

DB: What opportunities do you see for growth over the next 12 months?

SM: Direct marketing and customer bounce back. I think there’s absolutely opportunity to know our customers better. The other one I would say, because of the liquor trends, would be innovation and new product development. I think there’s a lot of growth opportunity in both of those areas.

DB: The ALM conference is in September. What will be some of the key themes this year?

SM: There will be a large focus on shopper trends and what’s working. We’ll also be talking a lot about the store of the future; not so much focusing on the look and feel, but concentrating primarily on the future sales mix and profitability.

DB: Can we expect any announcements or news?

SM: The industry keeps evolving, watch this space!