News

Treasury Wine Estates (TWE) has agreed to acquire California-based Daou Vineyards and its associates, for $1.4 billion, expected to be completed by the end of FY23.

The acquisition, set to fill a key Treasury Americas portfolio gap, also involves an additional earn-out of up to $156.9 million conditional on certain net sales revenue (NSR) targets delivering growth in excess of pre-agreed thresholds from FY25 to FY27.

Daou Vineyards will boost the ASX-listed winemaker’s luxury-led portfolio and provide a scale to support a future standalone Treasury Americas Luxury division.

“In Treasury Wine Estates, we have found a partner that not only understands the value of our brand and the premium assets we have cultivated but also the importance of ensuring that we maintain a relentless focus on quality and craftsmanship as we step into our future,” said Daou Vineyards founders Georges and Daniel Daou.

Upon completion, the companies expect the luxury portfolio NSR contribution to increase to 53 per cent of Treasury Americas and 49 per cent of the TWE Group.

“We continue to see strong long-term growth trends for luxury wine in TWE’s key global markets, with a significant value-creation opportunity leveraging and building on the strengths today of TWE, Penfolds, Treasury Americas and DAOU to create a multi-brand global luxury wine business of scale,” said Tim Ford, CEO at TWE.

The acquisition will be funded through $825 million equity raising, $157 million placement of TWE shares to the existing owners of Daou, and a $550 million debt facility.

Coca-Cola HBC (Hellenic Bottling Company) has purchased Finlandia Vodka from liquor giant Brown-Forman for $342 million (US$220 million), subject to adjustments related to inventory and other working capital items.

The beverage giant says the acquisition will bolster Coca-Cola HBC’s premium spirits credentials and drive mixability opportunities with premium and super premium non-alcoholic ready-to-drink (NARTD) products, capturing more consumers and strengthening partnerships in strategically important channels such as HoReCa (hotel-restaurant-catering)

Brown-Forman said the sale of Finlandia vodka is another step to its long-term strategic plan to premise its portfolio through brand innovation, acquisition, and divestiture. 

Established in 1970, Finlandia is one of the leading vodka brands in Central Eastern Europe with annual volumes of 2.7 million cases worldwide, of which more than 60 per cent is generated within Coca-Cola HBC’s geographic footprint. 

Anora Group bottles Finlandia in Finland based on a long-term production services agreement and is sold in pure and flavoured versions. 

“We are pleased to pass on the ownership torch of Finlandia to Coca-Cola HBC, who has proven to be a strong and reliable partner to our brands for more than 17 years,” said Lawson Whiting, CEO of Brown-Forman.

“I am confident that Coca-Cola HBC’s growth ambitions and capabilities in premium spirits, its critical mass and execution excellence, and its leading sales and distribution credentials in the markets where it operates will accelerate Finlandia’s growth trajectory.”

Brown-Forman’s roster of brands includes Jack Daniel’s Tennessee Whiskey, RTDs and other Jack Daniel’s-branded products, Woodford Reserve, Old Forester, Coopers’ Craft, The GlenDronach, Benriach, Glenglassaugh, Slane, Herradura, Fords Gin, and Diplomatico Rum.

The company has approximately 5600 employees globally, and its brands are sold in more than 170 countries.

Supermarket operator Woolworths Group saw total sales increase year-on-year during the first quarter – but some operations suffered declines.

Woolworths booked sales of $17.22 billion in the 14 weeks to October 1, 2023, up 5.3 per cent. The Australian food segment rose 6.4 per cent to $13.08 billion, while the New Zealand food segment jumped 5.8 per cent to $1.91 billion.

“Importantly for our customers, inflation in our food businesses continued to moderate over the quarter driven mainly by deflation in fruit and vegetables and meat as lower input costs in these categories have led to lower retail prices,” said Brad Banducci, CEO at Woolworths.

The Australian B2B business segment inched up 1.5 per cent to $1.13 billion. However, sales of Big W fell 5.5 per cent to $1.13 billion.

Woolworths’ other business operations posted a sales slump of $22 million.

“Looking ahead, we have strong plans in place for the key Christmas and holiday trading period and while sales trends in October to date have remained broadly in line with the trend lines in Q1, the trading environment remains uncertain and value for money remains a key focus for our customers across all our businesses,” said Banducci.

Coles chief executive Leah Weckert has shrugged off the marked slowdown in comparative store sales growth in the first quarter of the new financial year, saying shoppers are snapping up cheaper fresh produce and Christmas treats like mince pies heading into the key holiday period.

Ms Weckert told The Australian Financial Review Coles has a strong plan for the holidays when she expects more consumers to eat at home to celebrate. She also flagged that Coles had a strong result with its Magical Builders Harry Potter collectables program a year ago, boosting sales.

“We think it’s a strong [first quarter] result, given what we were cycling last year, and we feel it’s setting us up well going into Christmas,” she said.

“At the moment, it’s all about lots of fresh produce because the prices are so great … with the level of deflation than we had 12 months ago, and that is the area where volumes are up the most.”

Coles posted a 3.6 per cent rise in first-quarter sales to $10.25 billion, underpinned by its supermarket business, with customers eating at home and looking for special offers amid pressure on household budgets.

Supermarkets’ revenue gained 4.7 per cent to $9.2 billion for the 13 weeks to September 24. Excluding tobacco sales – which continued to decline in line with industry trends – sales increased by 5.9 per cent.

Comparable sales grew by 4.6 per cent in the first quarter – a marked slowdown from 6.8 per cent in the fourth quarter of 2023. Rival supermarket group Woolworths on Wednesday reported comparative sales growth of 5.5 per cent down from 6.4 per cent in the June quarter of 2023.

Ms Weckert said that there were improvements in waste and markdowns in the first quarter. New technology such as smart gates and more security to help stem theft in stores is expected to be rolled out in more than 250 of the most affected sites by the end of this year.

Lower price inflation

The retailer in August flagged growing theft as a significant problem at the nation’s second-largest grocery chain.

“The early results from where the technologies are being rolled out are in line with our expectations,” she said. “From our perspective, this is a short-term problem.”

Ms Weckert said she expects the stock loss benefits to come through in the second half, and is looking to introduce other cost and margin optimisation initiatives.

Coles’ prices increased 3.1 per cent in the three months to the end of September, compared with a 5.8 per cent increase in the last quarter of the previous financial year. The lower inflation was due to falling prices of fresh foods, meat, seafood and baked goods.

Shoppers flocked to Coles own-brand products, and a fourth consecutive quarter of growth, with sales reaching $3.2 billion – a 9.4 per cent increase. Customers also continued to shift to healthier options, with sales from Coles own-brand health and lifestyle products growing by almost 30 per cent.

Supermarket online sales grew by 25 per cent in the first quarter, with penetration increasing to 9.1 per cent. Ms Weckert said Coles has made it easier for customers to search for specials online, adding new features in the app such “filter by lowest unit price”, which is popular with shoppers.

Coles’ liquor revenue increased just 1.8 per cent to $851 million in the quarter, helped by new store openings and online sales, which rose 32.2 per cent.

Ms Weckert said shoppers were buying cheaper beer, over craft brands. In wine, the growth in sparkling, prosecco and rose was offset by lower champagne sales. The ready-to-drink category also grew strongly.

Coles shares ended Thursday slightly higher at $14.98. The stock is down nearly 20 per cent in the past six months.

Penn joins board

JPMorgan analyst Bryan Raymond said in a note before the sales results that it was too early for capital investment in cameras and gates to be making an impact on stock loss.

“We would not expect a meaningful underlying shift in shoplifting trends in recent months given cost-of-living pressures are persisting,” he wrote.

MST Marquee analyst Craig Woolford said in a note that comparable sales growth in Coles supermarkets slowed more markedly than for Woolworths and its liquor business had a weak quarter.

“We expect small downgrades to earnings given the weaker trends are likely to continue into [the second quarter] and beyond as industry-wide inflation eases back,” he said.

Former Telstra boss Andy Penn will join Coles board as a non-executive director and be chairman of the audit and risk committee, effective December 1.

Coles chairman James Graham said Mr Penn would bring significant Australian corporate and customer-facing experience to the board.

“As a past chief executive of both Telstra and AXA Asia Pacific, Andy has a strong background in large corporations where the application of technology has assisted the repositioning and strengthening of businesses in competitive markets,” Mr Graham said.

The world’s largest food trading companies detailed a plan on Monday to eliminate deforestation from their supply chains for soy, beef and palm oil by 2025, a step seen as essential to averting catastrophic climate change.

Destruction of forests – like the Amazon rainforest to make way for farm fields and ranches or Indonesian jungle for palm oil – emits huge amounts of greenhouse gas each year, helping to drive climate change.

The roadmap, launched at the COP27 United Nations climate summit in Egypt, comprises 14 firms including Cargill, Bunge, Archer Daniels Midland, Louis Dreyfus Company, Brazil’s JBS and China’s COFCO International.

The firms said the plan helps put the world on track to limit global warming to an increase of 1.5°C above pre-industrial levels, the threshold beyond which scientists say climate change risks spinning out of control.

The roadmap “represents a significant sector milestone in eliminating commodity-driven deforestation in line with a 1.5°C pathway,” COFCO International CEO Wei Dong said in a statement.

Many of the firms had previously committed to eliminating deforestation by 2025, with the plan establishing milestones along the way that vary slightly by sector.

The environmental advocacy group Mighty Earth CEO Glenn Hurowitz said that 2025 was not soon enough, calling for all deforestation to be ended immediately.

“The roadmap’s insistence that individual companies undertake best efforts to establish individual cut-off dates for deforestation no later than 2025 means the bulldozers will keep running and the destruction will continue,” he said in a statement.

The industry has a spotty record of meeting past deforestation commitments.

In 2010, hundreds of the world’s largest consumer brands as part of the Consumer Goods Forum pledged to reach “net zero” deforestation by 2020. But as the deadline approached, Cargill said that the food industry would fail to meet the goal.

The plan also calls on firms to establish targets for reducing their greenhouse gas emissions and to begin disclosing their emissions from land use change in 2024.

Family-owned pie brand Mrs Mac’s has been sold to Aus Pie Co, following months of financial pressure and tough times as a result of the Covid-19 pandemic.

In July, The Australian Financial Review and The West Australian reported that Mrs Mac’s was seeking an emergency capital boost to pay down debt or attract a new owner to take control of the iconic brand.

AFR reported that KPMG’s advisers were quietly taking a handful of potential investors through due diligence.

The West Australian stated this week that it had “made inquiries after a filing with the corporate regulator late on Wednesday showed a creditor’s voluntary winding-up process of the 68-year-old company had begun. However the liquidation is only for the old corporate entity, with Mrs Mac’s to continue trading under the new owner”.

“The acquisition of the Mrs Mac’s ensures that the tradition continues and that Mrs Mac’s has a bright future ahead,” said Bruce Feodoroff, CEO at Aus Pie Co. “We have plans to revitalise the company with further investment and improve the range, without sacrificing the flavour’s Australians and New Zealanders love.”

Mrs Mac’s began in Perth as Bakewell Pies in 1954 and was started by the Macgregor family, moving from the city to its current Morley manufacturing headquarters in 1968.

Currently, Mrs Mac’s head office and factory are based in Perth, with an office in Sydney and representatives across Australia and New Zealand.

Coining the famous term “if it’s not a Mrs Mac’s, take it back”, the company employs more than 330 people and has produced more than 100 million pies, rolls and other pasties across Australia and New Zealand.

In September 2021, Mrs Mac’s introduced a new and improved bakery range to be sold at local supermarkets, petrol and convenience stores.

In 2018, the business underwent a rebrand, complete with a new logo, a fresh look and new packaging which highlighted the company’s 68-year history.

Australia’s national wine inventory has risen for the second consecutive year as sales lull, according to a new survey from Wine Australia.

The industry body’s annual production, sales and inventory report found that supply chain constraints in the past two years have severely impacted the Australian wine sector coupled with high deposit tariffs on bottled wine imported to Mainland China along with changing consumer habits.

Total sales for both domestic and export wines were down by 9 per cent to 1.06 billion litres while total Australian wine production was down by 12 per cent to just over 1.3 billion litres.

The national stocks-to-sales ratio for red wine increased by 35 per cent to 2.77 while white wine remained static at 1.52.

Wine Australia’s manager for market insights, Peter Bailey, said the report captures the challenges the Australian grape and wine community have endured during the past couple of years.

“Wine inventory levels fluctuate during the year, generally being at their maximum just after the new vintage and then depleting over the next 12 months as wine is sold.

“However, transportation challenges in getting wine to market is reported to have had a flow-on effect, with wine production capacity expected to be further constrained ahead of vintage 2023 as a result of the higher-than-average inventory.”

The report is a “snapshot” of the national position and covers an estimated 77 per cent of total wine production and is not representative of smaller wine models.

Danielle Byrne has been named Reckitt Hygiene’s new head of sustainability and purpose for Australia.

The newly created leadership role will see her develop and execute the sustainability agenda for consumer household brands including Finish, Glen 20 Vanish and Pine O Cleen.

Byrne joined Reckitt in 2018 and has worked with several strategic customers, most recently with Woolworths. She has experience across the consumer goods industry internationally and lead commercial roles in the UK prior to joining the company.

Reckitt Hygiene ANZ’s regional director, Oliver Tatlow, said Byrne is already playing a “critical role” in helping bring the business’ sustainability strategy to life.

“We recognise that there is more to be done which is why we’ve appointed Danielle Byrne to this newly created role. Danielle brings great energy, drive and focus to the areas where we can make the biggest impact, and her appointment reinforces Reckitt’s commitment to work towards a more socially conscious and environmentally sustainable future.”

Last year, Reckitt pledged to halve its carbon footprint and the use of virgin plastic. It is moving to be 100 per cent renewable energy by 2030.

Major food and grocery brands in Australia are supporting a new scheme to keep soft plastic packaging out of landfills and build a new recycling industry that can produce food-grade, recycled soft plastic packaging in the country.

Led by the Australian Food and Grocery Council (AFGC), the National Plastics Recycling Scheme (NPRS) is a project designed to close the loop for soft plastic packaging and produce food-grade packaging from recycled materials local FMCG companies need but have to source overseas.

The initiative comes just days after the suspension of RedCycle’s soft-plastic recycling scheme that has left thousands of tonnes of unrecycled plastics in warehouses, and supermarket giants Woolworths and Coles forced to suspend collection from customers.

Seventeen major food and grocery manufacturing companies listed below have signed on as Foundation Supporters of the NPRS project, committing funds to the trials and pilots:

• PepsiCo
• Haribo
• Mars
• Simplot
• Unilever
• Mondelez
• Goodman Fielder
• Mayers Fine Food
• Unicharm
• SC Johnson
• Arnott’s
• Fonterra
• George Weston Foods
• Nestle
• Kimberly-Clark
• Kellogg’s
• Lactalis

Tanya Barden, CEO, AFGC, mentioned that the paused RedCycle store drop-off program – unconnected to the NPRS project – addressed a part of the recycling market. However, she said there is a need for a larger-scale program to recycle soft plastics for the long term. 

“Soft plastic packaging plays a vital role in ensuring the freshness and protection of food, personal care and home care products, and manufacturers use soft plastics because they are strong and light with a low carbon footprint,” said Barden.

Nearly 487,000 tonnes of soft-plastic packaging was used in the country from 2019 to 2020, with just 4 per cent of that material recycled. The organisation said diverting soft plastics from landfill on a larger scale can provide a clean stream of material for the country’s emerging advanced recycling industry. 

Darren Thorpe, managing director for APR Group, added there is a huge demand for recycled food-grade plastics not just in the country but all over the world and that collecting soft plastics in large volumes is crucial. 

“We have the technology to do that, and these trials are shaping a scalable model that will enable the creation of a sustainable and efficient advanced recycling industry for soft plastics here in Australia,” said Thorpe.

The first in a series of trials of kerbside collection of soft plastic packaging for NPRS has already begun in Victoria’s Macedon Ranges Shire Council. 

Natural health and supplement retailer Mr Vitamins has launched a natural health bundle range called Vit Kits to “streamline” the supplement shopping experience.

The range is available in five kits under Sleep, Skin, Kids, Calm and Soothe categories, with each kit containing three natural supplements and remedies designed to address relevant conditions.

According to Better Health research, about two-thirds of Australians use complementary and alternative therapies.

Garry Mortlock, CEO at Mr Vitamins, described the kits as a “culmination” of the brand’s quality supplements and expert advice condensed into one kit.

“Each Vit Kit was caringly curated by our qualified naturopaths and nutritionists. From a topline perspective, we believe there is a gap in the market for holistic product bundles, which is why we decided to launch these first five Vit Kits that can assist with some very common health ailments.”

He added there are plans underway to expand the Vit Kits range further according to consumer demand.

The kits are available across Mr Vitamins stores in Sydney and online.