Liquor State of the Industry 2017-18 AUSTRALIAN RETAIL LIQUOR TRENDS · 2018. 8. 10. · retail evolutions Online Outperforms •E-commerce is outperforming bricks & mortar in total

IRI Australia Channel Development

July 2018

AUSTRALIAN RETAIL LIQUOR TRENDS

Liquor State of the Industry 2017-18

© 2018 Information Resources Inc. (IRI). Confidential and Proprietary. 2

AGENDA: 6 sections, 30 themes, released in July and August 2018

Retail Liquor Overview Retail Trends in Beer Retail Trends in Cider

Accelerated Growth Moderate Growth Cider Contracts

Locally Convenient Mainstream Malaise Mainstream Malaise

Online Outperforms Modern Moderation Modern Moderation

Ranging Rethink Locally Authentic Locally Authentic

Booming Brands World Beer Hotpots Canned Convenience

Available w/c July 02, 2018 Available w/c July 16, 2018 Available w/c July 30, 2018

Key c

ate

gory

them

es

Source: IRI analysis

This is part 1 of a 6 part

series reviewing

performance trends in the

major liquor categories


AGENDA: 6 sections, 30 themes, released in July and August 2018

Retail Trends in RTD Premixes Retail Trends in Glass Spirits Retail Trends in Wine

RTD Resurgence Slowing Growth Consistent Gains

Mainstream Momentum Mainstream Malaise Price-Format Contrasts

Bold & Refined Light & Versatile Concentrated Growth

Modern & Refreshment Masstige Momentum Champagne Cools

Brand/Format Overlap Super/Ultra Premium New Directions

Available w/c August 13, 2018 Available w/c August 27, 2018 Available w/c August 27, 2018

Key c

ate

gory

them

es



Retail Liquor Overview

Retail Liquor Overview

Retail Trends in Beer

Retail Trends in Cider

Retail Trends in RTD Premixes

Retail Trends in Glass Spirits

Retail Trends in Wine


Retail liquor continues to record respectable annual dollar growth

Accelerated Growth

• All categories except cider recorded YOY growth

• Robust 3.0% dollar uplift (vs. 2.3% YA) contrasts slight volume losses

• All states recording annual sales gains

Locally Convenient

• Above average growth of convenience-led operators is bolstered by ‘little-and-often’ shopping

• Liquorland and BWS rising to prominence due to a range of impactful retail evolutions

Online Outperforms

• E-commerce is outperforming bricks & mortar in total retail, and in retail liquor

• Addressing the ‘digital shelf’ is key as liquor shoppers adopt an ‘everything now’ mindset

Ranging Re-think

• Proliferation in beer SKUs contrasts wine rationalisation

• Brands in decline (2,898) still exceed those posting growth (2,547)

• Led by beer, private label is recording faster growth

Booming Brands

• Great Northern remains, by some distance, the major driver of topline liquor growth

• The top 10 growth brands are generally recording growth momentum over at least 2 years

1 2 3 4 5

Source: IRI analysis; IRI MarketEdge, MAT To 03/06/18


Australia’s $17.6bn retail liquor channel is growing at 3.0% annually

TOTAL LIQUOR

$17.64bn($17.12bn)

3.0%(2.3%)

0.9%(2.4%)

$518m($390m)

-0.5%(0.4%)

ACTUAL

GROWTH

DOLLARS LITRES UNITS

Improved annual growthRobust dollar gains in spite of

marginally contracting volumes

Value outpacing volume gainsValue gains continually superior to

volume increases over 2 years

Broad category strengthPositive dollar growth in all

categories except cider

Accelerated Growth Locally Convenient Online Outperforms Ranging Rethink Booming Brands

Source: IRI MarketEdge, MAT To 03/06/18;

NB: Bracket value denotes prior YOY performance


Growth contribution from RTD premixes notably over-indexes vs. share

158m

Beer SpiritsWine RTD Cider

178m 166m 106m

-4m

Share of Total Retail Liquor Dollar Growth

31% 28% 27% 16% -1%

Share of Total Retail Liquor


129m

9m

142m

4m

Source: IRI MarketEdge, MAT To 03/06/18

145m 138m

81m

37% 21%26% 14% 3%


Liquor gains are broadly comparable to total retail, and other FMCG

LIQUORTOTAL RETAIL*

$314bn($306bn)

PACKAGED GROCERY

P&C OTC PHARMACY


Source: IRI MarketEdge, MAT To April-June 2018 (depending on channel);

*Australian Bureau of Statistics

3.0%DOLLARS

3.0%DOLLARS

3.4%DOLLARS

2.3%DOLLARS

2.6%DOLLARS


Annual dollar growth in retail liquor is evident state-wide

3.5%(2.9%)

3.7%(4.3%)

3.5%(0.9%)

0.8%(-1.7%)

2.9%(2.2%)

1.8%(-1.1%)

2.6%(3.9%)

denotes share of total

retail liquor dollar sales

25%

28%

12%

2%

7%

%

3%

Nationwide growthAll states recording annual

revenue gains

Fastest growth in NSW Stronger growth across the

ESB states, and in SA

WA and NT turnaroundReturn to growth a

welcome boost nationally 23%




$

$

$

$

$

$

$


Negative YOY volume growth has been shaped by two latest quarters

Successive qtrs. of

volume declines Negative volume

growth so far in 2018


Source: IRI MarketEdge, 8 quarters from 04/09/16 To 03/06/18

3.3

0.4

2.73.1

2.6

3.44.1

1.8

2.1

-2.5

1.1 1.4

0.20.7

-0.8

-2.0

Qtr To04/09/16

Qtr To04/12/16

Qtr To05/03/17

Qtr To04/06/17

Qtr To03/09/17

Qtr To03/12/17

Qtr To04/03/18

Qtr To03/06/18

Total Retail Liquor Dollar Growth % YA

Total Retail Liquor Litres Growth % YA

Seasonal influenceQ1 spike and Q2

slowdown influenced

by timing of Easter

Value outpacing

volume gains Inflationary impact of

excise gains, CDS

scheme in NSW, and

choice premiumisation


Broadly upbeat trading statements reflect a mostly robust industry

Positive comparable sales

growth for consecutive

quarters over 2 years

Next phase: range

simplification, price

investment, and growth of

exclusive labels

Strong transaction

growth, with Liquorland

the key driver

Progressing a 5-

year transformation

strategy

Aiming to be the

“world's best

drinks retailer”

BWS and Dan Murphy’s

driving solid growth for

Endeavour Drinks

Dan’s: best price, widest

range, knowledgeable

service

BWS: convenient local

bottle shop with tailored

range

FY18: overall group

sales up 5.7%

Very, very strong sales

performance again

Continue to benefit from

people buying and

consuming more locally

Drive premiumisation the

consumer is looking for

Clear focus on

premiumisation and

trading customers up


Source: IRI analysis; Company Trading Statements in 2017 and 2018

All relentlessly competing to be the easiest place in Australia to buy best-value drinks


Six key factors underpin strengthening BWS performance

Created an aura of something

special happening every day

over summer

100 Days of Summer Delivery Enhancement Sporting Event Activations

Ramping up faster delivery

and one hour Click & Collect

across key metro areas

H2 2017 growth credited to

“strong execution around

key sporting events”

Repositioning as the “local

bottle shop” by empowering

store CEOs in ranging decisions

Improved price perception

and NPS by organising offers

into clear categories

Localised Range Improved Price Perception Rewards Alignment

Woolworths Rewards program

at a time of increased traffic in

Woolworths Supermarkets


Source: IRI analysis; POPAI; Company Trading Statements


Addressing the ‘digital shelf’ in liquor has never been so important

16%DOLLARS

16%DOLLARS

GROCERY LIQUOR

20%DOLLARS

>20%DOLLARS

17%PENETRATION

Australians

shopping for

liquor online


Source: NAB Online Retail Sales Index; IRI Shopper Panel Survey;

Company Trading Statements in 2017 and 2018

15.1%(10.1%)

DOLLARS

Total

E-commerce

$25bn($21.7bn)

$3.3bnACTUAL

GROWTH

SHARE OF

TOTAL RETAIL

8%

66% of

shoppers

learn

about

products

onlinebefore

purchasing…


Liquor retailers are meeting elevated expectations for ‘everything now’

10-15%MONTHLY

BWS Quick Service

Delivery across >300

metro stores

Dan Murphy’s has accumulated

an array of industry accolades

in recent years

Majors and specialists are ensuring faster delivery and more control and curationOn-demand delivery start-ups

All bridging the gap between online

and offline, and off-and-on premise


Source: IRI analysis; POPAI; Company Trading Statements

$


Wine remains the only category where SKU rationalisation is evident

3%

14%

1%

5%3%

0%

2%

12%

7%

3% 3%

-3%Total Liquor Beer Cider Spirits RTD Wine

MAT To 07/05/17 MAT To 06/05/18

Percentage change in Active Products (YOY), by category

21% 4% 12% 7% 57%

37% 3% 21% 14% 26%

% of liquor SKUs

$ share of liquor



RTD


An imbalance in brand performance suggests range cuts will persist

Masterbrands in growth:

2,547

Masterbrands in decline:

2,898Sub-brands in decline:

5,116

Sub-brands in growth:

4,535

Focus on range optimisation

Navigating liquor is harder than ever

Active Products:

26,874




Dan’s Connections exemplifies how online ranging can differentiate


Source: IRI analysis; EDG Supplier Forum; danmurphys.com.au; news.com.au

Fragmenting and rapidly changing consumer preferences demands a broader and more bespoke rangeHeightened demand for niche and specialised products increases cost and complexity in the supply chain – especially for physical

retail. Online retailing allows retailers and suppliers to optimally meet the need of niche preferences without adding undue

complexity in the supply chain for SKUs that still have limited sales velocity (e.g. gluten-free beer)

Evolve to

12,000

SKUs

Next500 suppliers,

6,000

SKUs

Now


Aldi’s simple and focused range is enticing value conscious drinkers

Growing trust/familiarity

with other Aldi labels

Conveniently located

next to check-out

Increased frequency of

Aldi visits nationwide

Focused, easy-to-

navigate liquor fixture

Large number of award

winning exclusives

Range of seasonal/

limited time liquor

Source: IRI analysis; Roy Morgan; aldi.com.au


DR

IVE

RS


Improved private label growth has been a key theme of 2017-18


PRIVATE LABEL

$1.08bn($1.04bn)

4.8%(1.4%)

2.7%(1.1%)

$50m($14m)

4.8%(0.3%)

ACTUAL

GROWTH

DOLLARS LITRES UNITS

Private label

-3% 14%

3% 2%

0% 4%

Dollar growth % YA

2016-17 2017-18

$ $

$ $

$ $

36% 14%

$ $

+$24m

+$12m

+$7m

+$4m

-22% 24%

$+$3m

SKU

count

down -6% in last 2

years

$/litre

grew by

just 1% in last 2

years

RTD

$




Great Northern remains the major driver of topline liquor growth

+239m

46% share of

industry $

growth

13%Dollars+268m

52% share of

industry $

growth

#1 dollar growth driving brand #2-10 dollar growth driving brands**

60%DOLLARS


*CUB’s VP Marketing quoted in 2017 **National brands only


11%DOLLARS

2 3

5 6 7

8 9 10

4“Great Northern Brewing

Company has seen

unprecedented growth and

will be a focus for CUB. It

is a true success story”*


+436m

+71m +71m +52m +40m +36m +30m +29m +25m +22m

A two-year view further illuminates Great Northern’s vast impact

Private label

Legendary

Bre

win

g C

o

104

weeks +811mTO

P

10 brands

+220% *NEW* +29% +993% +46% +6% +52% +149% +38% +9%

Gre

at

No

rth

ern

Ca

na

dia

n

Clu

b

Fu

rph

y

Ja

ck

Da

nie

ls

Squealin

g

Pig

Actual Dollar Growth

Dollar growth % 104 wks.

Source: IRI MarketEdge, 104 Wks. To 03/06/18

Ya

k A

les

Asa

hi


Ja

me

so

n

Ja

co

b’s

Cre

ek


Developments on the horizon…

LEADING GROWTH BRANDS, ESPECIALLY IN BEER, ENDURE

- The primary battleground will revolve around ongoing share accumulation of Great Northern and Iron Jack. For the foreseeable future, the brands will remain the number 1 and 2 category drivers due to momentum sustaining investment

- The expansion of Furphy outside of Victoria will augment the brand’s success to-date, but will (further) impinge on select mainstream craft and classic beers

‘FRICTION-FREE’ RETAILING WILL PROGRESS

- Consumers will embrace online shopping across a broader range of product formats to more comprehensively include FMCG items (including liquor) in their repertoire

- Established liquor retailers will amplify efforts to enable more personalised choices, personalised promotions and seamless collection/delivery via improved e-commerce

- Online evolution will be key to catering for fragmenting/niche consumer preferences

DIRECT-TO-CONSUMER (DTC) RETAILING TO EMERGE

- Online is also an apt way for suppliers to personally engage and sell directly to consumers, underpinned by the authenticity and connection of the producer. The model inherently suits the burgeoning demand for craft beer and craft distilling

- Moët Hennessy’s Clos19 initiative internationally highlights that larger suppliers too can creatively utilise DTC in order to boost online sales, and in bringing-to-life quality focused brand experiences (e.g. choice/usage curation, exclusive content etc.)

Source: IRI analysis; clos19.com


Coming next in this series: Retail Trends in Beer

Retail Liquor Overview Retail Trends in Beer Retail Trends in Cider

Accelerated Growth Moderate Growth Cider Contracts

Locally Convenient Mainstream Malaise Mainstream Malaise

Online Outperforms Modern Moderation Modern Moderation

Ranging Rethink Locally Authentic Locally Authentic

Booming Brands World Beer Hotpots Canned Convenience

Available w/c July 02, 2018 Available w/c July 16, 2018 Available w/c July 30, 2018

Key c

ate

gory

them

es


This is part 1 of a 6 part

series reviewing

performance trends in the

major liquor categories


Look out for upcoming additional insights and inspiration from IRI…

Liquor State of the Industry

Mid-Year Update

Five Wellbeing Trends Shaping

Liquor Choices

Boundary Blurring Influences

in Liquor NPD and Marketing

• Retail Liquor Overview • Moderation & Abstention Trends • Cross-Category Barrel Aging Trends

• Retail Trends in Beer • Less-of-the Best: Trade-Up Trends • Flavour Infusion & Blending Trends

• Retail Trends in Cider • The Rise of Lower ABV • Cross-Category NPD Adaptation

• Retail Trends in Glass Spirits • Healthier Liquor Attribute Trends • Promotional Co-Branding

• Retail Trends in RTD Premixes • The Rise of Alcohol-Free

• Retail Trends in Wine

© 2018 Information Resources Inc. (IRI). Confidential and Proprietary. 25© 2018 Information Resources Inc. (IRI).

Confidential and Proprietary.25

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Liquor State of the Industry 2017-18 AUSTRALIAN RETAIL LIQUOR TRENDS · 2018. 8. 10. · retail evolutions Online Outperforms •E-commerce is outperforming bricks & mortar in total

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