Woolworths profit: Aussie families shunning red meat to cut costs, says Woolies CEO Brad Banducci

CASH-strapped Aussie families are ditching red meat to cut their grocery bills, according to the boss of the nation’s biggest grocery chain. But they’re buying other sources of protein instead, he says.

CASH-strapped Aussie families are ditching red meat to cut their grocery bills as wages grow at an anaemic rate, the head of grocery giant Woolworths has revealed.

Chief executive Brad Banducci says families are increasingly price sensitive, and opting for alternatives to red meat such as “pink protein”, or salmon.

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Asked on a media call about the impact of weak wage growth and cost of living pressures, Mr Banducci said: “Red meat as you know has become very expensive in Australia”.

“Increasingly we are seeing families move away from eating as much red meat as they were and balance that out with pink protein or other alternatives,” he said.

Woolworths chief Brad Banducci. Picture: John Feder.

Mr Banducci was speaking after Woolworths posted a net profit of $969 million for the 27 weeks to December 31 — up 37.6 per cent from a year earlier.

“A lot of families have seen the price reductions and have turned that into volume growth,” he said.

Woolies would look at making red meat more affordable, Mr Banducci said.

“We are seeing the value of putting good value entry-level products there so we are working very hard in our entry-level range on red meat given how expensive it is.”

“We see how central that is to a families budget.”

Macca’s perspective.

On a like-for-like basis, which strips out the impact of stores opening and closing, food sales at the group’s Australian supermarkets rose 4.9 per cent in the half.

The retailer has been cutting prices at Woolworths to win back customers in an increasingly competitive Australian grocery industry.

It has increased its interim dividend by 9c a share, to 43c.

Across, the group, earnings before interest and tax jumped 9.9 per cent to $902 million.

Revenue rose 3.8 per cent to $30 billion driven by strong sales growth from its supermarkets, Dan Murphy’s and BWS chains, and hotels.

Like-for-like sales growth was particularly strong in the second quarter — the three months to December — at 5.1 per cent.

Lara Tumilovics and Amanda Mcintyre at the Toorak Woolworths, which will be among the first stores in Victoria to phase out plastic bags.

That far outpaced the figure chalked up by rival Coles.

On Wednesday, Coles parent Wesfarmers reported like-for-like food and liquor sales growth at the chain of 0.9 per cent for the half and 1.4 per cent for the second quarter.

Mr Banducci said food sales growth might moderate in the second half, but added that its labouring discount department store Big W would lift its performance in the period.

The growth was an early sign of the group’s transformation, said Mr Banducci, who led the supermarket division before becoming chief executive.

“The emphasis on transforming our business will continue in the second half and into the 2019 financial year,” Mr Banducci said in a statement to the Australian Securities Exchange yesterday.

Woolworths has trumped arch rival Cole in sales growth. Picture: Hollie Adams.

“Our goal is to deliver a consistently good experience for our customers and team and leverage end-to-end process redesign and technology to improve our underlying productivity.”

Mr Banducci also said Woolworths was continuing “to assess its options” with regard to the group’s failed deal to sell its petrol station chain to British petroleum titan BP.

The Australian Competition and Consumer Commission late last year blocked the $1.8 billion transaction, saying it was concerned the deal would lead to higher petrol prices.

Woolworths shares were down 2.4 per cent, or 65c, in mid-afternoon trade at $26.99.