Appetites up as Aussie consumers get a taste for home living

The financial results are in: Australians have managed to spend up big on food delivery, gambling and alcohol.

One of the most popular pizza types was the Pepperoni pizza from the New Yorker range.

Amid financial difficulties wrought by the COVID-19 pandemic, Australians have still managed to spend up big on food delivery, gambling and alcohol.

And physical lockdowns have been no barrier to spending by customers of some of the biggest ASX listed retailers, corporate ­results have revealed.

On one hand, discount retailer The Reject Shop reported a 3.4 per cent increase in sales to $820m, while its sales mix changed as consumers sought out the cheapest possible prices for their essentials.

“Second-half comparable store sales growth was mainly driven by strong customer demand for ‘essential’ and ‘stay at home’ products during the first wave of COVID-19 in Australia,” the company said in its report.

“These products included grocery, cleaning, toiletries and pet care as well as craft and stationery, toys, garden, furniture, electronics, hardware and kitchen.”

At the same time, ANZ’s full-year results showed the bank had 130,000 COVID-19 related hardship inquiries, 69 per cent of which went on to have their mortgages deferred.

With 84,000 mortgage accounts worth $31bn in deferral, ANZ chief executive Shayne Elliot said customers were “looking to hedge,” aggressively reducing credit card balances by a total of $1bn from March to $5.3bn in July. Total mortgage offset balances were boosted over the three months by around 10 per cent to $31bn – although just $1.2bn of mortgage offset balances were attributable to deferred mortgages, highlighting the financially precarious situation of these customers.

But Australians still managed to spend money on themselves, with the government’s JobKeeper and early superannuation withdrawal schemes providing plenty of temporary income for discretionary spending.

Data from Illion and alphaBeta, part of Accenture, shows that in the week to August 9 spending on food delivery was 342 per cent above its average — the highest increase of any category.

Additionally, Australians who accessed their super early spent an average extra $207 on prepared food after the first tranche release, and $287 after the second tranche.

During the week pizza chain Domino’s Pizza shares reached record highs on the back of this trend. More than 105 million pizzas were sold in Australia and New Zealand, the company said, culminating in a record $1.2bn in pizza sales across 833 stores.

Like most consumer activity during the coronavirus pandemic, a lot of it was conducted online — Domino’s said online sales grew by 9.2 per cent over the year, with 74 per cent of all pizza orders taking place via the company’s e-commerce platform.

Handing down its annual results, the company said that during the lockdown stores in CBD areas suffered a decline in sales, while “suburban stores recorded higher sales as these same customers stayed, and ordered, at home”.

Although public health officials may be heartened to hear more Australians were using Dominos zero-contact delivery service, they may be left concerned over the type of pizza they were ordering.

Domino’s new plant-based beef range of pizzas was a success, the company said, but one of the most popular pizza types was the Pepperoni pizza from the New Yorker range, a giant 16 inch pie that packs a whopping 2256 calories — about 10 per cent more than an average adult man needs in a day.

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The habit of drinking at home was also observable in corporate accounts published this past week.

Redcape Hotels, a listed company that owns 32 venues and 21 bottle shops saw its full-year revenue decline just 9.1 per cent to $259.3m despite the lockdown, while its off-premise sales revenue increased by 4.1 per cent to $50.1m.

Coca-Cola Amatil, which saw its revenue decline by 8.8 per cent to $1.29bn due to the closure of higher-margin distribution channels like restaurants, saw a 10.8 per cent growth in the sale of its spirits.

Illion and alphaBeta’s data shows alcohol and tobacco spending remains 38 per cent higher than normal, with an extra $157 and $219 spent on the substances by recipients of the first and second tranche of early super withdrawal.

Coca-Cola Amatil managing director Peter West said even as venues reopened, at-home ­alcohol consumption remained strong. “Our alcohol business grew volume by approximately 19 per cent in July, as on-premise outlets reopened and socialising resumed,” Mr West said.

“There was also ongoing strong growth in at-home consumption of spirits, a trend that we’ve noticed since the second quarter of 2020 and an increase in demand for premix.”

The Australian fixation for gambling remained strong throughout COVID-19. Gambling spend remains 95 per cent above normal, with recipients of the second tranche of early super withdrawal betting an extra $327 within a fortnight of receiving their money

Tabcorp’s annual results show that venue closures didn’t deter punters, who turned instead to lotteries: like-to-like lottery sales increased between 15 per cent and 30 per cent during the COVID-19 shutdowns, the company said.

Revenues from the lotteries and Keno were $2.92bn, up 1.8 per cent, and EBITDA was $542m, up 5.7 per cent, the ­company said, with Australians turning to online platforms to get their fix.

More than 400,000 Australians became registered lottery players during the year, taking the total number to 3.7 million players — nearly 15 per cent of the ­population — while digital sales jumped by 4.5 per cent to account for 28 per cent of all lotteries ­turnover.

In an investor call, Tabcorp managing director Sue van der Merwe said half of all new registered players were between 18 and 40 years of age.

“The other thing that is very interesting and very positive for us is the age and demographic of those players,” she said.

“So, they were spread across all the demographic groups, but the highest was in the 31 to 40 year age group and just under 50 per cent of the new customers were actually between 18 and 40 years of age.

“So, very happy about that, very positive statistic for us.”

The games that grew the most in popularity over the year — Powerball and Set for Life — have some of the longest odds of any game on offer.

And despite the wagering business suffering declines as sport leagues across the world shut down, Tabcorp’s digital wagering turnover grew 3.8 per cent to $7.1bn, exceeding retail wagering takeover for the first time in the company’s history.

NAB chief economist Alan Oster said relatively high levels of discretionary spending will begin to trail off as the government cuts back its COVID-19 stimulus.

“We’re currently seeing the government spending, people selling assets, and in particular people using money withdrawn from their super funds to buy things,” Mr Oster said. “But the problem is, people can’t access their super forever — people have had their two hits. And although they are not getting rid of JobKeeper yet, they are winding it down.”