Dan Murphy’s, BWS owner Endeavour records growth as cost of living weighs

Patrons are continuing to toast the end of Covid-19 lockdowns as Dan Murphy’s, BWS and pubs owner Endeavour Group reveals a surge in sales.

Endeavour Group chief executive Steve Donohue, whose liquor chains include Dan Murphy’s and who operates a portfolio of more than 350 pubs, believes consumers are still viewing a night out with friends and family or glass of wine as a “small indulgence” and as such among the last expenses to be cut from household budgets.

Unveiling the group’s latest quarterly sales performance on Tuesday Mr Donohue said drinkers were however still looking for value which had placed a halo around the Dan Murphy’s ‘price beat’ guarantee and helped fuel growth of its My Dan loyalty card that in the quarter hit 5m users.

This helped drive a return to sales growth for its flagship retail liquor chains Dan Murphy’s and BWS with Australians also continuing to socialise with friends and family at their local bars to lift hotel sales.

Cost of living pressures remain top of mind for many consumers when they drop into a Dan Murphy’s to pick up a bottle of wine or case of beer or when they enjoy a meal at a pub, with Endeavour focusing on a range of offers at various price points to keep patrons coming through the door.

In its trading update Endeavour said that group sales for the third quarter rose 3.7 per cent to $2.83bn.

For its retail arm – which owns its Dan Murphy’s and BWS chains – sales rose 1.2 per cent to $2.35bn – and at its portfolio of 353 pubs sales rose 18.5 per cent to $480m.

Sales at its 1437 BWS stores and 264 Dan Murphy’s outlets returned to growth in the quarter after falling 3.7 per cent in the first six months of fiscal 2023, with that slide reflecting the ending of pandemic lockdowns that saw liquor consumption shift from in the home to venues such as pubs, hotels and restaurants.

Mr Donohue said customers were viewing a glass of wine or meal at a pub as an affordable treat or indulgence that could be made room for in household budgets even if interest rates, rents and other living expenses were rising.

“On the hotel experience, there is the familiarity, the value and the quality that you get in the hotel experience and I think on a per-drink basis or a per-bottle basis it’s a really small indulgence for a lot of people and therefore, one that perhaps isn’t the first on our list to give up,” Mr Donohue said.

“And what we do see is that reference to how much do I want to pay for convenience and really the overarching message is that we are seeing a stronger appetite as ever before for the lowest price in the market, which is what Dan Murphy’s guarantees for it’s members every day.”

In the March quarter update Endeavour said as the business continued into fourth quarter trading conditions had remained generally consistent with the third quarter.

“This quarter both segments were in growth, with stable trading across our portfolio compared to the Covid-19 impacted prior year.

“Australians love socialising and our network of brands are a go-to for consumers, whether they are enjoying a great value meal at one of our hotels, or taking advantage of the best prices on a great range of drinks.

“Our retail sales returned to growth in December and have continued to track ahead of last year over the third quarter.”

In-store sales at Dan Murphy’s and BWS drove this, growing by 2.8 per cent in the quarter and complementing this was a trend towards pick-up which represented 53 per cent of online sales in the period, reflecting the convenience of its omni channel offering.

“As we look ahead we continue to closely monitor customer choices in the context of the macroeconomic climate. We remain confident that we offer a great breadth of options and value for all social occasions and we will continue to tailor our offering as the environment requires,” Mr Donohue said.

He said at its retail arm promotional activity in the liquor sector remained elevated, particularly in the online channel. The shift back to physical stores at the end of lockdowns saw online sales growth fall 14 per cent.

In the quarter there was a continued trend from French champagne into Australian sparkling wine as the price of champagne had price hikes of 10 to 15 per cent.

“It has reached that inflection where people are willing to try premium Australian sparkling and in so doing are discovering it is a very good product and are sticking with it.”

During the quarter, Endeavour opened two Dan Murphy’s stores, six BWS stores and closed three BWS stores, ending the quarter with 1,701 stores.

At its hotels and pubs arm the third quarter increased by 18.5 per cent to $480m, with strong growth of 31.5 per cent in the first five weeks, followed by a growth rate of 11.5 per cent in the final eight weeks. Weekly sales were relatively stable across the period, however comparatives to last year are distorted as we cycle an unusual trading period.

Comparable sales increased 16.3 per cent for the quarter, with strong year on year growth in bars, food and accommodation as we cycled pandemic-related restrictions and team availability challenges last year. Patronage was further supported by the return of live sport and entertainment. Gaming sales growth continued to normalise from the elevated levels seen in the second half of 2022, reflecting the cycling of the heightened demand in the prior year.