Home brand pasta, liquor is up at Coles as shoppers go back to basics

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Supermarket giant Coles has recorded bumper sales of home brand pasta, rice, oil and liquor, with incoming chief executive Leah Weckert saying shoppers are gravitating towards budget options for the basics.

Coles confirmed in an update to the ASX that inflation is moderating across its stores compared to the previous quarter. Price inflation hit 6.2 per cent for the three months to the end of March, compared with 7.7 per cent for the second quarter.

Shoppers are buying home brand products.Credit: Louise Kennerley

The company said there was some deflation among certain products.

“The largest drivers of the moderation were in fresh produce, with some key lines in deflation, including lettuce, cucumbers and carrots and in the meat, deli and seafood category,” the group said.

Friday marks the last day on the job for Coles chief executive Steven Cain, who hands the reins over to Leah Weckert from Monday. The pair pointed to a spike in home brand product sales when discussing the group’s third-quarter results on Friday.

“We are seeing quite a shift into own brand particularly for those customers [on] a budget. Own brand pasta sales [are] up 40 per cent year-on-year,” Cain said.

Leah Weckert will take over as CEO of Coles Group from Steven Cain on May 1.Credit: Martin Keep

In a call with analysts, Weckert said shoppers were increasingly trading down when shopping for core pantry ingredients.

“You are seeing customers change behaviour – they are focused on their budget, they are optimising their grocery spend. [There is] much more meal planning, batch cooking, to make meals go further,” she said.

The home brand growth trend extends to alcohol as well, with the group reporting a 15.2 per cent increase in sales across exclusive liquor brands.

Cain said the group had seen particularly strong growth among “ready to drink” pre-mixed products and spirits.

“What we’ve got now is a very good, exclusive … brand offer in all of the categories in liquor,” he said.

Coles reported a 7 per cent jump in third-quarter supermarket sales on Friday, hitting $8.6 billion, while liquor sales were 2.6 per cent stronger to $801 million.

The company said its promotional offers and own-brand products helped power the results, resulting in an 11.4 per cent jump in own-brand sales revenue. Coles’ shares opened slightly stronger but declined by 0.2 per cent to $18.42 in the first half hour of trading.

Exclusive to Coles brands delivered $2.9 billion in sales for the quarter and the company launched 227 own-brand products onto shelves over the past three months.

In his last quarterly update for the business before his retirement, Coles boss Steven Cain said the group’s budget focus had helped drive sales volumes during the quarter.

“At a time when cost-of-living pressures are mounting for many customers, the unique combination of Australia’s largest own-brand range, hundreds of dropped and locked prices, thousands of weekly specials, free MasterChef cookware and Flybuys points has successfully driven sales and volume,” he said.

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