Planning your growth strategy into Australian Retail through a deeper understanding of the leading retailers financial reporting and market outlook – Metcash FY25 Final results

The latest round of financial reporting in the Australian grocery saw Metcash the leading wholesale Food and Drink supplier into the independent retailers in Australia announce their FY25 results. With the independent grocers recognised as an important channel for new international or domestic brands looking to launch it’s a strong indication of the channel’s health, customer preferences and trading outlook to help underpinned your approach to exporting. In a highly competitive market this update provides an essential insight for UK Food and Drink businesses targeting Australia for strategic growth.  Metcash play a critical role in supplying the independent retailers which accounts for ~17% of the $140bn market and into the Food Service Sector through its recent acquisition of the second largest national provider.

Results summary

• Metcash report to have outperformed the market in growth and have solidified a foundation to be competitive in grocery moving forward
• Food business has evolved becoming larger, more diverse and more resilient
• Total food sales $8.8Bn up 20.8%,
• With Superior Foods included from 3 June 2024, total sales reached $10.6Bn and growth of 11.1%
• Superior Foods total sales $1.16Bn up 4.6%, with 20% of the major contracts renewed
• Private Label growth of 7.6%
• More products sold on promotion than non-promotion reflecting the consumers focus on value
• Liquor outperformed the market with 3.4% growth total sales $5.3Bn and the beer category driving the growth as consumers shop for value

Looking ahead FY26 First 7 weeks trading

Total Group sales up 4.7%

Total Food Sales up 17.0%

Total liquor sales up 1.5%

A positive outlook with momentum continuing

A closer look into Metcash Strategy and Progress

• Under the Destination for Food and Drink strategic focus the key callouts includes growing Private Label, delivering on value across both food and liquor pricing, supporting the independent sector and their differentiation in the market whilst continuing to bring innovative, new products to the market fast. (It’s worth noting that Metcash Private Label offer is significantly less that Coles and Woolworths creating demand for suppliers and new supplier capability)
• CEO statement included recognition for solid performance, reflection on continued investment in value and enhanced customer experience across the independents, alongside the performance of their Food Service model

What does it mean? Is it a good time to target the Australian market for UK-based food and drink manufacturers or brand owners?

Yes, in our opinion there are 2 strategies when looking to engage Metcash in the market that should appeal to UK based food and drink businesses targeting the Australian market. Firstly, the demand for branded innovation to inspire consumers whilst delivering a clear point of difference in a highly competitive retail landscape remains a key trading objective.  Secondly the growth in Private Label and the access needed for best-in-class contract manufacturing as they look to close the Private Label gap vs Coles or Woolworths

Firstly, through a deep understanding of the target category taking proven innovation from other established markets into Australia or products that have a clear USP should appeal to buyers.

Secondly is understanding the strategic growth in Private Label and the opportunity this creates for your business, as buyers target best in class contract manufacturers, proven innovation capabilities, lowest cost operators or suppliers that can deliver on the increasingly demanding responsibly sourced agenda.

There is also the hybrid combing the launch of your brand alongside Private Label supply to drive growth into the total category.

The consistency of messaging regarding Private Label and its strategic importance creating demand for innovation that can support the ongoing momentum behind Private Label growth.

In summary the opportunity for innovative or exciting UK Food and Drink businesses targeting growth in the Australian market continues to look attractive. To succeed it’s essential to take a strategic approach to retailer engagement understanding the competitive landscape, key marketing messages resonating with consumers and have a route to market through a robust supply chain solution.

Prof. Consulting Group.

Are you looking to break into the Australian grocery retail industry? Look no further than Prof. Consulting Group! With our team of industry-leading experts and extensive range of services, we’ll help you take your business to the next level.

For more information or to discuss how Prof. Consulting Group can support your business, please contact us now.