Double-digit rise in liquor sales
CHEERS TO CONVENIENCE: BIG GROCERY RETAILERS INCREASE IN-STORE DRINKS NETWORKS
Volume consumed has been flat for past two to three years.
Despite the tough trading environment and the fact that South Africans aren’t necessarily drinking more, big retailers are making a lot more money from liquor sales.
Leading the pack is Shoprite Holdings, which saw its alcohol sales increase 25.1% in the year to June. Tops at Spar saw an increase of 19.3%, for the six months to March, while Massmart and Pick n Pay also show double-digit growth in their latest results.
Evan Walker, portfolio manager at 36One Asset Management, pointed out that these retailers have managed to do this despite alcohol sales volumes having been largely flat for the past two years.
And according to Wines of South Africa, wine consumption grew just 0.7% last year, resulting in volume consumption remaining at just over four million litres for the year.
“The volumes are flat and, to some extent, have been stagnant for the past two to three years.
“South Africa has had topline inflation, which has resulted in consumers paying more to drink,” Walker said.
“If you look at the numbers, there is a little bit more inflation in the liquor market and a component of higher taxes that have come through,” he said, adding that excise tax was being pushed on to consumers.
Another industry source, who chose to remain anonymous, said this had resulted in retailers relying on revenue growth.
“Top line is all good, but what is it doing to their margins?
“Because when you look at their margins, they are not necessarily going forward.
“They need to make money off the revenue growths, as well.”
Both commentators agreed the presence of liquor retail outlets has made it easier for consumers to make liquor purchases while grocery shopping. The big chains have all increased their liquor store networks. – melittan@citien.co.za