Retail market: liquor industry Briefing notes and sales support for news media sales teams

What’s in this deck? This deck is split into two sections: Section 1 An overview of the Australian retail market Media owners must understand the competitive environment and business needs of their clients in order to provide optimal advertising solutions. Section 1 of this deck won’t make you an instant expert, but it will help get you up to speed on the most important facts about the category. Section 2 Focus on bottle shops This report will focus on liquor retail. Additional reports will discuss other key retail sectors. Section 3 Support slides for sales presentations Every great sales presentation is tailored for each client, but there some points fit most clients within a category. Section 3 contains research about how consumers make alcohol purchases, and the contribution news media makes in the decision process.

Section 1 Retail market: an overview

Retail: core of the consumer economy Turnover: $24.9bn per month Over 134,819 retail businesses employing 1.3m people Sources: Australian Bureau of Statistics: 8501.0 - Retail Trade, Australia, March 2016. 6291.0.55.003 - Labour Force, Australia, Detailed, Quarterly, 2016. 81650 Counts of Australian Businesses, including Entries and Exits, Jun 2011 to Jun 2015.

Retail growth prospects for 2016 Retail growth was strong for most of 2015 despite less than expected growth for the Christmas/post-Christmas sales period. Forecasts for the remainder of 2016 are for continued growth albeit at a reduced rate. Source: www.trading economics.com/australia/retail-sales-annual/forecast; ABS

Retail: key sectors $24.9 billion/month Retail Food $10.1bn Household goods $4.4bn Cafes, restaurants & takeaway food $3.4bn Clothing, footwear & accessories $2.0bn Department stores $1.6bn Other retail Household goods (furniture, housewares, electrical/ electronic goods, hardware, building & garden supplies): 17% Cafes, restaurants & takeaway: 14% Clothing, footwear, accessories: 7% Department stores : 6% Food retail (supermarket/grocery, liquor, specialty food): 43% of all retail spend Source: Australian Bureau of Statistics 8501.0 - Retail Trade, Australia, March 2016.

Retailers: big spenders on advertising According to the latest Advertisers Report, retailers make up 4 of the top 5 advertisers, and 11 of the top 25. Retail accounts for 47% of total adspend for the top 25 advertisers. Retailers are also big spenders on newspaper media, accounting for almost half of the top 25 newspaper advertisers. Source: Ebiquity, 2014 Advertisers Report

Section 2 Liquor retail

Bottle shops: revenue Estimated Revenue: $10.0 billion (2015-16) Annual growth (2011-16): 3.2% Forecast annual growth (2016-2021): 2.8% Businesses: 2,305 Source: IBISWorld, Liquor Retailing in Australia, March 2016.

Alcohol consumption declining Falling alcohol consumption Per capita alcohol consumption has declined over the past six years. Liquor retailing revenue has remained fairly steady due to changes in the type of beverages purchased. Growth in premium categories and rising in-home consumption. Consumption outlook Alcohol consumption per capita is expected to decrease further through 2016. Source: Australian Bureau of Statistics, 4307.0.55.001 - Apparent Consumption of Alcohol, Australia, 2015.

What do consumers drink? Wine and beer dominate liquor sales: 63% of consumers (aged 18+) purchased wine or beer in the past month Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016.

What do consumers look like? Males aged 18 to 39: Favour spirits, cider and RTDs Males aged 40 and over: The largest market Greatest consumers of beer Women aged 18 to 39: Favour wine, cider and vodka Women aged 40 and over: Second largest market Greatest consumers of wine *Figures refer to alcoholic beverages purchased in the last four weeks. Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016.

Liquor retail industry: where do consumers shop? Liquor market dominated by grocery giants: Woolworths-owned Dan Murphy’s and BWS, and Coles-owned Liquorland and First Choice, account for 54 per cent of bottle shop consumers Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016.

The retail liquor landscape is changing Increasing Demand for off-premises alcohol Cider, spirits and premium beer Cider and craft beer are the fastest growing segments Demand for premium beverages Competition between retailers Online alcohol sales Per capita alcohol consumption Beer consumption Shift to premium beers has offset some of the profit lost due to declining beer sales Average industry product prices Decreasing Sources: Australian Bureau of Statistics, 4307.0.55.001 - Apparent Consumption of Alcohol, Australia, 2015; Inside Retail, Demand for online alcohol surges, March 2015; IBISWorld, Liquor Retailing in Australia, March 2016.

Section 3 Support slides for sales presentations

About these slides The following slides provide general supporting arguments to assist sales teams when building client-specific presentations. The purpose is to open discussion, to demonstrate a basic understanding of factors that drive liquor sales, and to show how news media can help to influence the sales process. These slides are intended to be used in a presentation after recapping the brief, and before presenting analysis and recommendations tailored to the specific client. Needless to say, they can and be should be adapted to suit your particular presentation requirements. Recap client/agency brief Supermarket industry support slides Client specific analysis Recommendations

9.1 million Australians shopped at a bottle store in the last month. Changing landscape The Australian liquor retail sector is performing admirably in the face of declining alcohol consumption. 9.1 million Australians shopped at a bottle store in the last month. Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016.

The liquor market: strong competition But…competition between liquor retailers is on the increase.

News media is here to help News media delivers large numbers of bottle shop consumers Advertisers can reach 94 per cent of bottle shop customers with news media – making it a powerful advertising platform for retailers. Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016; Nielsen DRM March 2016, People 14+ only.

Full strength reach Liquor store brands will reach their target market with news media advertising.  Regular drinkers are more likely to be male (59%) News media reaches 91% of males, including 94% of males who regularly enjoy a drink Drinkers are heavily featured in the socioeconomic group A, where they 44% are more likely to imbibe on a regular basis than those in the DE group. News media readers are more likely to belong to social grade A - 3.6 million of them read news media every month. Those who are married are 35% more likely to reach for a beer than those who have never married. With news media, advertisers can reach 95% of married people who regularly reach for a brew. Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016; Nielsen DRM March 2016, People 14+ only.

Drinkers are frequent and engaged news readers Newspapers rate No.1 for heavy media consumption in both regular beer drinkers and regular wine drinkers, indexing higher than any other media in comparison to all people. Regular beer drinkers are 26% more likely to be heavy newspaper readers (7+ issues per week) Regular wine drinkers are 37% more likely to be heavy newspaper readers (7+ issues per week) Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016.

Regular drinkers engage with digital news  Regular drinkers are more inclined than the general population to consume publisher content on digital devices The top 20% of spenders on beer, wine and spirits are 11 per cent more likely to read digital news media. Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016; Nielsen DRM March 2016, People 14+ only.

Readers value their favourite tipple News media readers are happy to spend big on their favourite tipple Some 35 per cent of digital readers say they buy their favourite brand of alcohol regardless of price. Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016; Nielsen DRM March 2016, People 14+ only.

Wine buffs Data shows that the majority of readers are wine buffs - some 45 per cent bought a bottle of wine in the last four weeks. News media reaches nine in ten of the top 20 per cent of spenders on wine. Digital readers are seven per cent more likely to be a top spender on wine. Community newspaper readers are 19 per cent more likely to shop at a specialised wine store. 95% of wine buffs who prefer Australian made, read news media every month Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016; Nielsen DRM March 2016, People 14+ only.

Readers are better prospects than non-readers News media readers buy more often than non-readers They are 16% more likely to have purchased their favourite drink from a bottle store in the last month than non-readers. Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016; Nielsen DRM March 2016, People 14+ only.

News media readers like to share their opinions Influence the influencers with news media News media reaches 92 per cent of people who are regularly asked their opinions about their favourite tipple and encourage people to buy because of a good experience. With news media, advertisers can reach 400,000 readers who are often the first person in their network to taste-test a new alcoholic beverage. And, 400,000 readers who regularly post or share comments about their experience online. Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016; Nielsen DRM March 2016, People 14+ only.

Print + digital: the perfect combination 79% Digital 74% The combined reach of print and digital news media: 94% of bottle shop customers Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending February 2016, Nielsen DRM February 2016, People 14+ only.

Client specific analysis & recommendations This is the point to bridge to a client specific discussion. Each presentation will need to be individually tailored to suit the client and their objectives, but the logical flow from here is to move on to Analyses that address the client’s specific situation, challenges and opportunities. Solutions using your inventory, giving clear reasons why they are appropriate to the client’s specific needs, and suggestions on how they can be used most effectively.