The Australian Association of Convenience Stores (AACS) has launched its Mid-Year State of Industry Report at events in Sydney and Melbourne.
The report, produced by CMA using data from Circana combined with the unmeasured non scan market, revealed that the channel faced a challenging start to the year, with total sales value increasing nationally by +0.7 per cent but down -1.2 per cent in units, due to inflation boosting value but also impacting unit sales. Total channel sales excluding tobacco grew by +4.6 per cent.
Theo Foukkare, CEO of AACS, said overall sales performance excluding tobacco, whilst challenged, is still showing good positive growth in confectionary, packaged beverages, foodservice and most other leading categories.
“Unit performance continues to be the biggest challenge as customer traffic into the channel is being affected by the extremely competitive discount environment across the grocery and quick service restaurant channels.”
NSW was the hardest hit, with a loss of -1.8 per cent in value which affected the overall national performance. On the flipside, WA is leading the nation with +6.6 per cent value showing improvement after a few slower years. Tasmania was the fastest performing state growing by +7.3 per cent driven by the limited availability of illicit tobacco in the state.
The Tobacco category remains the biggest challenge with a -13.8 per cent decline in sales. The black market for illegal tobacco and nicotine vaping products continues to play a significant role in this decline.
Foukkare said that AACS will continue to advocate with Federal and State Governments to address the limited enforcement of the illegal tobacco and vaping markets.
“A national licensing framework with enforcement managed directly by the Federal Government bodies is urgently required to bring this under control.”
Packaged Beverages built on its strong momentum of +12.2 per cent value rise in 2023, with a value increase of +5.5 per cent. Energy and sports drinks are the two subcategories that are continuing to perform strongly in this category, helping Packaged Beverages move to become the largest category in value performance, representing 28.7 per cent of the channel’s sales.
The Foodservice category continues to grow even after six very strong years of double-digit growth, however unit sales continue to be affected through the cost of living challenges.
The report also featured a ‘State of Play’ in which leaders across both the retailers and suppliers were asked for their views on the current convenience outlook. The view has shifted slightly since the start of the year, where more than half considered the outlook positive at 58 per cent, to 40 per cent viewing the outlook as positive.
Suppliers generally had a more positive outlook on the current state of play, while retailers were slightly more pessimistic.
“Cost of living, inflation and higher interest rates are having a material impact on consumer sentiment and spending. Value is most certainly king in the customers mind at the moment. Inflation impacts COGs and also operating/labour costs – it’s a double crunch and particularly difficult in a challenged market,” said one retailer leader.
Following the presentation of the report, attendees were invited to field questions to a panel of industry leaders. The open discussions allowed for guests to voice their queries and concerns to an informed panel, leading to insightful discussions on the challenges and opportunities that both suppliers and retailers face.
In Sydney, Brett Barclay, Nicola Richardson, General Manager of Retail, eComm, and Brand Partnerships at Asahi Beverages, Alexia Horley, General Manager – Australia Foods at PepsiCo, and Darren Park, CEO of UCB, provided their unique insights to the audience.
In Melbourne, the panel featured Barclay, Matt Keogh, EGM Retail at 7-Eleven, Haydn Tierney, Director at Bowser Bean, and Camilla Warnock, Impulse and GTM Director at PepsiCo Australia and New Zealand.
This article has been authorised by the Australian Association of Convenience Stores (AACS).
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