This was published 4 months ago
Hard Solo and Gen Z are driving a new wave of lemon drinks, says Endeavour boss
By Jessica Yun
The popularity of the controversial Hard Solo, now known as Hard Rated, and the drinking preferences of Generation Z have hailed a new boom in lemon drinks, says the boss of Dan Murphy’s and BWS’ parent company after unveiling a modest rise in group sales and earnings.
Endeavour Group chief executive Steve Donohue said Hard Rated had precipitated higher demand not only for lemon-flavoured premixed drinks but also across the broader beverages category.
Endeavour Group chief executive Steve Donohue says spritzers are coming back into fashion.
“People are loving anything that is refreshing and lemon flavour is one of the most refreshing drinks out there,” Donohue said. “What we’ve also seen is an explosion in demand for limoncello, for example. We just about doubled our sales in limoncello in Dan Murphy’s in December.”
Gen Z, in particular, are eager to reach for more innovative, convenient drinks and tend to prefer lighter, more refreshing beverages in smaller sizes, such as 330ml cans instead of 750ml.
The next type of alcoholic beverage to come back into fashion would be spritzers, he said.
“The old wine spritzer that was big in the ’70s is going to be back, and it’s already demonstrating that it’s back through some of the initial data that we’re seeing.
“Lighter, refreshing styles with fruit characters in them – this is what customers are looking for.”
Endeavour Group, which operates liquor stores and pubs and is the largest poker machine operator in the country, notched a 2.5 per cent uplift in sales to $6.7 billion while group earnings lifted 2.6 per cent higher to $661 million. Meanwhile, net profits declined 3.6 per cent to $351 million for the six months to December 31 as interest rates bit into financing costs.
The company had a “record Christmas” and a 2.7 per cent lift in hotel sales as the ASX-listed pubs and clubs owner improved their food, drinks and social events offerings.
Donohue signalled that being price-competitive in its liquor stores and pub meals was a key focus for the business as Australians continued to seek value for money while contending with higher costs of living, which he said hadn’t resulted in a decline in foot traffic to its venues.
“[We’re] very focused on the everyday classics and the experience of the hotel and making sure we continue to deliver the best price in town on those.”
The chief executive is watching consumer sentiment closely for signs of improvement and said that expectations of interest rate cuts in the second half of the year and the coming stage 3 tax cuts “augurs well for the category we’re in”.
The new year has been relatively subdued, with trading activity for the first seven weeks of the second half up 0.3 per cent, which MST Marquee senior research analyst Craig Woolford said pointed to softer sales trends. Endeavour’s share price was down 3.1 per cent in the afternoon as investors digested the half-year figures.
The $9.1 billion company has been under pressure lately from investors and sustained ongoing public criticism from its largest shareholder, pub baron Bruce Mathieson, leading to a fiery annual general meeting in October and ultimately the resignation of chairman Peter Hearl as well as Mathieson’s son, Bruce Mathieson Jnr from the company board.
Investor scrutiny led to Endeavour refreshing its performance targets. It is now targeting over $290 million in cost savings by fiscal 2026 and an annual target of at least 10 per cent shareholder value creation from 2026.
Endeavour’s poker machine earnings have been flat amid the company’s decision to implement Victoria’s gaming reforms ahead of schedule, which Donohue said was an “obvious drag”. The company does not break out its earnings from poker machines.
Taylor Swift’s Eras Tour has also lifted occupancy rates among many of Endeavour’s hotel venues in Melbourne and Sydney over the past two weeks.
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