Sales at Metcash are continuing to grow – underpinned by food, alcohol and hardware – but the wholesale distributor has warned higher interest rates are pushing consumers to cheaper products and impacting confidence.
Peter Birtles, the company’s chairman, told shareholders ahead of the Metcash annual meeting on Friday afternoon that illicit tobacco was also becoming a major problem for its independent chains IGA and Foodland grocery franchises.
Total sales across Metcash have increased 1.7 per cent in the 18 weeks to September 3, the company said. Its food segment, led by IGA, gained six per cent when tobacco is excluded. It rose 1.1 per cent including tobacco sales. This is a slowdown from the reported sales of 1.9 per cent growth in the first seen weeks of the year.
Wholesale price inflation excluding tobacco and fresh produce moderated from 8 per cent in May to be up 6.1 per cent in August.
Metcash chairman Peter Birtles says sales are being impacted by illegal tobacco. Peter Rae
Metcash confirmed overall tobacco sales have fallen 11 per cent so far this year compared with a fall of 6.8 per cent over 2023, which it attributed to an increasing trade in illicit tobacco and a decline in smoking.
The Australian Financial Review in August flagged this was a growing issue for independent chains led by IGA.
Supermarkets wholesale sales excluding tobacco have increased 6.2 per cent so far this year. More consumers are shopping around for promotions and discounts, the company said. “While demand continues to be solid in all pillars, the impact of higher interest rates and cost of living is impacting consumer confidence and the behaviour of some customers and shoppers in our retail networks,” Mr Birtles said.
He added that
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