Endeavour Group upbeat on premium wine spend after Cape Mentelle buy

World News

The boss of drinks retailer Endeavour Group says fans of quality beverages are still more than willing to spend on a good drop, as the company snaps up iconic Margaret River winery Cape Mentelle for its fine wine portfolio.

The Dan Murphy’s operator confirmed on Wednesday it had inked a deal with luxury goods behemoth Moët Hennessy to buy Cape Mentelle, which was founded in 1970 by David Hohnen and his brothers Mark and Giles.

Endeavour Group will add Cape Mentelle to its Paragon Wine Estates portfolio.

Endeavour chief executive Steve Donohue said the group had been on the lookout for a Margaret River operator to include in its stable since launching Paragon Wine Estates – which already includes McLaren Vale’s Chapel Hill Winery and Shingleback Wines – in 2019.

“They [Margaret River brands] don’t come along very often – it was an absolute stroke of luck we were able to acquire Cape Mentelle,” he said.

Endeavour has worked to get a foothold in the premium wines market over the past four years since buying the Chapel Hill business. The Cape Mentelle deal is the company’s eighth purchase.

The company is upbeat about the brand strength of Australian vineyards both for domestic consumers and overseas, even in the face of rising cost of living pressures across the board.

Monthly consumer price index data released by the Australian Bureau of Statistics on Wednesday put inflation at 7.3 per cent for November, with alcohol prices up 4.2 per cent compared with November 2021 and food prices up 9.4 per cent.

But Donohue said that consumers still want to splash out on small indulgences, like a nice bottle of gin or higher-end wine, even as inflation continues to bite.

“Relative to some other indulgences, it remains affordable,” he said.

He said that it was clear Australians had “enjoyed a very social Christmas”, with shoppers taking advantage of deals for premium products during this period.

Endeavour Group CEO Steve Donohue said “relative to some other indulgences”, alcohol was remaining affordable.Credit:Eamon Gallagher

The pub meal has also been a winner for the company over the summer period with a strong bounce-back in its pubs business.

“The dining occasion that the hotel affords people in the equation of quality and price has really captured people,” Donohue said. “The affordability of a pub meal has meant we have been run off our feet.”

The biggest challenge for pubs over summer has been securing enough chips amid a national potato shortage after extreme wet weather in 2022 – but Donohue said the group was working closely with suppliers to resolve this.

Cafe and restaurant spending has been soaring since COVID lockdowns lifted in late 2021, but retail sales figures released on Wednesday showed that growth had slowed to 0.1 per cent for the month of November.

Donohue acknowledges the outlook is uncertain – but noted that across the Dan Murphy’s business, the promise to offer the lowest prices in the market puts it in a strong position.

“I think it’s very much a watching brief. There’s a degree of volatility that may arise ahead – but people are taking comfort in our lowest price guarantee,” he said.

Endeavour Group shares remained flat on Wednesday, gaining just 0.16 per cent to close at $6.31.

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