The gourmet food business founded by Australian chef Maggie Beer is aiming to convince Australians its premium-priced products are worth the extra dollars, as it stares down a gloomy economic outlook where cost-conscious consumers are spending down on private-label and budget brands.
Maggie Beer Holdings (MBH) chief executive Kinda Grange on Monday said higher freight and labour costs, rising inflation and interest rates had eaten into the fine food company’s profits, which fell 68 per cent to $800,000 for the 2023 fiscal year.
The new financial year has started much in the same vein for the company.
“The trends are looking the same so far,” said Grange, noting that the company tends to trade better in the second quarter in the lead-up to the festive season.
“We’re really focused on ensuring that we have a fantastic plan for Christmas and execute that really well.”
The ASX-listed food business, known for products such as pheasant pate, quince paste, bone broth and ice-cream, had earnings decline 69.4 per cent to $3.2 million and net sales slide backwards by 1.4 per cent. The company has decided not to declare a final dividend.
Investors were unimpressed with the update, sending the share price plummeting 13.3 per cent.
Last financial year, the business was able to pass on price increases to customers, something it will consider doing again as operating costs pressures remain high.
“If we have rising costs in our business, then price is one of the levers that we might need to pull,” Grange said.
As a premium food business, MBH is precariously placed amid a retail environment where consumers are opting to spend less on their weekly grocery shop, not more. However, Grange ruled out the possibility the company would pivot away from its premium positioning in the market.
“The core of the Maggie Beer ethos is really high-quality ingredients and an uncompromising focus on quality and that comes at a cost,” said Grange. “We are not looking at developing around range that doesn’t fit with what the Maggie Beer brand is all about.”
The company, which is now predominantly an e-commerce business, will also have to drum up sales as the pandemic-driven online shopping boom fades, with consumers now shifting back to in-store shopping.
Maggie Beer products are primarily sold online and through the company’s Hamper & Gifts Australia e-commerce business, and sells a small selection of products through Woolworths, Coles, and David Jones. Grange flagged more “in-store activations” and “in-store promotions” to engage customers and lift sales.
Grange stepped into the top job in March this year and in June outlined a new five-year strategy to grow the business, which includes doubling down on organic dairy Paris Creek Farm (which MBH retained after failing to find a buyer), expanding the Maggie Beer product range and scaling Hampers and Gifts Australia.
The former Goodman Fielder executive is looking to lift sales by making the company less reliant on the busy Christmas period and entice customers to purchase products for at-home entertaining and dining.
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Source: Thanks smh.com