Emerald Chamber of Commerce Inc

Last drinks as Woolworths ditches Liquor

Some are wondering whether the name change may be the first step towards Woolworths hiving off the liquor business, through a demerger, IPO or trade sale. Gabriele Charotte

By Sarah Thompson & Joyce Moullakis

Woolworths has finally confirmed one of the worst kept secrets in the liquor industry, the restructuring of its $8 billion liquor business under a new brand, Endeavour Drinks Group.

Woolworths told suppliers and partners on Wednesday the name change, which takes effect in June, better reflected the evolving needs of its customers and its vision for the business.

But statements by Rose Scott, Woolworths' general manager of merchandising and marketing for Woolworths Liquor, also left some wondering whether the name change may be the first step towards Woolworths hiving off the liquor business, through a demerger, IPO or trade sale.

"Woolworths is synonymous with the customer facing supermarkets food business," Scott said. "Our association with them through ownership is strong and proud, but it is time for a story about us, for us."

"We need to separate our ownership from the strong customer facing brands that sit underneath it (Dan Murphy's, BWS, Cellarmasters, etc.)," she said.

While Woolworths has been losing market share in supermarkets, its liquor business has gone from strength to strength, underpinned by strong growth at Dan Murphy's, and sales are expected to exceed $8 billion this year.

However, Woolworths' long suffering shareholders believe the value of the liquor business is not fully reflected in Woolworths' market value and the retailer should consider spinning off all of parts of the business to realise some value.

The problem has been putting a value on the liquor business. Woolworths reports liquor sales but does not disclose liquor earnings. The name change to Endeavour may prompt analysts to sharpen their pencils and come up with a valuation.

A Woolworths spokesperson denied that Woolworths planned to spin off the drinks group. However, market watchers have not ruled out a demerger further down the track, especially if Woolworths gets the supermarkets business firing again and is less reliant on liquor.

There has also been speculation that Woolworths could demerge, BIG W, once it has been turned around, and its petrol business.

This story has been brought to you by the Emerald Chamber of Commerce Inc.

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