Endeavour Group, the largest retail drinks and hospitality company in Australia, is changing tack to focus on cost reduction and value-driven retail.

The update comes as part of a strategy update to its investors, not long after the group had seen its profits contract in the wake of heavy discounting at both BWS and Dan Murphy’s.

But the group’s complex portfolio, comprising those two retailers, ALH Hotels, and its own assets, is about to get simpler. 

“We examined the business through a number of lenses and have made the tough choices required to deliver the group’s next phase of growth,” CEO and MD Jane Hrdlicka told investors.

These “tough decisions” refer to plans to deliver $300 million in savings by fiscal 2029, a third of which are set to come to fruition by the end of 2027. One significant portion of these savings looks set to come from exiting the “majority of its existing winery and vineyard portfolio”, which the group said includes Chapel Hill, Oakridge, and Josef Chromy.

At the same time, the group will be investing in its hotel network while simplifying complexity and reinforcing “price leadership” at the two liquor retailers.

“With a disciplined focus on customer value, a targeted step-up in hotel investment, a hard eye to cost, and a simplified asset base, we have begun to execute our transformation,” Hrdlicka added.

“There is significant untapped potential in Australia’s best retail liquor brands and hotels, and we now have the roadmap in place to ensure that potential is fully realised for our customers and our shareholders.”

Earlier this month, Endeavour had disclosed the additional cost pressures that it was experiencing due to the Middle East war and subsequent pressures on global supply chains. During this, it warned shareholders that it expects to incur around $6 million to $8 million of additional fuel and freight-related costs in the financial year.