Woolworths to Separate From Poker & Alcohol Online
One of Australia’s largest supermarket brands is currently undergoing a major restructuring effort. The plans include the separation of alcohol and poker. The plan is currently being voted on by the company’s principal shareholders. If approved, the company will release its Endeavour Group, which contains the division responsible for poker machines, alcohol, hotels and nightclubs.
The idea is quite simple and will ensure that the Woolworths brand maintains its operational efficiency within the supermarket groceries business. For the many millions of Australians who have become accustomed to the Woolworths brand deep association with poker gambling, this move will be unexpected and will take some time to adjust.
This week will see the proceedings begin within the group of shareholders responsible for enacting the three-stage restructuring plan. The Woolworths corporation is for sure about to undergo fundamental changes at all levels of the organization. Initially, the poker operation within Woolworths will be transferred to the newly formed Endeavour Group. This newly formed spin-off entity will completely take control of the nightclubs, hotels, pubs, bars and poker machine venues – relinquishing the responsibility entirely from Woolworths. It is being widely analyzed in the Australian business commentary publications, with analysts billing this as the biggest re-structuring in the long history of Woolworths.
The initial forecasting by the entities currently serving as the majority shareholder in Woolworths suggests that the new satellite organization that will launch out of the ashes, Endeavour Group, is set to take control of the Australian drinks and hospitality business entirely. Economically, this is also huge, the newly formed Endeavour will control a market worth over AU$10 billion and expect to bring in revenues of over AU$1 billion. After the separation is complete, Woolworths will own an 85% share in Endeavour Group, making them firmly in control of the board and free to exercise any agenda they see fit for the new company.
Succumbing to External Pressure?
The announcement to differentiate the supermarket business from the gambling and alcohol serving divisions of the Woolworths business has not gone unnoticed by those that vehemently campaigned for this eventuality. The pressure to distance Woolworths from casual poker gambling has been growing from various groups including investors, anti-gambling charities and politicians for several years. But since the details of the split have been made public, it is obvious that the fiscal reasons are the primary motivation.
At the time the company announced its intentions to separate poker machines and alcohol drinking from the main Woolworths business enterprise, the news was welcomed by anti-gambling groups and investors. However, the CEO of Woolworths Brad Banducci does not seem to share this sentiment, in fact, he was downplaying the significance of this move by the firm, and commented.
The time to separate our supermarket and leisure divisions had been looming for some time. In order to achieve the necessary growth targets, it was essential to make this move, and we are pleased with the hard work and cooperation of all those who helped us achieve this.Brad Banducci, CEO Woolworths
With this dissociative language being flippantly put into the public domain by the Woolworths CEO, many critics are feeling disheartened. The reality is poker machine gambling will become significantly harder under the new corporate structure of Woolworths, and yet, advocates of gambling restrictions are unsatisfied. Time will tell how impactful this move will be. Removing alcohol and gambling elements from a business that primarily focuses of its retail supermarket vertical as the primary revenue stream is a logical step and one that will surely be paying dividends in the coming years.
The Future Divergence of Endeavour and Woolworths
Although these two organizations will be inherently different, with business operations in industries that hold completely opposite sets of challenges and obstacles, Woolworths as an entity will remain completely behind the driving wheel. By merging its leisure and hospitality segments into an external company, the firm can be allocated more abundantly the resources so desperately needed to fuel a supermarket chain currently occupying the position of market leader in Australia.
Endeavour will be a new venture – having already established a formidable reputation within the nightclubs, and hotels business, the natural succession that includes poker gaming and alcohol will slot neatly into the already burgeoning portfolio of business verticals. The main objective now will be to ensure that revenue targets are continuously being met, regulations and ethical guidelines are being kept up with, and the business continues to make investments into the development of its own staff.
But perhaps the greatest concern of stakeholders in the next years will be to improve the ethical standards that the company operates within. Under Woolworths, the newly formed Endeavour group will have to shake off the legacy of the concerning allegations filed against them in New South Wales of illegal and unethical behavior. The new company structure will serve as an adequate vehicle to re-establish the brand and gain back the trust of the customers they have squandered so often in the previous years.