Commentary: Australia: Woolworths to separate from its liquor and gaming interests

Author: Jason Pallant, The Conversation, Published on: 17 August 2019

"Getting out of liquor and pokies will cost Woolworths, but deliver lasting benefits", 4 july 2019

The Woolworths Group...announced...it will separate from its liquor and gaming businesses. This should be be welcomed as a bold step showing its stated commitments aren't just PR gimmickry.

...[S]everal Woolworths-owned hotels in New South Wales were accused of serving free drinks to encourage patrons to continue gambling.

As much as Woolworths might have done to ensure these business divisions operate as responsibly as possible, there is a stigma associated with their profits. They do not fit easily with "family-friendly values".

...Continuing to operate these businesses would represent a clear reputational risk for Woolworths at a time when consumers increasingly expect organisations to walk their talk and demonstrate they make a positive impact on society.

...At the aggregate level, perceptions of big companies like Woolworths are consistently negative. More consumers think they do little to nothing to contribute to the greater good than those who think they make a positive impact. There is clear desire for businesses to contribute more to society.

...The Woolworths Group will first combine its pubs and liquor retail divisions into one, then spin off that division into a separate company, listed on the Australian Stock Exchange.

It will be Australia's largest drinks and hospitality businesses, with expected annual sales of up to A$10 billion.

Losing the revenue will cost Woolworths. But the potential long-term benefits are considerable.

The separation presents an opportunity for the group to create a clearer perception among consumers of the company's values – a smart move in an evolving marketplace of empowered consumers demanding organisations be social leaders.

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Related companies: Woolworths Group Australia