Coles' supermarket rival Woolworths sold out of petrol stations several years ago and earlier this year also sold its pubs business which, along with selling alcohol, was also a major gambling operation with tens of thousands of poker machines in its venues.
The sale is another sign of the growing importance of sustainable investing to fund managers in Australia.
At a minimum, most do ESG investing, where they consider the sustainability of an investment based on ESG measures. For instance, they might look at a coal miner and consider whether as a producer of fossil fuels its business model is unsustainable and therefore a risky investment. This doesn't mean the fund won't invest in coal companies, but it is less likely to so to avoid the risk of owning a whole lot of coal mines and no customers as the global economy decarbonises.
(These companies aren't always bad investments. Last week coal miner Whitehaven's share prices hit a record high as coal prices reached all-time highs on the back of a thermal coal price that has doubled in the last year. Whitehaven's shares have tripled in price this year).
Many funds are going further than just ESG analysis, urged on by retail investors who don't want to put their cash into fossil fuel companies, gambling companies and weapons manufacturers. These funds won't invest in those products at all, regardless if there is a compelling investment case.
Interestingly, Coles didn't mention ESG considerations or Scope 3 emissions in its release to the market. But there is no doubt divesting a business which sells as much as 70 million litre of petrol a week will vastly improve its environmental footprint.
Coles pointed out the petrol station business had the lowest return on capital of any of its businesses. It is reaping A$300 million from the sale and freeing up A$816 million of lease commitments, cash it can use to invest in its core supermarket business. The funds will help Coles improve its logistics and technology to make it more competitive in the online grocery shopping market.
One reason the two dominant supermarket chains entered the service station business a couple of years ago was to drive sales to their supermarkets by giving supermarket customers fuel discounts. Coles will continue with its fuel discount docket program under an agreement with Viva, but it's not as effective as it once was after the competition regulator capped discounts to four cents a litre – hardly worth bothering with, even with today's high petrol prices.
While Coles doesn't want petrol stations anymore, Viva sees strong potential in owning the properties.
Sales have been crimped by Covid lockdowns and their ongoing effect, but Viva expects demand to recover to pre-Covid levels "in the longer term".
And in Australia, petrol sales over the longer term look assured.
The nation has 21 million internal combustion engine vehicles and a million internal combustion engine vehicles were sold in the 12 months to the end of July.
Contrast that with just 40,000 electric vehicles sold in Australia over the past decade, and it's evident there is money to be made from selling petrol to Aussies for many years to come.
This outlook was reflected in Viva's share price on the day of the announcement – up 4.6 per cent.
We're rich!
Australians are the richest people in the world, according to the latest Credit Suisse Global Wealth Report.
The median wealth of adult Australians – the point at which half the population are richer and half are poorer – is US$273,000, ahead of Belgium, New Zealand and Hong Kong. There are now 2.2 millionaires in the country.
But these statistics are no cause for celebration. As with New Zealand, the rising wealth is all due to surging house prices. It doesn't do most of us any economic good.
If we are lucky enough to already own houses, our increasing wealth is locked up in our properties, so it's not improving our lifestyle in any way.
For the increasing number of Australians locked out of the property market, it means the dream of home ownership is further and further away.