The Chasm Between Woolworths Liquor and Coles Liquor Will Create Problems
Thursday, 3rd November, 2005
- David Farmer
An article in the Australian, of September 21st quoted some figures from Metcash the large grocery and liquor wholesalers. Metcash estimate the retail liquor trade to be worth $10 billion. With 400 new shops joining their independent network they now supply liquor to 1785 outlets. This will boost sales to $760 million and give them 8% of the retail trade.
What this report did highlight is the gap that has opened up between Woolworths liquor and rival Coles. Woolworths have 1302 outlets with sales of about $2.5 billion while Coles have 669 outlets for sales of about $1.7 billion. The combined total is approximately 44% of the retail trade.
What the report did not say is how rapidly this is changing. The battle between Woolworths and Coles was discussed back in June (What Does the Tussle Between Woolworths and Coles-Myer in Liquor Mean For Wine Consumers?) and the size of this sales gap should alarm suppliers. With the recent Woolworths purchase of the Taverner Hotel Group's 33 pubs in October, the gap is now a chasm. Woolworths have already projected sales for 2005-2006 of $3.5 billion so you can now make that $3.6 billion.
Recent news about the performance of the Coles liquor group is nothing short of alarming. We have been told that wine sales in South Australia are down 20% on the previous year. We also believe that the trading performance of the Theos group acquired in 2003 is disastrous. Can ever a business, said to have cost around $170-$180 million, been destroyed so quickly. At a guess we would be surprised if the Coles liquor group improves on last years figures for 2005-2006. Thus it is not hard to see this group that was so dominant in the 1990’s being half the size of Woolworths liquor in a few years, and possibly by 2007.
Problems like this happen when the talent at the top is trying to fix many, many other areas of retail. A few years ago Coles assumed that liquor was going so well that it was at least one area they did not have to worry about. How quickly that altered.
The light went on for Woolworths in 1999 when they purchased the Dan Murphy chain. For the now bargain price of about $37 million they grabbed a business model that is simple, has strong branding and went with an advertising slogan, ‘Nobody beat Dan Murphy’, that is potent and believable, and one that Coles have never been able to match and destroy, and on reflection never took seriously.
And now they will pay. Coles say they are happy to grow organically but large companies do not have a good track record of growing by their own ability. While the threat of Dan Murphy got ever larger they dithered. This year they began the roll out their big box strategy, 1st Choice, though you cannot help but think that it came too late. What makes them believe they can wrest control from Dan Murphy’s? Dan’s has such a head of steam that they seem unbeatable and Coles have yet to realise that their form of advertising is so simple it may not be possible to better. How will they beat the pledge, ‘Nobody beats Dan Murphy’? And have they recalled that this style of advertising was perfected over decades and indeed it took Melbournians many years to agree that indeed it was the place to shop. This legacy will not be easy to compete against.
Having four shops in place five years after Woolworths purchased Dan Murphy is not a good start. Also Coles should not make the assumption that there is room for two big box styles of outlets in Australia. With Woolworths talking at least 100 Dan Murphy’s it may well be that the market has no room for the projected 75, 1st Choice stores. They must not assume just because they open stores that customers will appear. This will be an interesting tussle to watch as every big box opened effects not only small independents but the shops owned by the two majors as well.
As for the effect on consumers it is hard to gauge. The next few years as the two big groups tussle will mean bargains aplenty but as one chain becomes absolutely dominant the dynamic will change. It was hard to find a wine bargain when shopping recently at the local friendly Woolworths liquor on the N.S.W. south coast, and it was wall to wall Berringer-Blass- Southcorp, so start to fear the worst.
Fosters have recently given out figures that estimate supermarkets with attached liquor will have 30% of retail sales by 2010 (20% now) and the ‘big boxes’ will grow to 17% (10% now). We estimate that the two majors will have 53% market share at the end of June 2006 and extrapolating the Fosters figures suggests that will grow to 70% by 2010.
Assuming that consumers still get a great deal who will loose? It has to be the small to medium wine suppliers and a Coles liquor group at half the size of Woolworths, will not be able to help them. It is much better if the retail side is divided into two groups of about equal size as if the buyer of one group is too tough you still have a chance with the other. Alas it seems to us that this option has already been lost.
The full ramifications of this changing retail dynamic are not easy to define but it will not be good for the wine trade though it may be O.K. for consumers. The best remedy now is to hope for the complete deregulation of liquor licences in all states so they are freely available which would allow a vigorous force like Aldi to expand into liquor and provide fresh competition plus many small independents would open.
|
2 0 1 4
2 0 1 3
2 0 1 2
2 0 1 1
2 0 1 0
2 0 0 9
2 0 0 8
2 0 0 7
2 0 0 6
2 0 0 5
2 0 0 4
|
The Story of Penfolds Wine Storage Cabinets and Old Fashioned DiscountingFriday, 5th September 2014
Coles Liquor Shows Signs of LifeFriday, 1st August, 2014
The Dog Days of Being an Independent RetailerMonday, 24th March, 2014
Crumbling Brand Access Fees for New Zealand Sauvignon BlancMonday, 17th March, 2014
Matua and Real New Zealand Being Made in AustraliaThursday, 27th February, 2014
The 2014 Release of the Penfolds BinsThursday, 20th February, 2014
Matua Marlborough and VintrepreneurFriday, 31st January, 2014
Service and Shopping Experience versus The DealThursday, 23rd May, 2013
Personal Experiences with Mataro in AustraliaFriday, 22nd March, 2013
It's Mataro - Not MourvèdreFriday, 15th March, 2013
New Moves Selling Wine OnlineFriday, 8th March, 2013
The U.S. Oil Industry, Bordeaux and Australian Fine WineMonday, 11th February, 2013
Wine and Innovation Fashions Fads and Targeting Consumers TypesTuesday, 11th December, 2012
The Liquor Wars - Matt Skinner AppearsMonday, 19th November, 2012
A Black Swan Event Hits the WestWednesday, 31st October, 2012
Queen Adelaide Becomes No Name GirlThursday, 28th June, 2012
The Seven Teachings of Harry Brown 1918-1999Friday, 15th June, 2012
When Does an Escort become a High Class EscortTuesday, 29th May, 2012
Multi-Nationals Looking for Desirable BrandsThursday, 3rd May, 2012
Extending the Sauvignon Blanc BrandSunday, 18th December, 2011
Coles Continues the War on Liquor Prices - Woolworths is BoredSunday, 20th November, 2011
Liquor Price War DeclaredSunday, 20th November, 2011
The Liquor Wars - Woolworths is Killing ColesTuesday, 8th November, 2011
The Brand Access Fee and Wines Labelled AC/DCTuesday, 16th August, 2011
The Good Taste of UK ConsumersTuesday, 16th August, 2011
Wolf Blass Eaglehawk at $4.99Tuesday, 12th July, 2011
The Battle for the Penfolds DollarMonday, 21st March, 2011
Woolworths and Coles Like the Taste of New Zealand SaveeMonday, 14th March, 2011
Putting the Bling Back in ChampagneMonday, 21st February, 2011
Real Wine Drinkers Discussing FavouritesMonday, 21st February, 2011
Keeping Up with the Big RetailersFriday, 11th June 2010
It's 2010 Not 2000Friday, 28th May, 2010
Grange Spin from Peter GagoFriday, 21st May, 2010
What are Wines Worth and Pointing WinesFriday, 26th February, 2010
Killing the Champagne BrandTuesday, 9th February, 2010
Champagnes - the New Leaders at HarrodsFriday, 5th February, 2010
Two Co-Branded Yalumba WinesWednesday, 27th January, 2010
Are High Priced Wines Worth the Money?Thursday, 8th October, 2009
The Strange Case of Wolf Blass VeraeThursday, 24th September, 2009
Is There A Connection Between Three Seemingly Different Trends?Thursday, 13th August, 2009
Tintara - An Exclusive Wine for Dan MurphySaturday, 1st August, 2009
The Fresh Food People Strike AgainSaturday, 11th July, 2009
We All Love a Wine BargainMonday, 6th April, 2008
The Strange World of Liquor Retailing in 2009Tuesday, 10th March, 2008
Awash In a Sea of SaveeMonday, 28th November, 2008
53 Million Cases to ManyWednesday, 19th November, 2008
More on Grays On-LineWednesday, 19th November, 2008
The Origin of the Fosters Multi Beverage StrategySunday, 9th November, 2008
Bargains or Not on Grays OnlineSunday, 19th October, 2008
Is It The End of Nine Glorious Years?Monday, 13th October, 2008
Will Virtual Wine Companies Work? Sunday, 31st August, 2008
A Story about Mixing Wine and BeerSunday, 17th August, 2008
The Changing Tastes of Wine DrinkersSunday, 17th August, 2008
The Really Bad News About Sliding ExportsWednesday, 13th August, 2008
Wine Facts, Trends, Fads and HopeTuesday, 20th May, 2008
The Steady Decline of Tier One Wine CompaniesFriday, 9th May, 2008
Is It All Too Hard at Fosters?Sunday, 24th February, 2008
Who Would Have Thought of This!Tuesday, 19th February, 2008
Thank Goodness for AldiMonday, 11th February, 2008
A Pleasant Day Online at Grays AuctionsFriday, 3rd August, 2007
Wine Prices, Point Scores and RetailingThursday, 2nd August, 2007
A Useful Marketing LessonThursday, 26th July, 2007
The Dan Murphy View of CleanskinsTuesday, 17th July, 2007
Wine Slabs for Queen AdelaideTuesday, 10th July, 2007
Cheers I Hope You Enjoy the Blue NunMonday, 14th May, 2007
Sauvignon Blanc Sweeps All Before ItSaturday, 12th May, 2007
They Do Things Differently in TasmaniaFriday, 11th May, 2007
New Zealand Grab the Number One SpotSunday, 6th May, 2007
Woolworths Keeps Hammering AwayTuesday, 24th April, 2007
The Liquor Retailer Who Forgot How to Retail - Coles LiquorlandSunday, 22nd April, 2007
Conversations with a Sydney Liquor MerchantThursday, 12th April, 2007
Woolworths Charges AheadSunday, 8th April, 2007
Do You Recall Recommended Retail Prices?Sunday, 8th April, 2007
Cleanskin Shopping at Dan MurphyFriday, 30th March, 2007
Fosters - the Incredible Shrinking Wine CompanyTuesday, 27th March, 2007
Please, Please We Need More CompetitionMonday, 19th March, 2007
The Slow Death of a Great Brand - PenfoldsThursday, 15th March, 2007
What Do Fosters and Coles Have in Common?Tuesday, 8th March, 2007
News on the 2007 VintageTuesday, 6th March, 2007
Dan Strikes AgainFriday, 23rd February, 2007
Liquorland - The Future of RetailingTuesday, 30th January, 2006
Australia's Top 100 WinesThursday, 7th December, 2006
The Return of the Price Fighting VortexSunday, 3rd December, 2006
Ah! To Make a Wine with Aspirational StatusTuesday, 28th November, 2006
The Unusual Marketing at Brown BrosTuesday, 7th November, 2006
English Speakers Embrace WineTuesday, 17th October, 2006
What Comes After Barossa Pearl and Ben Ean?Monday, 18th September, 2006
High Alcohols and Bad Press About Australian WineThursday, 14th September, 2006
Crown Lager Crashes the Wine WeekendTuesday, 29th August, 2006
Rosemount Slides AwayWednesday, 23rd August, 2006
Wiping Your Hands and Ducking for CoverTuesday, 15th August, 2006
Talking with English Wine Merchant, Noel YoungFriday, 11th August, 2006
The Sky Darkens for RoséphobesWednesday, 9th August, 2006
Doing Hand Stands at the DorchesterTuesday, 1st August, 2006
How Does $5000 a Bottle Sound for Ch. Petrus 2005Tuesday, 25th July, 2006
We Did It Because We CouldMonday, 24th July, 2006
Wine Prices and MillionairesThursday, 22nd June, 2006
Why Are Cleanskins So Popular?Friday, 26th May, 2006
Rosé Raises Its Ugly HeadWednesday, 24th May, 2006
The Release of the 2001 Grange and Old MemoriesThursday, 11th May, 2006
A Retailer With a Sense of HumourMonday, 17th April, 2006
What About the Steak Knives?Monday, 10th April, 2006
Little Penguin Joins Yellow Tail in Top TenFriday, 7th April, 2006
Grange Over Priced Says AuctioneerTuesday, 21st March, 2006
White Drinkers Move Up While Clean Skins Take Red Drinkers DownWednesday, 8th March, 2006
Woolies Keeps Growing While Coles Plays Catch UpWednesday, 8th March, 2006
Gobbledegook from ColesTuesday, 21st February, 2006
Great Vintages Growing on TreesTuesday, 31st January, 2006
An Insight Into Clean SkinsTuesday, 31st January, 2006
Retail Concentration ContinuesFriday, 16th December, 2005
Big Box Number SevenThursday, 15th December, 2005
Fine Wine Price Slump PredictedSunday, 9th December, 2005
BEATEN!Tuesday, 6th December, 2005
'Two for' and '20% Off for Six' - Retailers Follow the Changing LeaderWednesday, 30th November, 2005
Coles Performs Predictably PoorlyFriday, 11th November, 2005
The Chasm Between Woolworths Liquor and Coles Liquor Will Create ProblemsThursday, 3rd November, 2005
And the Strong Get StrongerThursday, 27th October, 2005
And No Wonder - The $2.99 Wine Bottle is BackThursday, 27th October, 2005
The Clean Skin Surge ContinuesThursday, 27th October, 2005
Could it be True - Rosé is Rising?Thursday, 13th October, 2005
Bargain Priced, Well Made French WinesMonday, 22nd August, 2005
A Taste of Cleanskins from Dan MurphyThursday, 18th August, 2005
Winestate Recomends Orlando Jacobs Creek Reserve ShirazWednesday, 17th August, 2005
The Price Vortex Gathers SpeedWednesday, 3rd August, 2005 [Sydney]
Woolworths Quietly Rebadge First Estate to BWSSaturday, 30th July, 2005
It’s All Happening at the Dee Why Hotel, the Northern Beaches, SydneySunday, 24th July, 2005
Some Thoughts for Ms. Lucas - Liquor Retailing in AustraliaSunday, 24th July, 2005
The Price Fighting Varietals and the Spiralling Price VortexSunday, 24th July, 2005
What Does the Tussle Between Woolworths and ColesMyer in Liquor Mean For Wine Consumers?Thursday, 16th June, 2005
Wynns Cabernet for $16.99 and Thoughts on Clean SkinsFriday, 13th May, 2005
High End Wines Catch a ColdSaturday, 16th April, 2005
The Release of the Penfolds 2002 Bin Reds plus a Great RieslingMonday, 28th February, 2005
A Good Cheap French ChampagneFriday, 28th January, 2005
One of the Best Buys in RedWednesday, 21st November, 2004
The Good Times Are With UsWednesday, 17th November, 2004
Glug visits the Adelaide Wine ShowFriday, 8th October, 2004
Shopping at LiquorlandFriday, 1 October, 2004
A Great Kiwi, A Great Italian And More 2002 RedsWednesday, 29th September, 2004
The Barossa Wine Show, September, 2004Monday, 25th September, 2004
A Quick Trip to Dan Murphy'sFriday, 24th September, 2004
|
|