Unhealthy Competition

I’m all for a bit of healthy competition. And I do believe that more wine retail could be healthy.

Except. Except for the fact that we have a retail market firmly run by a duopoly. And – as is happening in South Australia – lobbying to allow liquor retail in supermarkets cannot exclude, by virtue of the application itself, the two majors. They are both staying exceedingly quiet on the matter for one simple reason: any way this pans out, they win.

So, the story is that a couple of independent retail groups have decided that they want to be able to sell wine. Not beer. Not spirits. Just wine. To ‘support’ the South Australian wine industry. Only the larger stores (over 400 square metres). And this will require a new licence category. Any retailer wishing to take advantage of this must satisfy the various licencing vagaries – that there is a need for a liquor retailer etc. So far, so good.

Except. Except that this does not just open the door to these two independent retail groups, but also to the two majors as well. So, potentially, BWS inside the local Woolies, and LiquorLand inside Coles. It hands Aldi just what they have been looking for on a silver platter. Sure. Convenient. Much like many other countries around the world. The overwhelming majority of stores which could satisfy the requirements are those belonging to the two majors. And once there is wine, the door to other liquor retail is already ajar. However, this has not occurred in markets like Victoria and the ACT where supermarket liquor was introduced so very long ago. Perhaps the majors have no interest in converting stores, or competing with the existent nearby floorspace..? At least for now.

And to limit ranging to SA wines would be exceedingly difficult from a legal standpoint. Particularly when many wines are made of multiregional fruit. Who stands as judge of what might be ranged? Is a Kiwi SB imported as bulk, and bottled in Adelaide by a local company one that might blur the lines enough? Because from a wine retailer’s point of view, why would you exclude the biggest selling category from your range, when doing so will actively damage your sales, and in all likelihood drive customers to the nearest competition?

And whilst I certainly don’t want endorse a protectionist stance, we have a number of awesome independent liquor retailers here in Adelaide. Who are likely to be the most heavily impacted by the appearance of ‘convenience licences’. Why go out of your way to find the quirky liquor store with limited parking options, when you could just grab a bottle along with the milk? Well, probably not you per se. If you are reading this, you likely seek out the fun independent bottleshops…

What if they were nudged out? To be replaced by more supermarket retail? We have the same number of people, with a slight growth in population, spending roughly the same dollars on wine. More stores means a dilution of revenue across those stores, and where declining liquor sales may well be offset by grocery sales, the retailer has a better shot at survival.

Where would we be then? As consumers, and as producers vying for what little shelf space there already is?

I am not saying this is a bad idea. Easy access to wine is a good thing. I am just not entirely sure that this has been properly thought through.

A couple from the UK said to me on the weekend that wine is different here. Here people care about what they are drinking. At home, it is just another 3 quid fifty spent at Tescos. No brand awareness. No care factor. This couple preferred our approach. They now think that wine is special, and worth research.

If it is approved, the majors could be first cab off the rank adapting their stores. And they will extend their reach. For those of us selling into the majors, that will be great…

If it is denied, they retain the position of biggest/most convenient/easiest. Market share either way rests where it does now.

So, how can we make it work? Without wrapping it up in red tape. Without making it a windfall for certain sectors only. With it being a smart option, and easy for independent retail to navigate and obtain.

And without the fights which are currently brewing over the issue…

If we are going down this path, let’s be smart about it.

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