It’s a curious decision by Woolworths to source its Queensland liquor requirements for the new Bruandwo outlets from rival retail group and wholesaler, Metcash.

After all Metcash had had the ALH contract but then ALH moved the deal to a new independent liquor wholesaler in Queensland and Metcash continued to supply the MGW hotels run off balance sheet for Woolies. But now all has been re-united and more than 150 outlets will now be supplied by Metcash throughout Queensland, a lucrative contract..

Metcash announced yesterday that it would be supplying the Bruandwo outlets, formerly those in Australian Leisure and Hospitality, through its Australian Liquor Marketers arm.

The MGW Hotels and liquor outlets in Queensland cost Woolies $300 million to assemble and until the Brunadwo bid for ALH were run separately to Woolies’ existing liquor business because of the quaint Queensland liquor laws.

Now the ALH deal is all but over, Woolies has started consolidating these and the Mathieson hotels in Victorian into its liquor division, which now aims to have sales of $3.5 billion a year (it will sell $3 billion worth in the next 12 months or so).

The announcement from Metcash is curious in that there’s no explanation as to how long the deal is and why Woolies could not supply the outlets from its own warehouses and distribution centres.

Woolies is spending hundreds of millions of dollars revamping its National and Regional Distribution Centres as part of the Project Refresh campaign to make its logistics and supply chains more efficient. Even though it’s an expansion of an original smaller contract, it’s a decision that could mean Woolies does not have the warehouse capacity or skills to supply liquor to its new outlets in Queensland.

The old contract was an arms-length arrangement because the MGW Hotels joint venture was off Woolies’ balance sheet.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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