So the Prime Minister wants to do something about binge drinking by young people. Talk to these people Kevin: Woolworths, Coles and Metcash.
The retailing trio dominates the business with well over $10 billion in alcohol sales a year: Woolies leads with around $5 billion, Coles has around $3.5 billion and Metcash has just over $3 billion.
They determine the weekly specials in pubs, bottle shops, and other outlets. If a manufacturer or distributor doesn’t want to play, they can lose their position and valuable sales.
They control the pricing, and the likes of Foster’s, Lion Nathan and Independent Liquor, not to mention Coca Cola Amatil, and all the distributors, dance to their tune. If Woolies, Coles and Metcash want to flog vodka cruisers cheaper one week, the distributors and producers offer hundreds of thousands of dollars in advertising and price support, or face losing some of the giants’ future business.
Here’s Woolies’ glowing report on its liquor business from the interim profit report released last month:
Dan Murphy’s, BWS and attached liquor, all continue to perform very well with strong growth in both sales and profits. Group liquor sales (including ALH Group retail liquor sales) for the first half totalled $2.5 billion (HY07: $2.1 billion). This reflects the strong growth in all our liquor brands and the high level of new store openings for Dan Murphys.
Dan Murphy’s opened 13 stores in the half year bringing the total number of Dan Murphy stores to 80. A further 13 stores are planned to be opened in the second half. We plan to have in excess of 150 Dan Murphy’s around Australia over the next four to five years. Dan Murphy’s provides customers with excellent value for money, extensive product ranging, personalised service and expertise.
At the end of December 2007, Woolworths Limited operated 1,058 liquor outlets.
And with Foster’s expecting beer sales to pick up from an attack on RTDs (Ready to Drinks), it was not unusual to see no discussion at all of RTD sales in its recent interim profit statement. In fact several years ago Foster’s used to break out information on alcohol sales in a more detailed form, with beer, spirits, RTDs and wine sales detailed and explained. Now there’s more information about wine sales in the troubled US business than in Australia.
It was all about beer sales in the so-called AAP region (Australia, Asia Pacific) in the profit announcement last month.
AAP beer net sales revenue increased 6.4%. In the imported premium segment in Australia, Corona continues to lead growth with volume increasing 36.1%. In the premium domestic segment Crown Lager pricing was re-positioned driving an expected reduction in volume. Pure Blonde continues to be the key driver of total beer category value growth in Australia (Source: AC Nielsen). Pure Blonde revenue increased over 100% and for the first time was supported with a national television advertising campaign. Carlton Dry’s re-launch as a reduced carbohydrate beer has gained momentum and captured 16% share of the lower carbohydrate category.
Erm, people binge drink on beer too.
For Coca Cola Amatil, the move into liquor has meant higher sales and profits, as it explained in its 2007 profit announcement last month:
“In alcohol, we launched our three core premium beers in New Zealand in October. Miller Chill was launched in Australia in November, the first significant beer innovation in Australia for many years, and we also successfully launched Jim Beam & Zero Sugar Cola in September”, Mr Davis said. CCA’s rapidly-growing alcohol business generated over $300 million in revenue1 in 2007 from the sale of Pacific Beverages’ premium beers and the Maxxium spirits portfolio. The business also delivered solid incremental earnings to CCA including contract manufacturing revenue on the Jim Beam alcoholic ready-to-drink range, various Maxxium sales incentives and the premium beer sales by Pacific Beverages. In addition, CCA’s overheads were spread over a larger revenue base.
If Mr Rudd was serious about binge drinking, he would tackle the likes of these giants and force them to restrict the sale of alcohol; it’s what successive Federal and State Governments have done with tobacco.