Eli Greenblat
March 23, 2012
The Age
LIQUOR retailer Doug Evans calls it ”feeding the monster”. The peculiar spectacle of independent bottle shop owners backing their trucks up to big box outlets such as Dan Murphy’s and filling up with cheap booze to then sell at their own stores.
Such is the pricing and buying power of outlets like Dan Murphy’s – owned by supermarket giant Woolworths – and Coles’ own network of 800 stores, that they can buy and sell beer, wine and spirits at a cheaper price than is available to the nation’s thousands of independent bottle shops.
Add to the mix the growing strength of Woolworths, Coles and the 17,000-store network that sits under wholesaler Metcash, and Mr Evans believes the often family owned, small-business dominated segment of neighbourhood bottle shops is in danger of becoming ”roadkill”.
”Independents are becoming more marginalised,” he said. ”If we just sit around and do nothing we won’t exist in the future and we don’t want to see that, for the good of the industry.
”It’s certainly not good for suppliers because it will be more difficult for them to build their brand and we don’t want to see a lot of independent businessmen and women go out of business because of what the chains are doing.”
These market dynamics and survival concerns helped bring together two independent liquor store groups yesterday to form ILG Australia, with the promise of aiming its combined 1600 bottle shops squarely at Woolworths and Coles to create a new force in liquor retailing.
The new group, ILG Australia, is being formed through the merger of Independent Liquor Group (ILG) and Southern Independent Liquor (SIL).
ILG is a member-owned co-op wholesaler providing wine, beer and spirits to more than 1200 hotels, bottle shops, licensed clubs, bars and restaurants across New South Wales and Queensland.
With turnover of $220 million and 750 members, its retail banners include Little Bottler, Pubmart and Clubmart.
SIL is a leading independent retailer in Victoria and Tasmania and has established the highly successful Duncan’s brand in both states. It has annual turnover of about $120 million.
However, if it’s a new shot in the supermarkets war, it’s more of a pistol than a cannon; the merged ILG Australia is still hopelessly outgunned by the $9 billion annually that pours into Woolworths’ and Coles’ more than 2000 outlets.
Mr Evans said ILG Australia would use its buying power to negotiate better deals with liquor suppliers, helping them to be more price competitive.
”The suppliers do support consolidation because what they want to see happen is a very very strong independent channel.”
He said the new group could increase its annual turnover to $400 million in a short period of time. ILG Australia will also invest in new branding and advertising to promote the benefits to consumers of shopping at their local independent bottle shop.
Woolworths and Coles declined to comment on the new group and its ambitions.
A spokesman for Metcash, which wholesales $2.3 billion in liquor to more than 17,000 outlets, welcomed the creation of ILG Australia.
”We think it’s a great idea. We are always happy when other independents step up the challenge and if we can offer any advice we would be more than happy to oblige.”
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