The ACCC has just signed off on Woolworths’ proposed acquisition of liquor chain Cellarmasters, taking supermarkets’ combined market share beyond 45 per cent. Does this consolidation concern you? Do you feel smaller retailers stand a chance?
Coles and Woolworths already enjoy at least 45 per cent of the liquor market, according to IBISWorld data.
Coles already operates Liquorland, Vintage Cellars and 1st choice Liqour Superstore. Woolworths has Woolworths Liquor, BWS, Dan Murphy’s and Langton’s.
The IBISWorld press release we’ve linked to suggests that the two plan to open “... 270 more big-box stores between them over the coming years.”
Both also, the analysis firm says, want to encourage consumers to buy their private label brands.
There’s only one reason to create a private label: cut out the middleman to boost profits.
Cellarmasters is a different beast.
Its model relies on members ordering direct from its warehouses.
We imagine that’s why the ACCC noted that “Woolworths and Cellarmasters are both retailers of wine, but with minimal overlap in their retail channels,” and also said “The online wine sales industry has been characterised by new entry and growth in recent years and the ACCC considered this trend was likely to continue in the near future.”
Woolworths taking out a dominant player is not therefore seen as a threat to competition or as likely to make life difficult for suppliers in the wine industry.
Somehow it’s not hard to feel we’ve heard that before.
I recall watching the Four Corners program, “The Price We Pay”, and feeling that the ACCC’s inquiry into retail practices was doomed to failure: what supplier would jeopardise their relationship with such colossal customers as the big two supermarkets?
What’s your opinion of this transaction? Is the liquor market becoming dangerously concentrated in the hands of the big two? Or can small retailers still carve out a viable niche?
Go crazy in the comment field below.