Liquorland is an Australian chain of liquor stores. It is owned by Coles Group, a supermarket giant. Up until Wesfarmers’ demerger on 21 November 2018, the company was owned by Wesfarmers. In 1981, Coles Supermarkets established interests in the liquor industry and has since acquired Liquorland and Vintage Cellars. This article will discuss how the brand has been influenced by the demerger.
Wesfarmers
Wesfarmers recently announced a new liquor concept store named Liquor Market in the Melbourne suburb of Ringwood. Its low-cost operating model targets quality alcohol. Liquor Market offers gold medal wines for under $20, and award-winning spirits and beers from around the world. The chain will hold masterclasses and hold workshops for people interested in learning more about alcohol. The company is experimenting with a new model to make it more profitable and enticing to consumers.
Coles and Wesfarmers are vying for market share in the Australian retail market. Coles and Wesfarmers share the same customer base. In addition to grocery and liquor, Coles has businesses in the food and home improvement markets and online. The two companies employ a combined 110,000 people in their 2,500 stores and operate 806 supermarkets and about 900 liquor outlets. Wesfarmers also owns Australian Vinyls.
After the discovery of fraud and a loss of A$1.27 billion in 2014, the company has slashed the goodwill value of its liquor business by $680 million. This equates to a 35 per cent reduction in the company’s goodwill value at June 30 last year. The writedown is expected to be recorded in Wesfarmers’ full-year results. Earlier this year, the company reported a $1 billion profit from the sale of its insurance business.
Woolworths
In the recent Federal Court decision on the Woolworths liquorland settlement, the Australian Competition and Consumer Commission (ACCC) found that Woolworths and its subsidiary Liquorland had engaged in anti-competitive behaviour in restricting the supply of packaged liquor to New South Wales retailers. The ACCC found that the companies entered into anti-competitive agreements and exclusionary clauses with licensed premises in the state. The settlements ended in 2005 and 2006.
Several factors impacted the decision in the Woolworths liquorland case. First, the Court of Appeal decided that a new entrant could be a competitor to the incumbent. It found that the question of whether a new entrant would be ‘competitive with’ the incumbent was more relevant in other contexts. Therefore, the decision in Woolworths favoured Palms Shopping Village. This ruling resulted in a conditional and unrestricted liquor licence for Palms Shopping Village.
The Court of Appeal found that the ACCC could have successfully pursued the objections to Liquorland’s application for a liquor licence even without the ‘exclusionary’ provision. However, the ACCC found that Woolworths and Liquorland had entered into deeds in relation to the liquor licence and acted on them. As a result, the ACCC held that such prohibitions were not legitimate.
Coles
Liquorland is an Australian chain of liquor stores, owned by the Coles Group. The Coles Group was previously part of Wesfarmers, but demerged from the company on 21 November 2018. Liquorland is part of the Coles Supermarkets chain, which has established interests in wine, beer, spirits, and other alcohol-related products since 1981. Its brand name includes Liquorland and the Vintage Cellars namesake brands.
In a recent video, a team member behind a Liquorland counter is seen stacking cases of $5 wine in various piles. During one particular stack, however, the boxed wines tumble to the floor, sending the bottles flying. Many people have questioned how the cases of wine managed to tumble. Coles is now rolling out a program called Flybuys to reward customers across all of its brands. It’s hoped the new program will boost brand stickiness and enhance customer satisfaction.
The new store design will be available in stores in September. The new design will keep the iconic “signature bottle shop” as the main feature, but it will incorporate a more sophisticated look with black and white colour schemes and a more spacious layout. The new concept is aimed at offering consumers a better selection of local wines and premium craft beer while still selling the old favourites. This new look will not only improve customer satisfaction, but will also make the Coles liquorland more attractive to customers.
Cleanskins
While the reputation of cleanskins in the liquor industry has suffered from oversupply and a strong Australian dollar, consumers have embraced the unbranded wines sold at Woolworths and Coles. Cleanskins are inexpensive wines that winemakers can sell to clear excess stock without compromising the brand integrity. Cleanskins are fast replacing branded cask wine and are available at considerable savings over the more expensive branded bottle.
The concept of selling cleanskins wine was first introduced to Australia in the early 2000s. The idea was to combat an oversupply of wine, resulting in a dramatic fall in price. As of 2006, wine consumption in Australia has increased and the price of cleanskins has dropped below that of bottled water and beer. Cleanskins get their name from the Australian term for an unbranded cattle, which is also used to describe undercover law enforcement agents.
‘Loss leaders’
A loss leader is a product or service that is sold at a substantial discount below its cost. The loss leader is offered to lure shoppers to the store and encourage them to purchase more products. Large discount retailers often use loss leaders to attract walk-in traffic and increase sales. They may be a good choice for businesses with little budget, or they may be a bad fit for smaller establishments that don’t have much budget.
Large corporations benefit from loss leader pricing because they can use their purchasing volume to negotiate lower prices on certain products. Smaller businesses can’t afford such drastic price cuts, so they must look for other ways to attract customers. Loss-leader pricing is controversial, however, and isn’t always effective. Some states have banned it entirely or partially, making the practice controversial. Other countries have imposed a ban on this practice entirely.
While loss leaders are an excellent way to entice shoppers to buy products and services, they can also lead to unintended consequences. Customers may end up cherry-picking loss-leader items or waiting for the next discount to purchase products. Moreover, if the loss leader price is too good to be true, customers may stock up and end up thinking that other products are overpriced and therefore are not worth buying.
New leadership team
With the new ownership of Coles Liquor, the company has replaced former CEO Darren Blackhurst as CEO and will be focusing on a more upmarket approach to the retail liquor sector. The new strategy focuses on local ranges and exclusive liquor brands to differentiate itself from the competition. The new management team has been working on a plan to implement the strategy over three horizons, including a review of all operations.
Brendon Lawry, a former Foodstuffs Merchandise Manager, will become the CEO of Liquorland on 1 January 2017. During his time at the food retailer, Lawry was instrumental in the success of the Wholesale Merchandise team, which included the development of the New World Wine Awards. While he may have been a little less savvy on the retail sector than his predecessors, he says that customer satisfaction is his top priority. He says retaining customer engagement will be key to the success of Liquorland.
Shane Ross, CEO of Retail Liquor Specialists Group, has been involved in the liquor industry for over 30 years. He founded Red Bottle Group in 2007, which has 10 stores across Sydney CBD. He is a champion of industry best practices and is a former board member of the Liquor Stores Association. The team will work to ensure compliance with government legislation and promote a fun and diverse workplace culture. The new leadership team is a key addition to the company and is expected to lead the company through a period of change and innovation.
