Supermarket wines

We investigate the sale and marketing of private label wines at Coles and Woolworths.
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Is that bottle of wine premium or private label? The answer may surprise you.

Woolworths and Coles are the two major players in the liquor industry, together controlling 58% of Australia’s liquor market. Both own large numbers of liquor stores – Woolworths operates more than 1250 and Coles over 780. 

Both also own hotels, clubs and pubs – Woolworths upwards of 280 and Coles more than 90.

In this article:

You can also take a look at our special investigation into the rise of private labels at Coles and Woolworths.

Private or premium label wine?

What do Platinum Blonde beer, Baily & Baily wine and Napoleon 1875 brandy have in common? And what about Tasman Bitter beer, Robinsons Marlborough Sauvignon Blanc and Pensilva Estate McLaren Vale Shiraz? 

It may surprise you, but the first three are Woolworths’ private label offerings, and the last three are Coles’ home brand. Just as they sell home brand food and household goods, the supermarkets also sell private label liquor. So would you buy a Coles- or Woolworths-branded bottle of wine, beer or spirit? 

You might be surprised to learn you may have already have done just that. 

Supply chain inroads

brand_takeover_part2_SUPPORTING2_MAY2012_WEBThe supermarkets aren’t just involved in the retail side of things. 

With its recent $340m acquisition of Cellarmasters, Woolworths now not only owns Australia’s largest online wine retailer but has also taken control of Dorrien, a wine producer with bottling, packaging, storage, filtration and testing facilities. 

It’s also recently bought some vineyards and acquired stakes in Gage Roads Brewery. Coles is also buying in at all levels of the supply chain.

According to market research company IBISWorld, the supermarkets have “exploited their market position to reduce shelf space dedicated to branded products and push their own, higher-margin private and control-label beer and wine”. 

Overall, an estimated eight per cent of all wine and two per cent of beer sold in Australia is produced by the big two supermarkets. 

The share of private labels sold through Woolworths and Coles liquor outlets, such as Dan Murphy’s, BWS, 1st Choice Liquor Superstore or Liquorland, is likely to be even higher, and on the way up overall.

How Coles and Woolworths cornered the liquor market

1998: Woolworths has 38 freestanding liquor stores, including five Dan Murphy’s stores it has acquired in Victoria.
1999: Coles opens the first Quaffers Wine Superstore.
2001: Woolworths opens its First Estate outlet for fine wines. It acquires 43 Liberty Liquor stores, bringing its total number of stores to 130. It has approximately 15% of the liquor market.
2002: Coles buys the NSW arm of the Theo’s Liquor chain, adding 49 liquor stores and four hotels to its stable.
2004: Woolworths acquires ALH Group for $1.3bn, netting 130 pubs and 400 liquor shops.
2005: Woolworths has 938 liquor outlets, including 192 freestanding ones. Coles begins its push into large-format liquor stores, opening two 1st Choice Liquor Superstores, with 47 new liquor stores opening in total. Coles owns 31 hotels nationally.
2006: Coles acquires Hedley Group, including 36 hotels and 103 bottle shops. Coles has an estimated 20% of the off-premises market, Woolworths has 23%.
Woolworths buys a 25% stake in Gage Roads Brewery, and the Langton’s online wine auction business. Woolworths opens two new liquor distribution centres and 77 new liquor stores.
2011: Woolworths expands Dan Murphy’s to 140 stores, with plans to have 200 open in the next three to five years. Woolworths buys Cellarmasters, Australia’s largest online wine retailer, for $340m. It is now also the owner of the Dorrien Estate wine production centre. Market share of Woolworths grows from 15% to more than 35%. 70 new private label beers, wines and spirits are introduced onto shelves. Total number of Woolworths liquor stores is 1250; Coles has a total of 785 liquor stores and 93 hotels.


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