Bottleshop prices

Australia's liquor market is dominated by Coles and Woolies, demolishing competition and squeezing out the smaller players.
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03.Price comparison

For a snapshot of the state of competition in the market, we checked the prices of some popular beer, wine and spirits (see the tables, below). We visited 11 stores on Sydney’s North Shore, including the Coles and Woolworths-owned outlets, as well as one IGA Plus Liquor store and four independents. We also asked the Liquor Merchants Association of Australia for beer and spirit wholesale prices, and found that retail prices below those trade prices are common for beer, particularly in the large stores (there was almost no below-cost selling of spirits). However, the wholesale price guide isn’t necessarily indicative of the true cost, because all retailers negotiate their own prices with their suppliers, and some get discounts and rebates of up to 5-20%.

  • CHOICE found that retail prices for beer were commonly below trade wholesale prices, particularly at the “big box” superstores.
  • Even when liquor outlets are owned by the same supermarket chain, you can expect to pay more if the outlet is close by the supermarket. For example, we found VB cost 40% more in Woolworths Liquor than in Dan Murphy's – even though both are owned by Woolies.
  • For the five popular beers compared, Dan Murphy’s had the cheapest average prices, followed by IGA. Independent stores were dearest, although a few were selling Victoria Bitter at below the listed wholesale price. The foreign beers were sold below the listed wholesale cost at almost all the shops surveyed. “Parallel importing of beer is very common in the industry, particularly by smaller independents, as it means they can circumvent the major breweries and further reduce prices for consumers,” says Woolworths. 
  • For the five spirits compared, Dan Murphy’s was cheapest, followed by 1st Choice Liquor, while Liquorland and Woolworths Liquor outlets were among the dearest. In fact, grocery shoppers at major supermarkets who drop into the adjacent bottle shop often pay dearly for this convenience. For the beer and spirits compared, Coles’ Liquorland was 14% dearer than its 1st Choice outlet, while Woolworths Liquor was 15% dearer than Dan Murphy’s (in one example, VB cost 35% more in Woolworths Liquor than in Dan Murphy’s).
  • If you’re prepared to buy in larger quantities (for example, two cases of beer or six bottles of wine), bigger discounts are often available.


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Wine glut and the rise of cleanskins

The wine industry has been dramatically affected primarily by an oversupply, but also by a strong Australian dollar that is hurting export sales. Coles and Woolworths have a booming market in their own label and unbranded wines – “cleanskins”. By bottling up wine for retailers to sell unbranded, winemakers can clear excess stock without damaging their brand integrity. And consumers have embraced cleanskins, which for many people have replaced branded cask wine at the budget end of the market and offered savings over more expensive labelled bottles.

But some believe cheap cleanskins and own brand wines are hurting the industry. “The two major supermarkets are now in an increasingly strong market position to dictate to suppliers,” says Mark McKenzie, Executive Director of Wine Grape Growers’ Australia. “The dominance of supermarket-owned wine brands made under contract is squeezing wine producers’ profits. And while consumers are enjoying low prices now, there will be a huge cost to the variety of Australian wines available.”

“The chronic oversupply is all our own doing – we’re not blaming the retailers for that,” says Stephen Strachan rom the Winemakers’ Federation of Australia. “But retailers are using the surplus to introduce their own brands to the market, which ultimately comes at a cost to established brands. For an established brand-owner it is soul-destroying to see your brand unnecessarily discounted in the marketplace, undoing all of the hard work you have done over the last five or even 10 years.”

The supermarkets deny such claims. “Cleanskins intrinsically exist due to the chronic oversupply in the Australian wine industry, and blaming retailers for the wine glut is drawing a rather long bow,” says a Coles spokesperson. “The reality is that cleanskins are an avenue for producers to sell their excess wine, with less long-term impact to their brands. While we offer a sizable range of cleanskins, they are only a small part of our overall wine range. We continue to support Australian wine producers, large and small.”

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