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November 11

Did You Know: Coles and Woolies own 50% of the Wine Industry in Australia

Posted by on November 11, 2015 at 8:04 AM

Ask yourself, have you ever purchased a Woolworths Select wine? Maybe you don’t like to buy them because you prefer something a bit more sophisticated. Aussies in general have a great thirst for vino and recent trends in alcohol consumption have shown our drinking habits as a nation are shifting slowly from beer to wine.

Did You Know: Coles and Woolies own 50% of the Wine Industry in Australia

However, if you’re a person who generally chooses to explore different tastes from across the globe and consider yourself “worldly-wise” when it comes to picking out a wine, then you may be a little disappointed to know that there’s a good chance you’ve already consumed these Woolworths Select wines without even knowing. For instance, many of Dan Murphy’s bottles of wine are Woolworths own brand wines and that’s just the tip of the iceberg.

 

Starting with the ‘Bay Estates Chardonnay’ ($10 per bottle) from Dan Murphy’s (drumroll please), this wine is a Woolworths’ own brand wine. It sounds like it’s made in a small family-run vineyard on the coast somewhere…wrong. Possibly you prefer the Spanish Rose ‘Lovers not Toreadors($16.15 per bottle), well guess what, its Woolworths’ again. So much effort has gone into the labelling of the Woolworths Spanish wine to make it look authentically European that most would be proud to take it to a dinner party, offering something a bit more unique than the well known local wines.

A company called Pinnacle Drinks owns these two brands, who’s head office is situated in one of Sydney’s suburbs, Surry Hills. Check out the company’s excuse for a website, it doesn’t even have one… simply a landing page. Although it only provides a very small portion of information, the final sentence in the footer gives it all away: “Pinnacle Drinks manages own and exclusive brands on behalf of Woolworths Liquor Group.”

 

Pinnacle Drinks registered these two brands of wine with the Intellectual Property (I.P.) office in Australia along with 343 other alcoholic beverages, including wines, spirits, beers and ciders.

Lets break things down then, shall we? Coles and Woolworths are undoubtedly the market leaders when it comes to supermarket shopping. Plus we know they also dominate the hardware / D.I.Y. sector with Bunnings and Masters. On top of all of this control, they are also responsible for selling about 50% of all wine in Australia. Therefore it’s not too difficult to imagine how these guys could be taking advantage of us, the customes.

Take a look at the graph below showing the price of grapes across Australia and you will notice that they have been dropping consistently since 2001. But wait, it gets better.

Did You Know: Coles and Woolies own 50% of the Wine Industry in Australia

The next graph below shows the average price of wine and how its been increasing since 2001.

 Did You Know: Coles and Woolies own 50% of the Wine Industry in Australia

Now, playing devils advocate, we could all argue that the quality of wine has been increasing, therefore processing costs may have risen relative to increasing prices. However, when there are two companies controlling 50% of the entire market, those costs in relation to economies of scale would hardly justify price rises to that extent.

Did You Know: Coles and Woolies own 50% of the Wine Industry in AustraliaOK, so this winery is actually a legitimate producer. Wolf Blass is actually the name of the guy behind Wolf Blass wines and he explained his frustration with the market situation in Australia to the media.

It will definitely get worse its very, very frustrating. These private label brands aren’t building on Australia’s great wine traditions,” Mr Blass exclaimed.

 

Did You Know: Coles and Woolies own 50% of the Wine Industry in Australia

It isn’t just a lone voice speaking out either, because almost 2,500 wineries and 6,300 grape growers have spoken out against the control that these two companies have. Bruno Altin owns a 100-hectare winery in Griffith NSW and he was so upset that he contacted the Senate inquiry to share his opinion on the matter.

“The control of Coles, Woolworths and increasingly Aldi of the liquor market have left very few options for winemakers as to where and for what price they can sell their wine in Australia.”

The upsetting fact is that individual hard working Australian wine growers struggled in 2014 due to market pressure from these large corporations. Only 15% of winegrowers made a profit in 2014 and whilst Wesfarmers and Woolworths do perform limited runs on small winery’s products, these are only for a short period of time.

It’s got to a point now where even the head of the Winemakers Federation has been complaining to the government. Plus, when you think about it, either Wesfarmers or Woolies collectively run all of the bottle shops too so even though we may naturally root for the underdog, in reality the big two aren’t going to give up prime shelf space in their stores any time soon.

 

If you are unaware about who owns what, then here is a short breakdown to finish off with:

Woolworths owns: Dan Murphy’s, BWS, Cellar Masters, Langtons and Winemarket.com.au.

Coles owns: 1st Choice, Vintage Cellars and Liquorland.

Now, I don’t want to get into Hotels, but Coles and Woolworths also own some as well and have these outlets to sell their wine through too. It just goes to show as a nation, we are highly dependent on two very large corporations and this is only going to worsen as they become more powerful.


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