Driven to drink

It’s been a week full of grog this week; all in the pursuit of good retail marketing. While most of the market focused on Woolworths’ overall result as being a bad thing, the company’s liquor and pub division results showed clearly how well its considered liquor strategy, consistently executed over a long period, is paying off.

My week in grog started in a Woolworths store in New Zealand, specifically in an outstanding chilled room. The chilled room in the Grey Lynn Countdown store was light, bright and large, with glass front walls and automatic glass sliding doors: this was a great retailing area. Great because it’s often hard to make this chilled room full of grog feel like anything other than a warehouse store room, which is always incongruous in a shopping environment. But, it’s especially so when consumers are making purchases that imply they’re preparing to have a good time.

I made a purchase: New Zealand wine label, Ata Rangi Pinot Noir and took it with me to dinner with a newly arrived senior exec who has spent 10 years in UK retailing. He has a wealth of knowledge on how rapidly retailing has changed in the UK, from the unusual perspective of both retailer and manufacturer. Over the pinot, he was very clear that Australia and New Zealand’s own rate of change is accelerating due to the lessons learned from the northern hemisphere being applied over a shorter time frame.

The following day, I met with two senior liquor manufacturers, owners of some of Australia’s and the world’s most iconic brands. Hearing the challenges they are facing from their own perspective within the retail environment, and linking it to the discussions from the night before, clearly highlighted just how much faster the pace of change in liquor retailing will be over the next three years.

Which brings me back to Woolworths liquor…

Late last year I was asked to present an overview of what is happening within liquor retailing to the directors and sales force of a global spirits company. Running through the retail-own brand shares within the UK grocery sector was confronting. Over 50% of key segments in the liquor, wine and beer aisles of the top UK grocers are now occupied by high quality retail-own brands.

When I showed a selection of more than 40 beer, wine and spirit brands to the sales team, they all recognised them as Woolworths or Coles retail own brands. In December alone, Woolworths introduced more than 100 new SKUs as own brand into their growing store network. And both Woolworths and Coles are doing this because shoppers, like us, are happy to buy them. If we weren’t, the retailers would remove them swiftly.

Woolworths will continue to grow its share of the liquor market in Australia and New Zealand. It will also grow the share of shelves that sell Woolworths-own high quality brands. Importantly, as with the UK, the best and brightest of Australian and global beer, wine and liquor makers will carefully and thoughtfully pick their way through this fast changing environment and be part of this growth. The more confrontational, adversarial or just short-sighted brand owners won’t.

This year will be an interesting one for grog in Australia and New Zealand, whether we are making it, importing it, selling it, buying it or just drinking it.

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