The long terms results of a wine retail dualopoly

About four years ago a new super doper large modern Woolworths opened in Bowral and after a lengthy protracted legal battle between our backward looking local council who has just joined the 20^th century, the case was finally settled in the Supreme Court which enabled Woolworths to open a liquor store which started trading this morning.

For those that are not familiar with the Southern Highlands, Bowral is the main shopping town and whilst there is a normal mix of economic classes living in the area, there is a conspicuous level of very wealthy people who live in the district. Woolworths is the premier supermarket by a long way so they are in the prime position to sell upmarket goods.

Being a booze shop-a-holic I just happened to be there at 7 AM when the doors opened. (If the truth be known I was after some smoked salmon, that’s my story and I am sticking to it!) The shop has a large array of “commercial” wines but by in large, the selection was pretty pedestrian. In the frog bubble department you had a choice of a brand I had never heard of or Moet NV, but there was not a single bottle in the fridges, so if you have a sudden special occasion, forget it!

The supply of fortified was also disappointing. If you are after bulk sherry in flagons or casks, you have a huge variety from which to choose, but if you want an upmarket Tokay you don’t have many options.

There were two other things that really struck me. The first was in relation to price. The normal prices of the wines sold were not what anyone knowledgeable about wine prices would call cheap! The ultimate example was 1995 Grange which had a price of $411, that’s right $411, when many stores had trouble getting rid of the 95 at $295. Rosemount 2000 GSM was $30.29, Wynns 2000 Black Label Cabernet $29.90 and Lehmann 2000 Shiraz 20.90.

Walk into any large good bottle shop and you normally find stacks of wine on sale and normally they are the less expensive type bottles. These specials are frequently a major drawcard in getting people into the store.  The lack of these wines ‘on special’ was conspicuous which is especially surprising as one would think a new store would want to make a big impression when they first open. However they did have 10% off any six bottle purchase.

No doubt Orlando would be tickled pink by having the 99 St Hugo (at $38) locked away with the Grange, Bin 707, XO Cognac and Malt Scotch but this an interesting indicator to the range they intend to stock and the level they are aiming at in a very telling fashion.

As I mentioned in last weeks Journal, where is a major grab for market share by Coles-Meyer and Woolworths. As consumers in the long run the greater the share these two wind up getting, the worse it will be for consumers. Just look what happened to your fees and level of service when banks deregulated and in theory competition became greater. We wound up with fewer banks as they consolidated and merged. The same thing will happen in the wine retail sector.

For serious wine lovers, the few remaining specialist fine wine retailers will be our saving grace. Gone will be the days when you will be able to walk into the average bottle shop and look for some surprises, unfortunate>Gone will be the days when you will be able to walk into the average bottle shop and look for some surprises, unfortunately in the future most of them will be pretty boring.

Cheers

Ric ©