Wine in Supermarkets?

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wine selection
wine in a supermarket in Paris, photo by christine592

The idea of wine in supermarkets is hardly novel. Indeed, many people reading this outside South Australia will be puzzled why this is a question at all.

Currently, South Australian supermarkets do not sell wine (or beer, or spirits). This doesn’t mean that we South Australians are going crook for a drink. There are plenty of bottle shops: many of them are owned by one of the big two supermarkets but there are also excellent examples of independent retailers. In addition, many pubs have bottle shops attached, and these tend to be drive-throughs (yes, you drive into the bottle shop and you can either get out and browse, of, if you’re in a hurry you stay in the car and someone will bring you your carton of cold beer). Drive-throughs have pretty generous opening hours so there aren’t that many hours in the day when you can’t buy an alcoholic drink retail.

But recently, some of the smaller supermarkets have decided they’d like to be able to sell wine, South Australian wine in particular. They say it will help the wine industry. Independent wine merchants say it will add to their woes as they struggle even more against behemoth retailers. The wine industry itself seems to be split.

On Wednesday night this was one of the issues I discussed with Peter Godfrey on 5AA. You can listen to the audio:

As a consumer I can see how compelling the idea of wine in supermarkets is. Yes, it would be fabulous to be able to nip into the supermarket, stock up on some lamb chops and loo roll and pop a bottle of some interesting, quirky, boutique, local red into the trolley.

But is that what is going to happen?

My gut feeling is … er, no. According to the Attorney-General’s discussion paper at the end of November 2012, Woolworths and Coles held (approximately) 53% of liquor licences in South Australia. Over HALF.

I’d be very interested to know how that translates to spend, because I’d bet my bottom dollar that much more than 53 cents in every dollar spent goes to the duopoly*.

The discussion paper says:

Small to medium sized wine producers currently face difficulty in getting their wine on the shelves of retail liquor stores, which has a direct impact on their ability to access the retail liquor market.

So, if liquor licences go to supermarkets (and only those with a floor size greater than 400m2) how is this going to support small to medium sized producers? I have no idea. Coles and Woolworths are unlikely to support South Australian only producers, which the independents** claim they will. Coles and Woolworths are unlikely to support small producers who can’t supply enough wine for all (or at least a great many) of their stores.

And this means we are likely to head the same way as the UK. The wine buyers in the big supermarkets in the UK exert amazing buying pressure over producers around the world. I’ve heard stories about wine arriving in the UK for a big supermarket and being rejected outright. Producers are squeezed on price (have we heard that one before?). The supermarkets allegedly sell wines at inflated prices for a period of time so they can sell them at a big advertised markdown. The consumer, picking up that bottle of quirky, interesting red to go with his or her lamb chop is over paying for a bottle of something that has been mass produced.

If you feel upset about the squeeze on dairy farmers, on fresh food producers then you need to be prepared the same thing happen to our wine industry.

Is that what you want?

* For non Australians, that’s a common way of referring to Coles and Woolworths and the grip they hold on the supermarket scene.

** Your local independent may be sporting posters about an epetition. This campaign is a little disingenuous on two levels. Firstly, the poster I saw suggested that the idea had been floated by the State Government. The discussion paper notes that this has come about “following an approach from independent supermarket chains”. Secondly, epetitions are not recognised by the South Australian parliament: it’s always disappointing when people don’t do their research.

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