Grocery giants use 'shadow' companies to make liquor

ABC NEWS (Australia)

Boutique alcohol manufacturers say Australia's grocery giants are encroaching on their market and eroding competition by selling private label liquor products. Even informed consumers have reported being confused by the widespread trend.

Transcript

00:00 Good afternoon. They're using a whole network of manufacturers and contract distillers.

00:08 I actually went inside one just a few days ago. Huge operation. They have massive tanks

00:15 that make private label wine. They have a cider bottling facility. They also have the

00:22 capability to tap in on the growing trends of things like seltzers and ready to drinks.

00:27 And that's really how the grocery giants like Coles and the Wooley spin-off Endeavor, which

00:33 operates liquor stores such as Dan Murphy's, are getting increasingly into private label

00:39 alcohol. We don't really have any firm figures on how entrenched home brand booze is in the

00:46 sector. Analysts say it's really hard. The company reports that I've looked at of things

00:51 like Coles and Endeavor don't make things particularly clear. Although Coles did say

00:55 that its exclusive label of alcohol products grew by 8.5% just last year alone. We're actually

01:02 about to get the company results of some of these companies soon, so I'll be keeping my

01:05 eye on this. As you mentioned there, it is getting increasingly controversial because

01:10 we have had so many stories in recent times of big corporations being alleged to have

01:16 been price gouging, to have had too much power over the market. Some alcohol brands say that

01:21 this is really the latest example of this happening. And why is this practice controversial,

01:28 Amelia? Well, as I mentioned there, it's because in some people's opinion, the latest way that

01:34 market power is being encroached on. We don't really know how much of independent brand

01:41 space is being taken up in bottle shops like the one behind me by private label products.

01:47 We don't know that Coles and Endeavor are releasing hundreds of these products every

01:51 year. And some of them are controversial because it's really hard to tell that that's what

01:56 you're buying. I just bought a bottle of gin from the liquor land behind me, which is owned

02:01 by Coles and it says Tasmanian gin, which is in fact where it's made. But it's really

02:06 hard to say that it's a Coles-linked product until you go to the very back of it and you

02:11 find its subsidiary company, or if you look up its trademark. I've actually been talking

02:15 to people along this street today, maybe 11 o'clock's a little bit too early for alcohol

02:20 for them, but they have told me they don't really care too much about home brand alcohol.

02:24 They care about price and whether it is good to drink or not. Although some customers I've

02:30 spoken to have said they are very concerned about this, that they don't know what they're

02:34 buying. So that's the gamut of ranges of opinion here, essentially.

02:38 [BLANK_AUDIO]

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