ARTICLE: Woolworths and its worth to Winos

[n4sir]

WOOLWORTHS AND ITS WORTH TO WINOS
Philip White
drinkster.com
05 March 2013

http://drinkster.blogspot.com/2013/03/w ... winos.html


An interesting read about the massive impact one of corporate juggernaut grocers has today in many aspects of the Australian wine industry, which extends perhaps a lot wider than people may first think.

Cheers,
Ian

[via collins]

Absolutely superlative piece from Whitey, I don't know how he keeps the energy up to fight the good fight.

Every since I learnt even a little of what he describes, I stopped buying from chains altogether. To read they are laying off their "wine wine specialists" in selected outlets is deeply saffening. A blunt expression of contempt for customers, and the development of the Australian wine business.

It does play into the "aggregation of capital just for the sake of it business", but it doesn't help the culture of wine one iota.

Long live the people passionate about their wine!

[ChrisV]

I don't understand what the article is driving at at all. A company involved in selling mass-produced wine is also involved in producing that wine, so everybody panic? I don't really understand what the charge against Woolies is.

The "fine wine experts" were presumably sacked because they were part of a strategy that made no sense at Dan Murphy. The weekly tastings at Dans are invariably $15 and below wines (apart from the Penfolds hype etc). Anyone who goes into Dan's to buy fine wine already knows what they want. Lamenting the lack of wine knowledge on the part of consumers and blaming it on Dan's sacking their fine wine staff has it exactly backwards.

The wines in Dan's $15 and below section are virtually all generically and industrially made whether Woolies own them or not.

Artisan producers who make genuinely good and interesting wines are thriving (see the emergence of labels such as Spinifex, Head, Ochota Barrels, Vinteloper etc etc) and will continue to do so. They don't need Dan's to survive and never have. It's a fact that we produce more wine grapes than are required in this country and have for a while, and some growers will eventually go to the wall. It's also a fact that consumers generally want to buy cheap, generic tasting wine. Blaming either of those things on Woolies seems misplaced.

[Michael McNally]

Nice to see some balance in the debate. Some good points there Chris.

Personally I would be more concerned if Woolies (or Coles) started buying 'independent' medium-sized companies like Tahbilk or Yalumba or De Bortoli. That could really screw the market. At the moment these players are able to cope with the First Choice/Dans model because they have spread their price points, kept a premium on most of their better wine, developed cellar door only releases, etc etc.

The elephant in the room whenever the 'market', price or quality are discussed is the chronic oversupply of grapes. Until that changes, the bottom-feeding will continue.

My 2c

Michael

[n4sir]

The additional dimension to this is Woolies purchase/running of Langtons wine auctions and Cellarmasters.

Langtons basically gives them control over a huge proportion of the Australian secondary market, and possibly as importantly the Langtons classification and price guides (which are also widely used as guides elsewhere). There's potential here for both manipulation of the secondary market to in turn influence retail prices, and to pressure suppliers (ie. wineries) because of the potential damage to their brand through possible devaluations/delistings. As wineries/grapegrowers go broke, they have the ample ability through the Cellarmasters winemaking facilities to buy up any resources cheap and have wines tailor made for them to squeeze out shelf space, in the process putting even more pressure on their competitors/suppliers. There's no real need to buy any independent/medium-sized wineries, they don't have to when there's the potential to screw them over so badly now.

Not saying any of this will happen, but it does bring up the question of just how big is too big, and has the ACCC really paid enough attention to this situation?

Cheers,
Ian

[phillisc]

Interesting debate.
I feel a small tinge of guilt in supporting the big two, but generally speaking it is purchases from the big makers at prices that are substantially less then their CD or mail order prices. And when their CEOs are on 7 figure sums, they can wear this loss. Equally, last time looked I was not on the Bill Gates payroll, so yes if I can save a few dollars then I will.
Small makers often do not have or need to the shelf space of the big two and their business model is structured accordingly. If their product is good enough, I will make the effort to go and find it.

I applaud that the big two keep a lot of wine companies honest and stop them going on with all the bulldust and spin.
It is unfortunate that employees lose their jobs, but the business model is that wine is only a product, no more or less and as such the product is inconsequential. For the majority of uni students who work in these places do they really care if they are selling a bottle of wine or blocks of chocolate? If that is the view of the employer, then that is where the problem may lie.

For those who work for an independent the degree of passion may be a lot higher, and their job prospects more secure.

Cheers
Craig.

[Panda 9D]

Wine stores will go the same way book stores, video stores, music stores etc. By becoming the biggest outlet of alcohol, they essentially become the country's wine curators. They will crush independent stores and I imagine they will ultimately exclude a lot of independent wineries from their stores if they own brands that are in direct competition with it. Shortsighted self-interest in consumers will screw them in the end.

Louis CK articulates this phenomenon perfectly in this video from 0:57 onwards.

http://www.youtube.com/watch?v=N95IMKRkcBw

[ChrisV]

I think we're a very long way away from monopolies in either wine production or retail. Many other retail outlets (online retailers, various fine wine stores) are thriving. There are an enormous number of small wineries out there. I don't see any evidence it's not possible to make it in the industry without dealing with Woolies. What I see is a big retailer using economies of scale to offer mass-produced wine to consumers cheaply. This strikes me as good for consumers. Sorry if it offends Whitey's sensibilities that nobody wants to drink Pinot Noir, but that's just the way people are. I don't see any fuss about a crisis in Australia's beer retailing industry because the vast bulk of what gets sold is swill like VB, Tooheys, etc etc. All made by big corporations too! The horror.

The idea that Woolies will manipulate the secondary market in wine via their ownership of Langton's strikes me as exceptionally tinfoil-hatted. What is the master plan here? Manipulate the secondary market so wines appear more valuable, then jack up the retail price, and the sheep-like consumer will have no choice but to pay the prices? If people are willing to get fleeced that way, they deserve it. There's plenty of other wine out there to buy instead.

[daz]

Many here must have seen some premium wines offered by DM at what, to at least myself, are prices that may not be achievable at a Langton's auction.

[TiggerK]

Indeed, but for that premium, you get the ability to take a wine back if there's an issue. Can be worth paying IMHO if you're looking for something premium to drink in the short term. Keep the receipt!!

[daz]

Indeed, but for that premium, you get the ability to take a wine back if there's an issue. Can be worth paying IMHO if you're looking for something premium to drink in the short term. Keep the receipt!!

Perhaps I should have written, "super premium wines". I was attempting to link such DM offers to Woolworths ownership of Langtons, the most likely source of single bottles of wines offered by DM at fixed four digit prices which to me seems to be an attempt to maximise profit, avoiding the risk of reduced return at auction. Come in sucker from the general public with no idea of the value of the wine other than it's an old Grange that could be a good investment if kept for another ten years. I haven't looked at the return/refund policy for such offers.

[dlo]

I have seen bucketloads of Langtons auction wine at DM's at 2x to 3x the historically high auction realisation prices. With mark-ups like this, no wonder DM's have quite generous returns policy. I bought a 1985 "supposedly" excellent Bordeaux second growth that was more than a little tired and was able to get my 125 bucks back without a problem.