Supermarkets raise the pressure on bottleshops

Spirits and liqueurs are the emerging battleground in liquor retailing as supermarkets prepare to break the monopoly long held by the bottleshops.

Although supermarkets can sell wine and beer, they are not able to sell spirits, including pre-mixed drinks and fortified wines.

But plans by supermarket companies to introduce stand-alone liquor stores will allow them to broaden their range to capture a larger share of the $1.1 billion take-home liquor market.

Foodstuffs, which owns the New World and Pak 'N Save supermarket chains, will be the first on the scene when it opens the first of what will be a national Duffy & Finn's liquor chain in Wellington's Porirua in June.

Woolworths Australia, which owns the Foodtown, Woolworths and Countdown supermarkets, has also said it sees opportunities in liquor and is expected to bring its successful liquor barn chain Dan Murphy's to New Zealand.

However, the company refused to confirm that yesterday, saying it had made "no assertions about liquor operations in New Zealand".

This week, The Warehouse entered the market with the launch of the first Warehouse Cellars - a stand-alone liquor store within The Warehouse - challenging the beer and wine offering of supermarkets.

Although it has placed a voluntary restriction on the sale of spirits at the pilot store at Fraser Cove, Tauranga, the company has not ruled out selling spirits in the future.

Foodstuffs Wellington managing director Tony McNeil said the Duffy & Finn's concept was not about the company selling more wine and beer but about capturing a greater share of the market.

Although prices would be competitive with its supermarkets, a wider product range would allow it to sell more upmarket beer and wine, as well as spirits.

Supermarkets had captured a 55 per cent share of the wine market and 40 to 45 per cent share of the beer market.

"But that's still only 25 per cent of the total liquor market so there's still a bigger market out there we're looking to tap."

McNeil said the first Duffy & Finn's would be built a couple of shops up from Pak 'N Save Porirua. Foodstuffs planned to open 10 in the lower North Island by the end of next year.

Where possible, they would be built on the same site as its supermarkets.

Distilled Spirits Association chief executive Thomas Chin said business would be more competitive, particularly for the traditional stand-alone private liquor stores in the suburbs.

"That trade has been put on notice that new operators are coming into town and the retail dynamic is about to change. But the change will be incremental rather than revolutionary," he said.

"Once they start to build up the numbers, that will be when we start to see changes in the market."

A second Warehouse Cellars will open in Sylvia Park, in the Auckland suburb of Mt Wellington, in June.

However, the concept will be further trialled before being rolled out to more stores. The Warehouse has 85 stores nationally.

Other than an initial "blip and surge" in liquor sales as new players entered, Chin expected the spirits and liqueurs market to remain stable at about 1.1 million 9-litre cases a year.

"What we've got is a particular sized pie and that pie won't grow much bigger, but pieces of that pie will be redivided and those with zero market share right now will gain their share off someone else," Chin said.

Convenience would be the big drawcard for on-site supermarket liquor stores and the Warehouse Cellars, he said.

"If you can do all your shopping under one roof, paying and parking your car only once, that's got to be compelling.

"The flipside is if you're only after one bottle you may not want to queue."

However, Chin believed there was still room for specialist retailers, and that was where traditional bottle stores would need to differentiate themselves with better service, product knowledge and range.