With the legislative hammer coming down on the liquor retailing industry, the Herald reveals the key players and what they own.
A simple convenience or a plague on society? Whatever your view of liquor outlets, new laws on the way are expected to curb the enormous growth the industry has seen in New Zealand over the past couple of decades.
The Sale and Supply of Alcohol Amendment Bill passed its third reading in Parliament last month, paving the way for several changes including allowing any individual or group to object to a licence application, removing the ability for parties to appeal provisional local alcohol policies, and doing away with the ability to cross-examine at licensing hearings.
Health advocates have welcomed the new laws, claiming there are already far too many off-licences in some areas. There are still concerns, however, that not enough is being done to tackle issues such as worker exploitation and the glamourisation of alcohol through advertising and sponsorship.
Others say that instead of addressing alcohol-related harm, the changes will hurt responsible business operators and exaggerate problems with the current licensing process.
Liquor retailing is a huge business in New Zealand, with sales of beer and wine dominated by the two major supermarket groups, Foodstuffs and Woolworths NZ. However, the number of independent liquor stores has increased dramatically since the start of the century.
There are now approximately 11,000 licensed premises in New Zealand, including about 3000 off-licences, or takeaway bottle stores. The Covid pandemic also spawned a rapid rise in specialist online delivery companies.
According to Stats NZ, the volume of beer, wine and spirits available for consumption was 498 million litres last year, around the same as the previous year. The figures show that while wine and beer volumes have been decreasing, the trend for spirits is the opposite: the total volume of spirits increased by 3.2 per cent to 103m litres in 2022 and has risen by 12 per cent since 2014.
When it comes to value, the market is getting bigger.
Revenue from alcoholic beverages now totals roughly $12 billion in New Zealand and is expected to grow annually by about 4.2 per cent.
Off-licence outlets account for the largest share of estimated sales by value (66 per cent), just over twice that of on-licences (32 per cent), while the two supermarket groups sell more than 60 per cent of all alcoholic beverages (excluding spirits).
The retail industry has changed over the years, with big producers Lion and DB getting out of the distribution trade. That has coincided with the consolidation of bottle store brand ownership - master franchises that control vast networks of independently owned stores.
Here are the top 10 alcohol retailers:
Tasman Liquor Company
Tasman Liquor runs the largest bottle store franchise business in New Zealand, while also supplying liquor to the stores in its network. It has rapidly expanded with two significant recent acquisitions and last year the company generated more than $250m in revenue.
Ultimately owned by Australian food, liquor and hardware giant Metcash, Tasman has built a small empire in this country – recently acquiring more than 230 privately owned Liquor Centre and Liquor Spot stores.
The company, headed in New Zealand by general manager Grant Simpson, already had a sizeable franchise operation with 105 Bottle-O and Merchants Liquor stores. According to Metcash’s annual report, it now has 370 franchised shops in New Zealand.
Financial accounts for Tasman Liquor note two recent acquisitions, revealing that in 2021 it paid $6.5 million for the business assets of Liquor Centres Auckland Limited, which was owned by Auckland businessman Lal Senaratne. Former operations manager Andrew Senaratne was retained by Metcash to run the franchise operations.
Tasman’s accounts also noted that last year it paid $2.5m for the business assets of Lion Liquor Retail Limited, a subsidiary of Lion NZ which had operated the Liquor King chain. Lion had earlier announced it was exiting the retail trade and selling its 22 remaining Liquor King stores in New Zealand.
Those acquisitions will further boost Tasman’s financials, which last year showed a total revenue of $250.27m for a net profit of $2.85m, up from $2.54m in 2021.
Some of the liquor stores now sitting under Tasman’s umbrella have been controversial at times, with Bottle-O and Liquor Centre both making headlines for failed labour inspections.
Last December, Sukhdev Singh and his associated companies which operated four Liquor Centre stores were slapped with a record $1.5m in fines after he was found to have confiscated workers’ bank cards, forced them to work 70-hour weeks and made them sleep at one of his shops. The offending happened between 2015 and 2019 before Tasman acquired the store network.
With two co-operatives effectively controlling 53 per cent of the New Zealand grocery market, including beer and wine sales, as well as a nationwide chain of bottle stores, Foodstuffs is almost certainly this country’s largest liquor wholesaler and distributor by volume.
The group controls 330 grocery retail stores in the North Island and more than 200 in the South Island, operating under the Pak’nSave, New World, Four Square and Gilmours brands. Each store is independently owned and operated, and since 1999 the group has had the ability to sell beer, wine and cider throughout New Zealand.
Foodstuffs, which reported a combined revenue of $7.7b in the 2023 financial year, does not disclose the contribution from alcohol sales. However, with beer and wine the alcohol market’s largest segment, worth $4.9b in 2023, it is a significant part of the Foodstuffs business. And while the liquor category perhaps doesn’t offer huge margins, it is valuable in attracting customers into stores.
It has been estimated that supermarket and grocery stores account for about 60 per cent of all off-licence beer and wine sales by volume.
While spirits are off the supermarket table, Foodstuffs also owns LiquorLand, which operates a franchise of independently owned bottle shops nationwide under the stewardship of chief executive Brendon Lawry.
The business has expanded since Foodstuffs bought it from DB Breweries in 2009 and now has more than 160 stores in the network.
Much of the store growth has come through acquisition. For example, after Foodstuffs bought Hamilton chain The Mill in 2015 it converted about 35 of those stores to LiquorLand. Foodstuffs acquired The Mill from Japanese giant Asahi, which had earlier bought it from Independent Liquor. The Mill was valued at $18.2m as part of the broader $1.5b Independent Liquor transaction.
The Foodstuffs group has also recently switched 19 Henry’s Beer, Wine & Spirits stores in the South Island to the LiquorLand brand, having acquired them from Imperial Discount liquor in 2007.
In 2021 Foodstuffs reached a deal with the Waitākere and Portage Licensing Trusts to allow some of their WestLiquor stores in West Auckland to be rebranded as LiquorLand. So far, 12 stores have been converted under the partnership.
With almost 200 Countdown supermarkets, 40 SuperValue and 30 FreshChoice stores, Australian public company Woolworths is the second largest grocery company in New Zealand.
Like Foodstuffs, the company shifts huge quantities of beer and wine through its stores, although it does not break out the segment’s revenue in its local accounts. Woolworths last year reported $7.5b in sales revenue from its New Zealand operations for the June 2022 year.
Unlike rival Foodstuffs, the Australian company does not own bottle shop brands here, although it reportedly did attempt to buy LiquorLand in 2008.
The company, headed by Spencer Sonn in New Zealand, will soon begin rebranding its Countdown stores to Woolworths.
Super Liquor Holdings
Founded in the late 1970s by John Butterfield, the business was originally known as Super Liquor Man before being rebranded to Super Liquor under the ownership of Lion Nathan.
In 1992 Lion franchised the stores and stepped back from managing the chain in 1995. Super Liquor Holdings was established in September of that year and today encompasses 173 stores throughout the country, each independently owned and operated under the franchise model.
Companies Office records show The Gate Limited as the largest shareholder of master franchise Super Liquor Holdings, with 2.96 per cent of the company’s shares. The Gate, which has six individual shareholders, owns stores in Alexandra, Cromwell, Remarkables Park and Wanaka.
Another multiple-store owner is Nelson Holdings, which operates shops in Motueka, Nelson, Richmond, and two in the Tahunanui area.
Super Liquor Holdings’ directors are Karen Crabb, Ian Dowthwaite, Bruce Longhurst, Hitesh Patel, Philippa Sutherland and Craig Wilson.
Thirsty Liquor Group
Since purchasing the Thirsty Liquor brand in April 2013, Renee Patel and Tina Govan have expanded the business to more than 170 stores nationwide.
Like most liquor store retailers, Thirsty Liquor operates a franchise model with each store independently owned and operated.
The network includes 35 stores trading under the Black Bull Liquor brand.
The Companies Office records two equal shareholders in the master franchise – Thirsty Partnership, which is associated with Patel and Govan, and Thirst Traders, which is jointly owned by Harinder Deep Singh Mann and Inderjit Singh Kalat.
The Licensing Trusts
Unlike the rest of Auckland, people living out west are unable to buy alcohol in supermarkets, instead, they are catered for by the Portage and Waitākere Licensing Trusts.
The trusts, set up in the 1970s, have a near-monopoly where they operate all hotels, taverns and off-licences in their districts. Members are elected by the community to govern the trusts, which are chartered to return surplus profits to the community through grants, rebates to clubs, sponsorships and other support for community activities.
In recent years those returns have not been great and a group opposed to the trusts’ monopoly is gaining some traction, with four of its members becoming trustees at the most recent election.
In the 2022 financial year, the trusts collected more than $130m in revenue but returned less than $2m in grants and funding.
Trusts chief executive Allan Pollard said in May that the organisation was aiming to grow revenue by 23 per cent to $160m within five years, with the aim of boosting community returns to $5m.
The organisation aims to open up to 10 new hospitality venues and retail stores during the period.
It now has 25 off-licences and recently began a process to rebrand them as either LiquorLand or Super Liquor and change to a franchise model in partnership with Foodstuffs.
The lower North Island also has a community trust, which is mainly involved in social housing but derives profit from several hospitality outlets.
Trust House Limited, established more than 60 years ago, today has a portfolio of hospitality businesses in Wairarapa, Tararua, Flaxmere and Porirua. In the past two decades, Trust House has diversified into retail, community housing and hydro-electric power generation. It now manages more than 500 rental homes.
Glengarry was founded in 1940 by the late Josef Jakicevich, who arrived almost penniless in New Zealand in 1920 just as prohibition was introduced in the US.
Now owned by Josef’s son Tony Jakicevich, whose three sons also became actively involved in the business, Glengarry can lay claim to being the oldest wine retail company in New Zealand, and one of the largest.
Glengarry now has 17 stores nationwide and in 2005 opened Dida’s Wine Lounge and Tapas and Dida’s Food Store sited either side of the original Jervois Rd, Auckland store.
Last November the Herald reported Glengarry’s stores had suffered 42 burglaries over a two-year period amid the spate of ram-raid attacks sweeping Auckland and other parts of the country.
The smash and grabs cost the company more than $250,000, said general manager Liz Wheadon.
The last few years have been difficult for the hospitality industry, with the Covid pandemic, high inflation and the cost of living crisis proving too much for many small operators.
This has led to consolidation, with some of the big players getting bigger while some have divested assets and others have closed.
As of August 2022, there were 3602 liquor on-licences for restaurants in New Zealand and more than 5000 drinking establishments licensed for the sale and consumption of alcoholic beverages.
Brewing giants DB Breweries and Lion NZ continue to have a strong presence, either through financial support mechanisms or outright ownership of specialist venues.
DB this year extended its pub portfolio through the takeover of Wellington hospitality company Kāpura and Auckland company Joylab, which were merged to create Star Hospitality Group, largely owned by DB and headed by Kāpura’s Jamie Williams.
The DB deal, which involved 55 venues employing about 1600 people, means a number of former Lion pubs are now in the hands of their biggest rival.
Meanwhile, NZX-listed Good Spirits Hospitality has had to sell assets to reduce debt, recently striking a deal to sell its portfolio of nine pubs, including Danny Doolans, to Brew on Quay for $20.7m.
The transaction, subject to shareholder vote, has a related party dimension given Brew on Quay is jointly owned by current Good Spirits chief executive Geoff Tuttle.
The other joint owner is Richard Sigley, who had previously sold 11 venues to Good Spirits back in 2014. Sigley also was involved in an attempted deal last year to sell his hospitality business Nourish Group to Good Spirits but that deal fell through.
Nourish, which employed more than 400 people, was subsequently sold to US billionaire Bill Foley’s Foley Holdings for an undisclosed sum. Those assets included Soul Bar & Bistro in Auckland’s Viaduct, Jervois Steak House in Queenstown, Shed 5 in Wellington and Bistro Lago in Taupō, among others.
Private equity-owned Australian Venue Co, thought to have been interested in the Good Spirits bars, has an existing portfolio of nine pubs in Wellington (including The Old Bailey and The Realm) and two in Auckland (Saint Alice and Dr Rudi’s).
The company, with dozens of Australian pubs run by former Spotless executive Paul Waterson, is set to be acquired by PAG Asia Capital for about US$1.4b, the AFR reported last week.
Another hospitality business making waves is NZX-listed Savor Group, which has 20 restaurant venues in Auckland including Amano, Azabu, Ebisu and Non Solo Pizza.
The company, which recently opened Bivacco and MoVida restaurants, made its way to the NZX via a merger with brewing company Moa Group in 2019.
Savor’s founder Lucien Law is managing director and Group chief executive and retains a 5.2 per cent stake. The largest shareholder with 15.8 per cent is H&G Limited, the investment vehicle of Sir Selwyn and David Cushing.
Sky City Entertainment shouldn’t be forgotten with its range of hospitality and entertainment venues serving customers in Auckland, Hamilton, Queenstown and Australia. While gambling is its main game, the company still derives 12 per cent of its normalised revenue from food and beverage. The group has recently reported total revenue of $967m, with hospitality accounting for $105m of that.
There are also a number of smaller players in the business and often making headlines such as Auckland publicans Leo Molloy and Steve Gillett and restaurateur Al Brown.
Duty-free alcohol remains a favourite among Kiwi travellers looking to enjoy a drink while on holiday or restock the cabinet on their return.
The major gateway, Auckland International Airport, currently has just one provider – Aelia Duty Free, which has three stores in the terminal.
A competitor, Aer Rianta International (trading as The Loop Duty Free) departed the scene in May this year.
Aelia is owned by French company Lagardère, which generated total revenue of $12.8b in 2022 from 39 countries.
To the doorstep: The online disruptors
Home delivery of alcohol, like many products, took off in the early stages of the Covid-19 pandemic. But it was already a growing industry in New Zealand.
According to a Salvation Army report, there was a rapid increase in mail-order licences and remote selling by off-licences during Covid lockdowns. Almost one third (32 per cent) of all mail order licences (352) were granted since 2020, noted the report, published in August 2022.
Many of those were issued to existing bricks-and-mortar businesses. However, there has also been a rapid rise in specialist online delivery companies in recent years.
Some of the better-known businesses include The Fine Wine Delivery Company (founded by Jeff and Virginia Poole), Wine Central (Paul Newport) and The Good Wine Company (Dale Hurman).
COMING UP IN THE SERIES:
- The crafty power players: Michael Donaldson casts his eye over the most influential people in the craft beer industry amid an increasingly challenging environment.
- The Vintners: Andrea Fox delves into the wine industry and uncovers New Zealand’s larger vineyard owners.
WHERE TO GET HELP FOR ALCOHOL, DRUG AND GAMBLING PROBLEMS
Alcohol Drug Helpline - 0800 787 797
Alcoholics Anonymous - 0800 229 6757
Gambling Helpline - 0800 654 655 or text 8006.