Woolies Boss Warns of Home Brand Revolution

By Andrew Starke

Woolworths CEO and managing director, Michael Luscombe, has warned liquor retailers that wine sales in Australia will increasingly be dominated by the supermarket’s private-label offerings.

As a cash-rich but time-poor society, Australia appears destined to follow the UK in embracing the supermarket to the detriment of the high street shop.

Luscombe told The Sydney Morning Herald that supermarket private-label wines would capture a greater slice of the market as shoppers fall in line with overseas trends and warm to home-brand offerings.

“It's no different to grocery or anything else that we are in,” he said. “Consumer electronics, general merchandising, this is a trend that is happening worldwide, in fact it's very much behind the world trend in Australia, so there is a lot more of it to come.”

Discount retailers, supermarkets, and on-line operators have all put the squeeze on liquor retailers in recent times, with increased competition putting pressure on both price and the image of wine as a premium product.

However Luscombe told the SMH that winemakers should have known the grape glut would help spur growth in private-label wines, adding it was not wise to blame shopkeepers for the competitive squeeze.

“Don't point the finger at the retailer, you need to search your own backyard to understand why you made the decisions with the knowledge that you should have had,” he said.

Woolworths does not release penetration rates for its private-label products but Luscombe revealed that home-brand wine was its biggest growth area in liquor.

While private-label brands account for an estimated 20 percent of annual sales of Woolworths and rival Coles, rates in Britain and the United States are twice as high.

Woolworths has introduced a number of labels to compete with established wine companies on the shelves of its shops and Dan Murphy's outlets, with labels such as Craftsmen, Cow Bombie and Baily & Baily.