By Andrew Starke
Woolworths has expanded its liquor offering with the acquisition of The Cellarmasters Group (Cellarmasters) from Archer Capital for $340 million.
Cellarmasters is Australia’s largest direct seller of home-delivered wine with operations in Australia and New Zealand.
It is understood that both Coles and Woolworths had been in ongoing negotiations to acquire Cellarmasters with price and compatibility with existing online platforms the major sticking point.
While the direct business represents an attractive and complementary bolt-on to Woolworths’ existing liquor portfolio, it remains to be seen how it will be integrated with existing liquor operations Dan Murphy’s, BWS, Woolworths Liquor and Langton’s.
The retail giant has already delayed going live with an e-commerce site for Dan Murphy’s by one month.
Cellarmasters' multi-banner platform covers most customer types: Wine – Cellarmasters and NZ Wine Society; Fine Wine – WineIQ and CellarForce; and Value Wine – WineMarket.com.au
Cellarmasters also has a winemaking operation, Dorrien, which produces a range of wines which are distributed through the Cellarmasters direct channel.
In addition, Cellarmasters provides a range of services to the winemaking community such as bottling, packaging, storage, filtration and testing.
“Direct wine marketing is an exciting and emerging segment of the industry that is ripe for further investment and innovation,” said Woolworths’ CEO Michael Luscombe.
“Cellarmasters is a specialised business and a logical extension to our existing liquor portfolio. It also underlines our continued focus on achieving ongoing growth for shareholders while meeting the evolving needs of our customers.
“Cellarmasters’ portfolio of innovative businesses and brands will benefit from the added value of Woolworths’ logistical and distribution capabilities, as well as the ongoing support of our capital and managerial resources.”
Woolworths Liquor Group GM Steve Greentree said that while direct retail wine sales are presently only a small percentage of the overall market, it is a high-growth and highly-specialised sector.
“Our strategy is to innovate in line with evolving customer trends through a multi-channel, multi-brand and multi-platform liquor offer and the addition of Cellarmasters represents a perfect fit,” he said.
Woolworths intends to retain the existing senior management.
Archer Capital bought Cellarmasters from the Foster’s Group in 2007.
Completion of the current deal is expected to occur no later than May 2011, subject to regulatory approval.