“Whilst our per capita consumption of alcohol is gradually decreasing, take-home liquor sales are rising as a percentage of the overall market,” said IBISWorld General Manager (Australia), Mr Robert Bryant. “Continuing industry deregulation, price wars, a perception of convenience and consumer concerns about drink driving are fuelling this change, and it's a trend we forecast will continue in years to come.”
Supermarkets have been quick to pick up on the shift in drinking patterns, with Woolworths and Coles both investing heavily to acquire independent liquor stores and chains – as well as expanding their own branded in-store outlets – since the early 2000's. And it hasn't taken them long to emerge as the industry's dominant competitors.
“Woolworths in particular has become a significant player,” Mr Bryant said, “Through its acquisition of numerous licensed premises as well as expanding its Woolworths Liquor, Dan Murphy and BWS chains, Woolworths Ltd increased liquor sale revenue by 17% last year, generating $4,100 million and snaring 25% market share.”
At the end of the last fiscal year, Woolworths had a total of 1,027 supermarket-attached and independently located liquor retail outlets across the country. Its “discount” Dan Murphy brand is expanding rapidly, with 68 stores open at the end of 2007 and sites earmarked for up to 150 stores over the coming two to three years. The group's ownership of the Taverner Hotel and ALH/MGW chains also gives it a portfolio of 255 pubs.
Holding its own with 20% market share, Coles Group Ltd – which owns Liquorland, Vintage Cellars, Quaffers and 1st Choice – has 85 hotels and 751 liquor stores to its name, with at least 20 more store openings scheduled this financial year and a target above 120 over the next several.
As the cost of living continues to soar, competitive pricing in the liquor segment has become critical, and, unfortunately for the industry's independent operators, the supermarket conglomerates are setting the standards for price since both Woolworths and Coles control “discount liquor” brands.
But with IBISWorld estimating 6.2% growth over the period to 2013 for the retail liquor industry as a whole, substantial increases in bottom line results can be expected for all players in the industry, not just supermarkets with their incredibly competitive prices in convenient store locations.
As for who is doing the drinking, Mr Bryant said 80% of the retail alcohol sales industry's revenue is derived from households with the average home spending around $22.32 on alcohol each week – a figure that rises to $44.08 a week for the top 20% of households by income. The poorest 20% of households spend an average of $8.77 a week on alcoholic beverages, mostly on beer.
“Currently, Australians consume, on average, 24.6 litres of alcohol per capita each year, and our data indicates that the drinks we're selecting are changing, with many people opting for low alcohol beers over full strength, and pre-mixed spirits outselling straight liquor.”
Results from Nielson Research's '2007 end of year ScanTrack Liquor survey' state that beer sales currently account for 38.8% of retail liquor sales, while wine sales make up 23.6%, ready to drink and cider products make up 21.3% and spirits make up 16.3%.
Bottled white wine remains the strongest seller from the wine shelves, accounting for 33.6% of all wine sales in the twelve month period to November 2007. Red wine and sparkling wine varieties continue to show strong growth, with red wine sales up 5.3%, accounting for 28.5% of sales and sparkling wine up 6.5% accounting for 17.9% of sales. Nearly 20% of wine purchased is in a cask, while just 1.6% of sales come from fortified wines.
Sales of imported beers are soaring with sales growth above 20%, while domestic and imported premium beer sales are also holding their own with double digit growth.
Ready to drink products (RTD's) are increasing in popularity - with bourbon-based drinks accounting for 48.6% of all RTD's sold. Mr Bryant added that the RTD market is currently worth about $2.55 billion, with dark RTD's dominating the segment accounting for around 75% of sales.
Within the twelve month period to the end of November 2007, premium products sold well throughout the bottled spirits segment, with Scotch dominating sales with 26.6%, followed by Bourbon with 23.2%. Liqueurs grew strongly with a rise of 11.2%, securing a 13.7% share of sales, with Vodka also showing strong growth of 11%, securing 11.6% of sales. Dark rum continued to be a favourite choice accounting for 11.8%, and brandy and cognac accounted for 4.8% of sales.
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