August 03, 2011
Source: The Australian
Story By: Blair Speedy
- Coles to engage in liquor war with Woolies
- Coles to open 183 new stores over four years
SUPERMARKET giant Coles has negotiated $130 million in annual discounts from its liquor suppliers to help fund a massive expansion in the alcohol sector, helping to up the ante in its price war with rival Woolworths in the $14 billion liquor market.
Internal Coles documents, seen by The Australian, also show it plans a restructuring that will see 10 loss-making 1st Choice liquor stores close , just six years after the chain opened its first outlet, and is considering taking a stake in a brewery to underpin the supply of private-label beers.
Coles controls a 19 per cent share of the packaged liquor market - representing about $2.7 billion in sales - through its 766-strong portfolio of 1st Choice, Liquorland and Vintage Cellars chains, just half that of its arch rival Woolworths, which operates 1208 stores under the Dan Murphy's, Woolworths Liquor and BWS banners.
Since being taken over by Wesfarmers in 2007, Coles has opened just 15 new liquor stores, while Woolworths has opened 181 - a situation the smaller retailer plans to address with an aggressive program of 183 new store openings over the next four years.
At least 80 of these will be 1st Choice outlets, although the company says execution of the big-box format has been substandard since it was launched under former owners Coles Myer in 2005.
Coles has pushed suppliers to back its expansion plans, wringing an extra $130m in annual "allowances" which it has used to cut shelf prices at 1st Choice and Liquorland outlets, according to the documents.
The company is also considering changing the brand to Coles Liquor Superstore after finding that the 1st Choice name is "too generic". The Liquorland name is set to be rebadged as Coles Liquor.
Coles plans to close eight 1st Choice stores this financial year and another two next year, although another 40 new sites will be opened over the same two-year period.
To read the full story, follow this link: www.news.com.au/business/coles-bulks-up-for-liquor-war-with-arch-rival-woolworths/story-e6frfm1i-1226107150530
