New figures from Roy Morgan show Woolworths' Endeavour Drinks Group now holds a 49.2% share of the Australian retail alcohol market.
As of December 2016, its outlets - including Dan Murphy’s, BWS and Woolworths Liquor - accounted for $7.1billion of the $14.5billion Australians spent on alcohol last year.
BWS had almost 17% of the market, Dan Murphy’s jumped from 25.4% in 2015 to 30% in 2016 and Woolworths Liquor accounted for 2.4%.
Coles trailed behind with an overall market share of 15.5% in 2016, or $2.2 billion, with Liquorland scoring a 9.1% market share.
First Choice showed the best growth of the Coles-owned liquor retailers, growing its market share from 4.5% to 5% over the last year. But Aldi Liquor was hot on its heels, increasing its share to 3.5% from 2.4% year-on-year. It has shown a steeper upwards trajectory over the last four years than First Choice.
Independent retailers such as Cellarbrations collectively hold a 10.4% share, while wine clubs or subscription services hold 4.6%.
Roy Morgan Research's Norman Morris said: “For independents, hotel bottle shops and less mainstream supermarket chains wishing to remain competitive, it is essential to understand what it is about Dan Murphy’s that attracts such a large (and growing) share of the market and to do what they can to emulate these qualities. For example, Roy Morgan data shows that people who usually shop at Dan Murphy’s place above-average importance on a good range and a well laid-out store where it’s easy to find what they’re looking for. At the same time, they enjoy having a good look around liquor stores, suggesting a willingness to browse rather than just zone in on what they came for and then get out fast.
“Additionally, the smaller retailers need to be aware what their existing customers value in a bottle shop - whether it’s being located close to other shopping spots (ALDI and IGA Liquor customers place great importance on this), low wine prices (noticeably more important for ALDI shoppers) or good specials (a particular priority for First Choice customers)—and ensure that they continue to meet these expectations.
“As with Bunnings in the hardware sector, Dan Murphy’s is such a category killer for the alcohol retail market, that it’s unlikely to face any challenges from its smaller rivals in the near future. But this doesn’t mean the smaller players can’t claim more of the booze market for themselves, by emphasising their unique strengths at the same time as they apply what they can from Dan Murphy’s success to their own business model."
No plans to sell Dan Murphy's
Not surprisingly, Woolworths chief executive Brad Banducci told a News Corp conference in Melbourne today that the company had no plans to sell Dan Murphy's.
However, he admitted rising electricity prices were a "material issue" that would lead to higher prices on the shelves in Woolworths supermarkets.
"We manage what we can manage with energy efficiency. But given the cost increases that are coming through right now, we are trying to outrun a bear, but I am not sure we can," Banducci said.
"We will have to in some way, very cautiously and carefully, pass those through to our customers, unfortunately."
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