Kiwi beer drinkers are well aware of the Big Two brewers dominating beer production here in New Zealand.
But beer retailing is also tied up by three large businesses, and independent beer retailers face big and powerful competitors.
For example, there are only two supermarket groups in New Zealand, and one of them is also the biggest liquor retailer.
The supermarket operators are Progressive Enterprises and Foodstuffs. Progressive is Australian-owned and operates Countdown, which is taking over the Woolworths and Foodtown chains. It also operates the Super Value and Fresh Choice chains, which are franchised to local owner-operators.
Foodstuffs is a New Zealand-owned cooperative – storeowners own Foodstuffs, rather than the head office owning the stores. Foodstuffs’ grocery chains are Four Square, On The Spot, New World and Pak’n Save. All up, Foodstuffs makes up slightly more than half of the supermarket trade, and Progressive takes up the rest.
Considering that supermarkets dominate liquor retailing, it seems roughly accurate to assume Progressive has at least a quarter of the market share and Foodstuffs has a bit more.
The supermarkets’ different business models have important implications for us craft beer acolytes. Progressive likes to centralise distribution and operates three enormous distribution centres supplying all supermarkets around the country. Obviously some products, like bread, are delivered directly to stores, but Progressive prefers suppliers to deliver to its distribution centres in bulk, and to run the same product ranges in all stores.
Being individually owned, Foodstuffs shows a bit more flexibility. Storeowners have more say in what they will sell, and Foodstuffs seems to accept more direct-to-store deliveries. The result is that some Foodstuffs supermarkets (especially New Worlds) now carry quite a range of craft beer from around the country. Island Bay New World (formerly owned by brewer Maurice Bennett of Bennett’s Beer) and Thorndon New World have better ranges than most independent liquor stores.
As for Progressive, the franchised Super Value and Fresh Choice chains have more flexibility in their beer range, which often includes local and boutique brewers.
But what about bottle stores? Do they offer strong competition to supermarkets?
Nah, not really.
Apart from its grocery chains, Foodstuffs also operates three liquor store chains – Liquorland, Henry’s, and Duffy & Finn. Foodstuffs says Liquorland has the largest market share of any liquor chain. Combine this with its supermarkets and other liquor chains, and it adds up that Foodstuffs is the largest liquor retailer in New Zealand.
Its biggest competition is Lion Nathan, which has Liquor King and Super Liquor chains. The biggest independent chain is The Mill, and from what I’ve seen, craft beer isn’t part of its low price, high turnover business model.
Effectively then, there are only three major liquor retailers in New Zealand. Foodstuffs supermarkets have some flexibility in choosing their ranges. Progressive supermarkets have less say in what they stock and won’t bother with small suppliers. Lion’s bottle stores obviously emphasise its products, but not exclusively. Liquor King has a beer club, and this month its website is promoting Tuatara.
So where does that leave the independent liquor retailer? Facing big competition, that’s where. Indies have less buying power, smaller marketing budgets, and need to offer better service to survive. It must be tough down there.
As a craft beer fan, I need good brewers and good bars, but I also need good retailers who are able to find stock from numerous small suppliers. They must be willing to put in more work and sell for smaller margins than they would if they just dealt with the big two brewers.
We need them, and they need us. If there is a retailer like this in your town, please tell me about them. If there isn’t, then check out some of the links on the right for indy retailers like Regional Wines who deliver to your door.
The United States has ‘Support Your Local Record Store Day’, which is on April 16 this year. Perhaps I should declare April 16 to be the Official NZ Beer Blog Support Your Independent Bottle Store Day. Any nominations for good, independent beer retailers?
Cheers
Copyright Martin Craig, February 2010. Reproduction with permission.
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Filed under: Around the country, Beer Makers, Gushing forth | Tagged under beer, craft beer, liquor industry, liquor retailing, New Zealand Beer, NZ liquor industry, Regional wines, Tuatara | 47 Comments »