liquor.shop.co.nz

The liquor market in NZ is hotting up with Progs, Foodies and the Warehouse set to shake up the scene over the next few months. The move by the big two supermarket isn't supprising given international licencing conditions have given their overseas counterparts plenty of profit in the sprit and RTD market.

But we're not going to see a pice war - not unless one of the big two flinches, despite The Mill's opening of Liquor.co stores. Partly because the supermarkets will ignore Liquor.co, and partly because Liquor's parallel import strategy will hamper direct comparative pricing, and keep the the budget brands (inc. The Warehouse) happy with their margins.

(Liquor.co isn't to be confused with liquor.com on Queen St, neither of which have an internet presence...)

Despite what the supermarkets would have you believe, compared to dry grocery lines, liquor has a good margin - and the high value, again compared to Weet-Bix and tinned peaches, high volume nature of the category will keep all the players interested in keeping prices stable.

It's bad enough to them that Kiwis buy well over half of all liquor when it's discounted, when margins are squeezed in favour of volume. They can't afford to push loss leaders year round against each other because neither Progs or Foodies will win. They really have only two options in the market: push smaller players out or let their competitors etch away at their market share. It's going to be a combination of both - probably consolidating into 4 or 5 players with very few independants stadning firm in small towns and licencing trust areas.

Which is why growing the category is the only option for them. Bring on sprits. Bring on the store within a store model. Yes, less players=evil in a lot of cases. But with licencing laws unlikely to relax in New Zealand in the next twenty years, large liquor retailers will continue to go out of their way to keep their licences clean from underage stings (v bad PR).

Big players are easy targets for instectors, they deliver results and publicity to the reality of underage alcohol purchases. Less players=easier targets=more vigilance.

This has got to be good for our binge drinking culture. Normalising the 18+ sale of hard sprits (and bringing it away from dodgy dealers) will create a more mature drinking culture in the country. Just look at how we looked at wine 20 years ago. I'd bet Chardonnay and Sauvignon weren't everyday words, let alone Gewurztraminer and Pinot Gris.

Yes. It's all about the money. But if the police/district and national licencing authrotities hold their nerve (as they did with the Red Sheds) and keep on top of the big players, we could all be better off.