Grape and Wine Sector Regulatory Impact Analysis

14th October 2024

PUBLIC AND ANONYMOUS

I wish to make a submission to the enquiry into the grape and wine industry.
In particular, my submission highlights the dominance of the wine retailing by the duopoly of Endeavour Group, and Coles.
Their vertical integration from vineyard to wine production, brand ownership, and market dominance clearly leads to market dominance, and with Endeavour’s 5.4 loyalty cardholders provides them with data and direct marketing to influence consumer trends.

Mr Emerson’s foreword to the Food and Grocery Code document referred to addressing the heavy imbalance in market power between supermarkets and their suppliers, especially smaller suppliers.
He also considered other retailers, including the sale of nursery plants by Bunnings, and the sale of wine, beer and spirits by supermarket affiliates.
His decision was to recommend only on grocery shopping.

Perhaps at that time the review team were not fully appraised of the position of the wine industry supply, especially to the duopoly of Endeavour Group, and Coles.
The imbalance and dominance by this duopoly surely requires review.

I am greatly concerned for the future of the small to medium wine producers who may be denied access to the retail channel to market, and at fair prices.
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The huge market share by this duopoly could enable them to influence and control the wine market in Australia.

To assist your understanding of the wine industry, the following is a precis provided from various authorities including Wine Australia, Wine Titles and the Real Review.
Supporting documents from these authorities are attached.

I am sure you are aware of the difficult times being experienced by wine producers in
Australia including in the Hunter Valley.
The producers are feeling the effects of the current economic difficulties, and with reduced visitation to the wine regions, their cellar door sales channel to market is suffering.

Their sales to the on-premise channel are also badly affected as restaurants are doing it tough.
So that leaves the off trade channel, which is dominated by two retailers.

Today there are approx. 2300 wine producers in Australia, of which 1600 produce less than 3,500 dozen per annum, just a lifestyle hobby.
The top 18 produce 80% of the total volume.

That leaves 700 small to medium producers, it’s their businesses and livelihood.

The imbalance in the retail channel for wine really commenced when the large supermarkets Coles and Woolworths aggressively pursued liquor sales from late 1990s, especially Woolworths who opened an average 1.5 new BWS shops every week for over fourteen years, with now over 1400, and 246 Dan Murphy’s.

Coles own Liquorland, Vintage Cellars and First Choice Liquor Market.

In 2021, Woolworths divested their liquor business into a separate public company,
Endeavour Group.

Wine Australia is the National organisation representing the grape and wine producers.
From their report January 2024 on wine retail sales market dominance, Endeavour has
64.7% and Coles 15.7% of total market – that leaves less than 20% for independents.

Of real concern is Endeavour’s vertical integrated business model, controlling from their vineyards, making their own wine, bottling with their own brand labels, and pursuing vineyard and winery acquisition.
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The Real Review, Australia’s independent review for the wine industry recently published, “Who owns my wine”.
From this review, Endeavour has 234 own brand labels, and Coles 84.

Endeavours recent report advises their loyalty card scheme has 5.4 million members for their data analysis and marketing.

The outcome is the small to medium wine producers, who employ the most in the wine industry, could be denied access to a just and fair retail market, by the domination and control of the duopoly.

This imbalance in the wine industry, and market power of the duopoly, surely requires review, and to ensure the consumer public are aware of the producer behind the brands.

Attached documents
 Wine Australia - Australian wine market insights report January 2024
 The Real review – Who makes my wine
 Winetitles – Endeavour plans “aggressive” expansion, 22 July 2021

I look forward to your reply, many thanks,