November 14, 2011
DE BORTOLI Wines, one of Australia's largest family-owned wine groups, has criticised the proliferation of private labels across the nation's supermarket shelves, arguing pressure exerted by Woolworths and Coles along with the high Australian dollar and a growing grape surplus were threatening industry profits.
Managing director Darren De Bortoli said there was less shelf space for branded wines as supermarket home-brand labels were being discounted.
''You have got import pressure kicking in and the [supermarket] chains being more aggressive on the way they are managing the SKUs [stock-keeping units] they sell,'' Mr De Bortoli said.
Poor trading conditions and the wine glut were pushing rival winemakers to supply wine at greatly reduced prices that eventually found its way into private labels.
''It's tough because of their [supermarkets'] approach to private labels and the fact there are other wine companies being very aggressive in that area - someone has to supply wine to private labels.
''In a lot of cases [with private label wine] the quality is a lot lower, but it will take a while for the consumer to cotton on to that.''
Woolworths and Coles have been very successful capturing market share in the wine sector, with previous Woolworths boss Michael Luscombe admitting last year that home-brand wine was the biggest growth area in liquor.
''We are certainly seeing Coles more supportive of branded product,'' Mr De Bortoli said. ''They are not so absorbed on the private-label mantra that Woolworths are on.''
De Bortoli, a third-generation family business, is the latest producer to criticise the supermarkets for driving the deeper penetration of private-label goods in their stores.
In August, global food manufacturer HJ Heinz slammed the dominant market power of Coles and Woolworths for fostering an ''inhospitable environment'' for suppliers.
Its anger was fuelled by the growing dominance of private-label competitors to its own branded range.
The issue flared up again this month when Woolworths chief executive Grant O'Brien said the nation's biggest supermarket group would aim to double its sale of private-label products to represent about one-third of total sales.
A spokeswoman for Woolworths said the group carried 6130 domestic wines, including 225 private-label wines - less than 4 per cent.
''The wines we stock in individual stores varies according to customer demand,'' she said. ''Ultimately, it is the customer who drives what makes it onto our shelves.
''Our private-label wines deliver exceptional value for money and as a result are popular with customers.''
A Coles spokesman said: ''The number of private-label wines in our stores has remained broadly stable in our stores over the last two years. We don't have a target for private-label wine sales, our customers will decide what products they want to see on our shelves.
''Most private-label wine is sold in the entry-level category, where customers are less concerned about brand names and more focused on value. We are committed to ensuring our customers can buy the wine brands they know and love in our stores, as well as choose from a range of great value private-label wines.''
ASIC documents show De Bortoli had flat revenue of $197.7 million in 2010-11 as profit increased to $16.6 million from $13.42 million.
Article by Eli Greenblat from TheAge