“Honest” Coles still doesn’t declare private label wines

Posted on May 1, 2016

Private label wine production is all about “integrity”, respect for wine producers and competing with brands on quality, according to the head of Coles supermarkets’ 500-strong portfolio of retailer-owned liquor brands.

So much so, apparently, that Lucy Clements feels “a real responsibility to make sure… our liquor stores are true and honest places to sell your wares.”

Mind you, that heartfelt dedication to honesty doesn’t extend to actually telling the customers of the supermarket’s three retail liquor brands who produced their next wine purchase.

“Whether customers know it’s a private label or not, it’s the way they fall in love with that wine, and that actually for me is important and that’s what drives loyalty,” she told The Australian last week.

And it’s not just punters who can’t tell the difference. We at Vinloco spend an indecent amount of time traipsing the aisles of Australia’s major wine retailers to make sure we’re covering what Australian wine drinkers buy.

We also spend hundreds of hours entering thousands of barcodes, prices and scores from wine shows into our database so we can calculate what constitutes a good value wine.

So we think we know our wines. And, yet, even we still get tripped up by private label wines masquerading as genuine brands.

It’s an issue that continues to vex the local wine industry.

Critics of the practice, which is now estimated to account for as much as 25 per cent of retail wine sales in Australia, base their attacks on the counterfeit nature of the retailer-owned labels while others declaim their contrived provenance.

A senate enquiry heard last year that private labels were “decimating” Australia’s 2500-plus wine producers.

“Many small businesses are precluded from a reasonable opportunity to trade, the public are misled as to the true source and nature of the products offered and legitimate traditional businesses and skills are lost,” said Wines of Western Australia.

The supermarkets’ brutal grip on the industry was illustrated in a report into the wine production industry’s profitability commissioned by the Winemakers Federation of Australia.

The report, written by Centaurus Partners in 2013, found that Coles and Woolworths had gouged just about every dollar of profitability out of the wine producers in just five years.

A high dollar restricting exports and an oversupply of grapes were partly to blame but producers told Centaurus they felt the main factor was the unrelenting pressure applied by Coles and Woolworths which control a combined 70% of retail wine sales in Australia.

Practices honed over years in the grocery aisles – such as funding “price support” (read, supplier-funded discounts), paying for shelf space and placement and subsidising supermarket-owned marketing material – were now being compounded by the supermarkets turning on their suppliers and becoming their competitors by commissioning their own labels.

Woolworths’ efforts in this area accelerated with its purchase of Cellarmasters – a vertically integrated grower, producer, bottler and direct marketer of wines.

With its newfound knowledge of the marginal cost of wine production, Woolworths would demand suppliers offer prices as close to cost as possible or be replaced by an alternative supplier if not its own brands produced in-house or by a contract producer.

Good news for contract producers? Maybe not. The razor-thin margins offered by the supermarkets forced even one of Coles’ biggest contract suppliers, Littore Wines, to the wall last year despite producing cornerstones of its private label range such as Trails End and Whispers.

Wine producers acknowledge private label wines aren’t going away. The best they can hope for is more transparent labelling declaring the wines’ ownership by the supermarkets.

Coles, which now counts more than 500 brands across its stable of private liquor labels, doesn’t look like it’s going to play ball.

Despite telling The Australian last week about its respect for branded wine producers, Lucy Clements dismissed local winemakers’ concerns as an immature reaction to a practice now well-entrenched overseas.

“I come from a very long background of private label wines, and I’m extremely proud of the work we are doing in that zone, I know that it fits with what Coles wants to do in the future and we want private label wines to be a much bigger part of our customers’ drinking experience,” she told the paper.

Can you tell which wines are retailer-owned?

Can you tell which wines are retailer-owned?

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