By James Atkinson

Wesfarmers executives copped a grilling from analysts yesterday over the continued poor performance of Coles' liquor business.

At Wesfarmers' fourth quarter sales results briefing, Merrill Lynch's David Errington asked why it is that liquor continually holds back Coles' overall Food and Liquor performance by 0.9 per cent "every quarter".

"I want to know what you're actually doing with this business," Errington asked Wesfarmers managing director Richard Goyder and finance director Terry Bowen.

"It's not an insignificant business now, Woolworths have got $6.6 billion of sales, I think it's a $16 billion to $17 billion market," he said.

Errington's censure follows recent criticism by another analyst of 1st Choice's lacklustre online offering.

The Merrill Lynch analyst said he was particularly concerned by "the lack of pipeline of new stores".

"In this particular year you've opened six stores and Woolworths opened 43, most of them Dan Murphy's," Errington said.

"I don't mind if you've got legacy assets, but you've now had this business for five years, the business is not growing, you're not improving, you're not putting new stores out there, better stores," he said.

"I'd like to know why there hasn't been more improvement here."

Finance director Terry Bowen responded with a spirited defence of the liquor division, backing up earlier comments by Coles managing director Ian McLeod that the underlying performance across all brands in the liquor business had been positive.

Coles' headline food and liquor sales of $26.2 billion for the 2012 financial year were 4.6 per cent above the previous comparable period, while comparable store sales increased 3.7 per cent.

For the fourth quarter, total food and liquor sales increased 4.6 per cent to $6.5 billion, while comparable store sales increased 3.0 per cent.

Click here to read Terry Bowen's response to questioning on Coles' liquor performance.

The Shout Team

The leading online news service for Australia's beer, wine, spirits and hospitality industries.

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  1. The figures speak for themselves Coles liquor have opened 36 stores and closed 30 so in twelve months they have opened a net value of 6 stores with a tiny pipeline going into the future. This will inevitably continue to detiriate there business as they are not even the third biggest retailer, far behind both Woolworths & ALM which are both stepping up their business models. Looking back at the Coles liquor past since Wesfarmers purchased the business it has been a slash and burn approach to cut cost without growth and to be honest looking at the current approach it is more of the same with little care for growing the business but simply trying to get more profit from there reducing market share while the market leader soldiers on unopposed.
    If there was anyone willing to take the risks needed in this industry at the moment within the Coles business they would seize the opportunity within the depressed pub market and team with a business like Redcape with its new lease on life and try to build a business like Woolworths through buying the leaseholds to NLG’s pubs and creating a separate pub business to grow there off premise business through numerous pub purchases, especially with the numerous receiverships in the liquor industry.

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