By James Atkinson

Coles isn't interested in selling liquor to its independent competitors and has introduced case limits to stop the practice, says Terry Bowen, finance director at parent company Wesfarmers.

Responding to tough questioning from analysts yesterday, Bowen said the recently introduced case limits had impacted Coles' liquor sales in the last quarter, but it was for the greater good.

"We did take a couple of decisions in the quarter which probably were a bit long overdue," he said.

Bowen said Coles didn't want the extra volume that flowed from promotional activity if it just meant that the company was selling to its local competitors at very low margins.

"It didn't seem to make a lot of sense because you don't get any other add-on sales, they just come in and load pallets of product into their truck and drive to their store," he said.

"In moving away from that, we certainly saw total sales come down."

Bowen said Coles Liquor's new management team did a lot of work in "price architecture" in the quarter which had been particularly positive in Liquorland as well as 1st Choice.

"Promotional effectiveness in 1st Choice was much better in the quarter than we've seen," he said.

"Private label sales, we're putting a strong focus on bundling offers and they've worked pretty well."

Bowen also defended the liquor division's store rollout program. He said the closure of some Liquorland stores to bring down the net number of liquor stores was "arguably facing into some network issues that this business had for some time".

"That's a good thing for the business to be doing and no different to what we did in supermarkets," he said.

Bowen nonetheless acknowledged Coles was trailing Woolworths in new store openings.

"But we are opening a reasonable number of stores up and we expect to continue to do that, hopefully even at a faster rate," he said.

"If you look at the stores we've opened during the year, we've opened 36 stores, eight of those being 1st Choice stores."

Bowen concluded that Coles liquor operations were back on track.

"Our new management team helping Tony Leon are doing a pretty good job at this stage," he said.

Click here for more on Coles' sales results.

The Shout Team

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

Leave a comment

Your email address will not be published. Required fields are marked *