By James Atkinson

New laws under consideration by the Queensland Government to allow the sale of alcohol in grocery stores could severely undermine the state's hotel industry, according to hotel advisory firm PJT Accountants.

The Newman Government this year released a discussion paper asking for input on the future of the state's liquor and gaming laws, with alcohol in supermarkets among the options on the table.

PJT partner Wayne Patten told TheShout he recently met with Attorney General Jarrod Bleijie, who has responsibility for the state's liquor and gaming portfolio, to raise the concerns of hoteliers.

Patten said grocery operators such as Aldi and IGA claim to be unfairly discriminated against by not being able to sell alcohol in a similar way to mega chains Coles and Woolworths. 

He said he explained to Bleije that in order to obtain this competitive advantage, Coles and Woolworths were required to purchase a local hotel to obtain the necessary liquor licence, an astute move overlooked by smaller operators and a significant investment which saw positive growth in business valuations throughout the industry.

"These businesses have committed hundreds of thousands of dollars into purchasing and setting up detached bottleshops, and in the process employing thousands of Queenslanders," he said.

Patten, who previously owned a pub himself and still represents many hoteliers through PJT's specialist hotels division, said many Queensland hotels are currently "hanging on by a thread".

"In some cases bank valuations are just 50 per cent of the value they enjoyed just four to five years ago when the industry was booming," he said.

"Many hoteliers are committed to long-term leases, negotiated when the market was buoyant. In this much tougher market, margins are thin but the lease outgoings remain constant."

He said PJT's belief is that the valuations of hotels will be severely impacted by allowing supermarkets to sell alcohol.

"This opinion is shared by leading banks and bank panel valuers, as a reduction in bottleshop sales will ultimately mean a reduction in profit, thus less value in the hotel," Patten said.

Patten claims that if Coles and Woolworths are not required to own hotels for the sale of liquor, they may sell their hotel interests should the legislation pass, and therefore flood the market – further reducing hotel valuations.

The Shout Team

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

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  1. The jewel in the crown for Woolworths and Coles in owning pubs is pokies (electronic gaming machines – egm) and not liquor or pub ownership. Woolies owns 13,000egm and Coles has 2,740egm. Liquor and property assets are secondary or inconvenient baggage. Gaming makes them in the order of $5m a day in net metered wins or about $1.7 billion a year.

    However, enabling chain stores to sell liquor at super markets, will drive further competition in liquor pricing, eroding sales at family and privately owned pubs, ultimately profits and hotel values. When profits erode so do loan repayment capacities and value depreciation upsets loan to value ratio leaving debts unsecured and banks calling in loans.

    The major chain duopoly of Coles and Woolworths has now penetrated every sector of household demand including fuel, bakery, butcher, grocery (fresh dry & packaged) and liquor by owning pubs.

    Ultimately the chain stores would be limited to their original core business – “Groceries” which would significantly benefit small businesses and the hundreds they employ.

    Take the fuel industry, over the past 20 years, its declined from about 20,000 retailers (service stations) to currently just a few more than 6,000. The sad thing is that pubs are following a similar trend. Take the Burdekin district south of townsville. In the past 18 months, two hotels have been placed into receivership with the mortgagee now in possession of the assets and guess what, the town has a chain store owned pub!.

    The private sector is pushing S!!t up a hill because of the shear purchasing power of chain stores and where their egm revenue can substantially subsides other income streams to create unrealistic competition and pricing!!!!!!

  2. It seems extraordinary that extension of liquor supply outlets is even being discussed considering that liquor is being blamed for everything from an ingrown toenail to murder!! Make up your mind, authorities!

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