By Andy Young
Next year will see the formation of a new national retail group, with more than 500 stores and with plans to become one of Australia’s top five liquor buyers.
The group will be known as Pentagon Ventures and with regulatory approvals now in place the group is working hard to launch for Easter 2016.
An industry source told TheShout: “There is a group being formed right now that will effectively become one of the top five liquor customers in Australia. We’re talking bigger than Thirsty Camel, we talking bigger than ILG. It will be up there challenging the likes of IBA, LMG; it's on that sort of scale.
“This a group of like-minded independent retailers, who are coming together to create a genuine alternative route to market. When you start talking about being one of the top five liquor customers nationally, that is a pretty big and a serious thing for the country.”
As an idea of the scale of the new group, Thirsty Camel currently has 450 stores and the Liquor Marketing Group represents more than 1400 independent operators in the off-premise market.
The source revealed that although suppliers will not yet be aware that this group is coming, when it does launch it will provide them with a one point of contact, simpler route to market.
The source added: “The supplier community is reorganising at the moment, with their changing structures and there is a desire from the supplier community to simplify their route to market and to have a single point of contact. This is one of the things that this group of customers is putting in place.
“The group will be increasing volume, shifting share, pricing and retail execution. This is about providing a genuine alternative route to market for the larger suppliers.”
As negotiations among the retailers go on with the formation of the group, things have been kept very quiet, especially while the group has been working on regulatory approvals across the country. But according to TheShout’s source, those approvals “seem to have been achieved”, so the group is now preparing to engage with a selection of suppliers, which will be by invitation only, with a view to launching by Easter next year.
I like to think on what these announcements actually mean by looking into the wording, and then I like to ask questions.
The pie is only so big at the moment, so is the intention of the group to increase the size of the pie or just carve it up differently? If they are going to increase the size of the pie how do they intend to do it? If they just want a bigger part of the current pie, why would the major suppliers back them differently than they do the chains or other major groups?
What is their commitment to staff training and career development for their staff who will be the ones who make or break the venture? What of the smaller suppliers who can give outlets a point of difference that consumers look for these days? Or will the group be just another incarnation of BWS et.al. with a different banner? This is the sort of detail that should be addressed in the release.
Agree, why is a supplier going to drop his dacks further when volume remains constant. The consumer isn’t going to start drinking more.
Here we go again, i have been in this industry since 1977 and seen a lot of changes over the years.
The industry needs a stronger lobby at government level when you look at the current market share held by the main players.
The four main players make up 75% of the market leaving 25% for the independents and you have several buying & marketing groups competing for this 25%.
One of the major players make up just under 50% share of the 75%, in most western countries their government’s market share cut off is 20%. It is out of control here and the government is still allowing the big boys to grow share.
Now we need to look at what this growth has created for the consumer, lack of choice, the consumers brand of choice no longer stocked and replaced by one of their own brands.
Looking at the press release by the pentagon-ventures it looks to me like they think they have a few friendly large suppliers with strong brands that will support their venture but it will not be at the expense of the big boys. These large suppliers are now panicking as a lot of their brands are not required by the four large retailers and their business model is in a sales decline and see this as a lifeline.
I would be very surprised if any of the independent buying & marketing groups were showing healthy growth, what i am seeing in the independent sector is the operators who are working their retail business and offering a different offer to the big boys are doing well.
This business is not as simple as putting up a fancy banner and your staff in a nice uniform and hoping the consumer will support your business.
The other issue is you have 500 outlets owned independently and a lot of different egos and personalities to deal with, good luck if you can get them all on the same page.