Woolies eyes off alcopops
Woolworths is rumoured to be looking at the country's biggest alcopops maker. Janine Perrett reports.
WOOLWORTHS is rumoured to be looking at the country's biggest maker of pre-mixed drinks, Independent Liquor, as a potential supplier for its fast-growing, private-label beer business, and to reduce its reliance on Foster's Group and Lion Nathan.
Speculation is rife that Woolworths has been examining its options: an outright acquisition of Independent Liquor, a partial acquisition, or a formal strategic alliance. The business is believed to be worth about $700 million, which is much less than its two private equity operators paid for it three years ago.
The battle for market share between Coles and Woolworths is running hot, and it is becoming harder for either to grow without running into competition issues or legislative problems.
Independent Liquor produces and distributes beer, wine and spirits here and in New Zealand, including Haagen and Carlsberg.
A spokesman for Woolworths said there were always rumours about Woolworths and he would not comment.
A source close to Independent Liquor said a tie-up with Woolworths made strategic sense. Not only would it enable Woolworths to increase its house brands, but it would give access to costings that could be used to get better terms from the bigger suppliers, Foster's and Lion Nathan.
''They can say, we will do it ourselves if you don't give us certain products at a specified margin,'' he said.
Independent Liquor, which was sold to private equity operators PEP and Unitas in December 2006 for $NZ1.3 billion, already contract-packages the company's house-brand beer, Platinum Blonde, on the eastern seaboard.
Woolworths also has a private-label beer, Dry Dock, and wine brands Cow Bombie and Bailey & Bailey. It is the exclusive distributor of Mexican beer Sol.
A deal would fit in with the company's plan to increase its private-label brands.
Last year Woolworths bought 25 per cent of West Australian boutique beer operator Gage Roads, which makes private-label beer to sell in Woolworths liquor stores.
A recent report by research firm The Nielsen Company showed that Australians had increased spending on private-label brands in 2009, up 4.3 per cent from the previous year. Private-label brands now account for 22.5 per cent of total grocery spending.
According to Woolworths, about 2000 of its product lines are private labels and they have been adding to them at a rate of two to one against branded products.
