Michael Bailey Deputy editor

Michael has been a business journalist for 12 years. He has extensive experience editing magazines covering funds management, commercial property and the travel industry. In 2011 he won a Citi Excellence in Financial Journalism award for a BRW cover story on economic indicators.

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Free Moët! Why an independent liquor chain can do it, and the majors can’t

Published 17 July 2013 12:00, Updated 19 July 2013 10:04

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Free Moët! Why an independent liquor chain can do it, and the majors can’t

Spend $90 on Tempus Two, get this $50 baby thrown in free in a loss-leading deal from Porter’s Liquor. Photo: John Woudstra

A free bottle of Moët & Chandon Impérial Brut is the latest ploy for foot traffic from the Porter’s Liquor marketing group of independently owned stores, whose general manager says the deal is structured in a way the “big box” chains cannot match.

The offer, which the group of 30 Sydney stores promoted with newspaper inserts last weekend, gives away a bottle of the French champagne with any six regularly-priced bottles from the Hunter Valley’s Tempus Two wine range.

It’s an “incredibly expensive” campaign to be borne by 30 stores, says Porter’s general manager Giuseppe Minissale, not least because the two suppliers involved – Australian Vintage Limited for the Tempus Two, and Moët & Chandon for the champagne – do not subsidise the deal at all.

“Our members are losing money on this deal in isolation, but it’s a great way of getting people into our stores, and once you’re there, buying the six bottles lets you get 20 per cent off anything else in the shop, Minissale says.

“A lot of people take the opportunity to buy limited release reds.”

Minissale won’t reveal how many bottles of Moët & Chandon, which Porter’s usually retails between $50 and $60, the group is prepared to give away. However three days in to an offer which runs until July 30, he says the network ran out of Tempus Two shiraz and had asked the winery to bottle more, which will be delivered this Friday.

An unbeatable deal

The “strong aspect” of the deal is that the major chains can not match it, Minissale claims.

It’s well known in liquor retailing circles that suppliers help fund “protection” for the major chains, so that if a competitor sells a particular product below cost, the chains are able to honour their “match any price” promise.

However such protection clauses do not apply to promotions where the rival retailer wears the loss, and the supplier has not discounted. The theory goes that the chains owned by Coles (First Choice, Liquorland, Vintage Cellars) and Woolworths (Dan Murphy’s, BWS) can therefore not match deals such as the Porter’s “free Moët” offer, as their large number of stores mean the balance sheet erosion would be too great.

Comment was being sought from Dan Murphy’s.

Australia’s “big box” retailers, which a well-travelled Minissale acknowledges are “absolutely world class”, will usually have the cheapest prices on single bottles. Dan Murphy’s is selling a bottle of Moët & Chandon Impérial Brut for $47.40, or $44.90 as part of a six-bottle purchase.

In terms of day-to-day pricing, Minissale says Porter’s is happy to play in the “convenience” space – it’s stores are often located on high streets near restaurants – and says the group, which operates as a limited-guarantee company, “doesn’t need” to expand beyond NSW.

“Although 40 or 50 stores would be nice,” he allows.

Porter’s has been doing three or four loss-leading deals for the last couple of years, Minissale says. In March the group allowed buyers of a mixed dozen of Penfold’s reds to get a case of the Barossa winery’s famed St Henri shiraz for $300.

“People who know wine know that was a good deal,” he says.

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