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Loose lips sink shops

Published:  18 January, 2007

Have you been wondering where Grant Ramage, former senior wine buyer for Oddbins, has been hiding over the past few months? Well let me enlighten you: he's alive and well and living in Melbourne, where he's been hired as a key player in the development of the wine and spirits arm of Australia's biggest retailer, Coles Myer.

Ramage's initial job has been to build the range in First Choice, Coles Myer's new chain of liquor superstores', the prototype of which opened a couple of weeks ago across the road from the company's head office (which ought to keep the employees on their toes - oh, and while I'm in parentheses, I should tell you that Coles Myer spell their store 1st Choice' and I should too, probably, but I think it looks silly - just as I refuse to write Yellow Tail as [yellow tail]').

I had a stroll around the new megastore - sorry, superstore - recently with Ramage and the managing director of Coles Myer Liquor, Peter Scott, who's come across from heading up the company's chain of office supplies superstores. And I'd love to be able to relate to Harpers readers - many of whom know him - how Grant is finding life in Melbourne, and how he compares the Australian retail scene to that in the UK. But I can't. Apart from very basic information about products, Ramage was unable to tell me anything about his own experiences or views. When I asked, Peter Scott interrupted: We don't want to do personal interviews. It's about First Choice. You know the routine.'

Um, well, no, I don't actually. I'm used to interviewing winemakers, viticulturists, CEOs of major wine companies - and have never been told that personal questions are off-limits. Ah yes, said Scott, but as you come up the value chain at the consumer end, there's more sensitive I.P. around, and whatever you talk about, everyone reads about it.'

In other words, there's too much at stake here. In wartime, as your grandad will remind you, loose lips sink ships. And this is a war - between Coles Myer and the other player in the Australian retail duopoly, Woolworths. First Choice is the former company's serious attempt to stop the march of the latter's chain of discount grog warehouses, Dan Murphy's (founded by a Melbourne retailer who built his reputation on savage discounting in the 80s and 90s - slogan: Nobody, but nobody, beats Dan Murphy' - before selling the company to Woolworths). There are currently 36 Dan's stores across the country, with another 15 in the pipeline; the plan is to open 75 First Choices in the next five years. This may not sound like a lot to you, but considering Australia's population (20 million) concentrated in a very small number of urban centres, it is significant.

Ramage and Scott may be proud to show off First Choice's impressive range of single malts, trendy vodkas and boutique winery ross (now really: who would ever have thought this would be such an explosively expanding market segment?), but the real battles will take place in the aisles stacked floor-to-ceiling with extravagantly discounted commercial wine brands.

Importantly, Scott and Ramage have opened a new front in this war: Champagne. Coles Myer has gone out on a limb and started importing some well-known brands - Bollinger for example - direct, rather than buy from the Australian wholesaler, in this case, Tucker Seabrook. There's a lot of cost in the value chain here in Australia,' Scott told me. We've taken that cost out of the value chain.' Ramage also confirmed that Coles Myer was talking to some medium-sized Australian wineries about also supplying direct.

Again, parallel importing (or buying direct from the supplier and sidestepping the wholesaler) is nothing new to you, but it is a significant crack in the ingrained three-tier system Down Under that is worrying both producers and distributors.

No wonder one of the reasons Foster's CEO Trevor O'Hoy gave for wanting to purchase Southcorp was to strengthen the company in the face of the two increasingly aggressive major retailers. No wonder brewer Lion Nathan, owner of a slew of premium Australian and New Zealand wineries including Petaluma, St Hallett and Wither Hills, as well as wine distribution arm, Distinguished Vineyards, is, as I write these words, reportedly looking to purchase wholesaler Tucker Seabrook. And no wonder Tuckers are considering selling.

I'd love to know how Grant Ramage feels about his buying decisions having such far-reaching ramifications for the Australian wine industry and trade. Shame he can't tell me.