Liquorland drop prices as part of repositioning strategy

Posted by Daniel Palmer on 10th November 2008

Liquorland, Wesfarmers’ largest alcohol chain, has permanently cut their prices in an endeavour to reposition the brand.

A Liquorland spokesman told the Australian Financial Review that the price cut represented “an integral part of our strategy to deliver better value to our customers.”

The move has been made following a review of liquor operations since the purchase of Coles Group by Wesfarmers last year. Since the review they have also managed to lure former Dan Murphy’s boss Tony Leon – an instrumental figure in building the burgeoning Dan Murphy’s chain.

Dan Murphy’s, which was purchased by Woolworths a decade ago when they had five stores and turnover of around $100 million, witnessed rapid growth under Mr Leon’s leadership as store numbers swelled to 88 and turnover grew to about $2 billion annually.

At the time of Mr Leon’s appointment it was widely believed that a price war could develop, with his well-renowned negotiating skills anticipated to heighten price pressure in the market. And it appears such a situation may eventuate as he competes with the chain he helped build.

Upon his appointment, Mr Leon hinted that he believed he could orchestrate a turnaround in the liquor division at Coles, which would see them flourish. “Having built a successful liquor business in Australia, I look forward to doing the same again in supporting the Coles turnaround,” he advised.

At a recent investor briefing Wesfarmers reported that Liquorland, which has around 630 outlets, would also increase their focus on convenience while another of their liquor chains – Vintage Cellars – would seek to improve its ‘specialist credentials’.