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Supermarkets continue to use price as their key weapon in enhancing market share. Each week flyers go in to every letterbox leading with their latest promotion of cheap wine and cheap beer. This approach is completely at odds with the submissions made and commitment given to our members of parliament prior to supermarkets being given access to beer and wine.
Supermarkets argued that beer and wine were simply an accompaniment to food which is why they wanted those products on their supermarket shelves. They indicated at the time that they would not use alcohol as a loss leader.
Clearly both supermarket chains have moved on from that approach and are competing aggressively on price for market share. Given that those commitments have been broken perhaps it’s time for Government to revisit the rules under which supermarkets operate. The Government is proposing amendments to the Sale of Liquor Act and they should consider taking the opportunity to address supermarkets pricing strategies.
One approach would be to ban supermarkets and indeed all liquor retailers from advertising the price of those products outside their premises. The ability to promote the availability of certain brands and what alcohol products are for sale would continue to be permitted. Banning the advertising of price would remove the incentive to use alcohol products as a loss leader. The supermarkets should not have a problem with this as this approach is consistent with their commitment in 1999.
Parliament agreed to give the supermarkets access to beer and wine on the basis they would not compete on price, given that the supermarkets have reneged on this deal perhaps it’s time for the Government to revisit this position.
Bruce H Robertson
Chief Executive
Hospitality Association of NZ
3 March 2008 |
