Coles set to axe Vintage Cellars and First Choice brands as it takes fight to Dan Murphy’s

Coles is set to scrap two of its liquor chain brands, Vintage Cellars and First Choice Liquor Market, to fold them under the better-known Liquorland banner in a bid to boost sales and claw back market share lost to its larger rival Dan Murphy’s and BWS.

Liquor sales were a dent in Coles’ otherwise solid full-year results announced last week, with revenue rising 2.3 per cent but reported earnings for the division sliding 6.5 per cent. Meanwhile, Dan Murphy’s and BWS operator Endeavour Group notched 3.4 per cent sales growth and 4.7 per cent lift in operating earnings.

Coles is eyeing big changes to its bottle shop brands.

Coles Liquor chief executive Michael Courtney said its customer research showed Liquorland was “by far the strongest brand” that resonated with customers.

“What those two brands [Vintage Cellars and First Choice Liquor Market] suffer from is low brand awareness,” he said.

“With Liquorland as by far our strongest and most well-known brand, we feel that by extending that brand to those locations will lead to greater awareness with customers and drive more foot traffic into those stores in what we know is already a strong customer experience.”

First Choice Liquor Market operates in a big-box format featuring a wide range of alcohol categories, similar to Dan Murphy’s, while Vintage Cellars is Coles’ more upmarket retailer with roots as a fine wine chain.

‘What those two brands [Vintage Cellars and First Choice Liquor Market] suffer from is low brand awareness.’

Michael Courtney, Coles Liquor chief executive

The changes are being floated as a pilot starting with the South Australian market, where there are 45 stores across the three brands. Six First Choice Liquor Market stores and three Vintage Cellars stores will be rebranded to “Liquorland Warehouse” and “Liquorland Cellars” respectively. A further two First Choice stores in Queensland and three Vintage Cellars stores in Victoria will also be part of the pilot to kick off in November.

The move will also streamline the liquor chains – effectively run as three separate businesses – into one, bringing together separate promotions and loyalty programs.

“In one week, Liquorland may have a promotional price on a Corona six-pack. Then the following week, First Choice Liquor might be running a promotion on Corona six-pack.

“When we’re doing it three different ways, [across] three different brands, that’s not particularly friendly or easy to shop for the customer.”

Customers were also asked whether all 992 stores should be rebranded as simply “Liquorland”, but Courtney said the feedback indicated shoppers would find it helpful to retain certain descriptors to indicate which stores would have a broader range and which had a more premium offer.

As family budgets remain under pressure from higher household bills, Australian shoppers have been cutting out alcohol from their budgets, swapping steak and chicken schnitzel for fish and chips and burgers at the pub, and shopping more private label brands at the supermarkets.

Courtney said the liquor market was in a “challenged space for growth”, creating more competition between industry players.

“When we’re in the situation where sales growth is low for the market, but cost inflation remains high, that puts pressure on earnings,” he said. “We’re focused on making sure we’re doing everything we can to have as strong a customer offer as possible to be driving top-line sales the best that we can.”

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