Champagne off Dan Murphy’s shelves in Woolies dispute with Moet owner

Woolworths is embroiled in a protracted price battle with upmarket brands including Moet, Chandon, Krug and Dom Perignon.

Dan Murphy’s has been forced to take down from its website the key LVMH brands. Picture: AFP

Shoppers heading into their local Dan Murphy’s for a bottle of Moet champagne or vintage Dom Perignon are likely to be walking out empty-handed after a feud between Woolworths and the world’s leading owner of luxury brands, French conglomerate Louis Vuitton Moet Hennessy, spilt into the aisles.

Woolworths is embroiled in a protracted price battle with LVMH over the French luxury goods giant’s stable of best-selling liquor brands that has resulted in Australia’s biggest supermarket and liquor retailer running almost dry of supplies of Moet, Chandon, Krug, Dom Perignon, Glenmorangie whisky and Cape Mentelle wine.

It is believed the stand-off began in February, when LVMH demanded a price rise for some of its key products from Dan Murphy’s, which the supermarket group refused to agree to.

Hopes of a negotiated deal soon evaporated, leaving the supermarket retailer’s big-box liquor chain Dan Murphy’s dangerously low on crucial supplies.

It leaves most of its stores almost empty of brands such as Moet, which commands about 40 per cent market share of the Australian champagne market, and Veuve Clicquot, which has a share of more than 15 per cent. It is estimated these top champagne brands alone generate more than $300m a year in sales, of which Dan Murphy’s would account for a significant portion.

The inability of Dan Murphy’s to fully supply these popular liquor brands to its customers comes at a time when alcoholic beverage sales are booming in Australia as restaurants, bars and nightclubs are closed and people are drinking at home.

These boom conditions have helped champagne sales in Australia return to growth after large falls last year, with liquor outlets doing a brisk trade. But now Dan Murphy’s will be competing with one arm tied behind its back because of the supplier dispute.

Dan Murphy’s has been forced to take down from its website the key LVMH brands that it now has inadequate supplies of, namely Moet, Veuve Clicquot, Chandon, Krug, Dom Perignon, New Zealand’s Cloudy Bay wine, Cape Mentelle and Glenmorangie whisky as it is now unable to fill consumer purchases.

Consumers who search for these brands are directed to competing offers, so someone searching for Moet is offered Mumm instead, and a search for Glenmorangie brings up Jack Daniel’s and Chivas Regal.

Shoppers walking into Dan Murphy’s stores looking for a bottle of Moet or Glenmorangie whisky are being told by Dan Murphy’s staff the retailer is out of stock and that hopefully supplies will be replenished soon.

The dispute has pitted the might and global power of LVMH, which owns a rich stable of luxury goods, from liquor to fashion, against Australia’s biggest retailer and will test the respective strength of supplier and wholesaler.

Typically in Australia, Woolworths is big enough to dominate the power game with smaller suppliers, but in LVMH it is facing a global behemoth with a market value of €200bn ($328bn), seven times its own size.

Although Dan Murphy’s, the biggest liquor outlet in Australia, was able to draw down existing supplies to meet consumer demands, those quantities were quickly depleted.

A spokeswoman for Endeavour Drinks, the Woolworths business that owns Dan Murphy’s, declined to comment on the dispute.

“We don’t make public comments on our commercial dealings with suppliers. We’re working with the supplier to improve product availability for our customers as soon as possible,’’ the spokeswoman said.

Disputes between suppliers and retailers are not common, but when they break out can lead to stalemates that rob the brand owner of a key sales channel and leave the retailer stranded without key products that customers expect, demand them to stock, and will cross the road to rival retailers to purchase if needed.

In 2015, a price battle between Coles and US food group Campbell Soup Co over its biscuits resulted in Australia’s favourite guilty pleasure, the Tim Tam, not being sold to the nation’s second-biggest supermarket chain.

That dispute was triggered when Arnott’s, then owned by Campbell, demanded price rises of up to 10 per cent for some of its biscuits — including Scotch Finger, Teddy Bear and Monte Carlo — and a similar rise on some popular Campbell’s cooking stock products.

It blew out to a full-scale blockade, with Arnott’s refusing to supply Coles with up to six Tim Tam varieties and a range of other biscuits. Woolworths remained supplied during that ­battle.

In 2011, popular brewer Foster’s refused to sell its key beer brands such as VB to Coles and Woolworths after the two chains planned to sell them below cost.

The Australian contacted LVMH for comment.

Woolworths is scheduled to release its full-year results to the market on Thursday.