Upload
kezia
View
37
Download
0
Embed Size (px)
DESCRIPTION
Draft Liquor Bill (B23 – 2003) Public Hearing – 13 May 2003 Shoprite Checkers - Submission N. Presenter: Whitey Basson CEO - Shoprite Checkers. Shoprite . Currently operates 317 grocer’s wine licensed outlets Best represents the country’s demographic profile (LSM). - PowerPoint PPT Presentation
Citation preview
Draft Liquor Bill(B23 – 2003)
Public Hearing – 13 May 2003Shoprite Checkers -
Submission N
Presenter:Whitey Basson
CEO - Shoprite Checkers
Shoprite
• Currently operates 317 grocer’s wine licensed outlets
• Best represents the country’s demographic profile (LSM)
LSM1-3 LSM4 LSM5 LSM6 LSM7 LSM8Shoprite Checkers All Shoppers
Retail Shopper profile by LSM group
Shoprite• Total of 34m customers monthly• 60% of housewives shop at
Shoprite• Supermarkets sell approximately
22% of all unfortified wine
Bill objectives• Reduce socio economic and
other costs of alcohol consumption &• Promote the entry of new
participants in the liquor industry
1. 3 – Tier system• Manufacturer–Micro Manufacturer (not
specifically determined)• Distributor• Retailer
Disadvantage of 3 – Tier system • Abandonment of existing
infrastructure–Procurement (now only from
distributor)–Re-distribution not permitted
• Result = Increased cost
Disadvantage of 3 – Tier system (cont.)• New entry to the second tier
will be very costly while efficient distribution systems currently exist• Inevitably a cost passed on to
the already burdened consumer
Disadvantage of 3 – Tier system (cont.)• Price sensitive product– Increased price = reduced volume
(source: USB price elasticity –1)Price increase 20% volume down 20%
• Influence on employment–345 000 farm workers wine industry
Disadvantage of 3 – Tier system (cont.)• Proposed 3 tier system does not
dilute current monopolies of manufactures–Second tier will continue to dominate
sector as currently experienced by small retailers because of size and brands
Disadvantage of 3 – Tier system (cont.)– High establishment cost of new brands to
manufacturers without direct access to consumer markets – reduced competition (Possible control of delivery)
–We believe the 3 tier system will not meet its objectives as it failed in the USA – see handout of Adv Pretorius (advisory to the competitions board)
2. Conversion of Grocer wine license• Section 5 provides for the conversion
of current wine grocer licenses to full off-consumption licenses
• We welcome this– Require OPTION to retain the grocer wine
licenses as some locations cannot be converted.
– Extend range to include beer (reasons later in presentation)
Conversion of Grocer wine license (cont.)• For the following reasons:–No regulations available–Adhere to the specific needs of
community in which we operate–70% of wine purchases in
Supermarkets are made by women • conversion to a full license will force them
back into the old bottle store environment which they resent
Conversion of Grocer wine license (cont.)–Reduce grocers ability to lower
prices (10 – 15%)–Removal of the grocer wine license
will reduce competition and increase price discrepancy
Conversion of Grocer wine license (cont.)–Supermarkets are•well controlled and disciplined• comply to all the requirements of the
act not to sell liquor to minors and other unqualified people
–Tax collection is structured and controllable
Conversion of Grocer wine license (cont.)–Worldwide, liquor products across the
total range are offered for sale in retail supermarkets
3. Empowerment• The difficulty of achieving
objectives like– broadening the manufacturing and
distribution channels –and economic empowerment
• Is highlighted by the following slides of the current distribution control in the liquor industry
Empowerment (cont.)• Beer – 96% of the beer market is
dominated by a single manufacturer and beer equals 53.9% of the total liquor market • This resulted largely to the failure
of new participants entering the beer market succesfully in the 60’s
2.7 0.2 0.1 0.1 0.1
96.6
SAB
Win
dhoe
k
Bav
eria
Bra
u
Bec
ks
Gui
nnes
s
Impo
rted
Kilk
enny
Off consumption – Supplier % Share of Total Beer marketYE Feb/Mar 2003
Total Liq Off-cons – Category % Share of Total Liq market
24.5
11.57.8
2.3
53.9
Bee
r
Spiri
ts
Tot.
Unf
orts
Flav
Alc
Bev
Forts
YE Feb/Mar 2003
Empowerment (cont.)• New entrants require organised
high volume outlets such as supermarkets to enter and launch new brands successfully in the beer market and
• Utilise the efficient distribution network of grocers to deliver their products
Empowerment (cont.)• Wine–Brands are also strongly controlled –
unless diluted by strong retail channels new entrants will fail–Grocers successfully established
new wine brands and this could be enhanced should beer sales be permitted
Total Liq Off-cons – Supplier % Share of Total Liq market
20.8
8.63.4 1.6 1.2 0.7 0.4 0.1
10.0
53.2
SAB
Dis
tell
UD
V
E Sn
ell
Dou
glas
G
Seag
ram
s
Bro
wn
Form
an
Moo
iuits
ig
Jonk
eer
All
othe
r
YE Feb/Mar 2003
Conclusion• Welcome intentions of legislature–To weaken monopolies–Promote new entrants
• We believe the 3 tier system will not meet its objectives (US failure)
• 3-tier System to be properly investigated before implementation
Conclusion (cont.)
• Supermarkets holds the key to–New entrants–Effective Distribution–Delivery to the public –Responsible manner–Lowest prices
Conclusion (cont.)
Supermarkets will develop industry as a whole creating export
opportunities and employment
Thank you