Big chains abolish below-cost liquor deals

Cheap supermarket beer is a bait for customers, say critics. Photo / Greg Bowker

The two big supermarket chains say they have stopped selling alcohol below cost as a "loss leader", after claims the cheap deals lead to alcohol abuse.

Supermarkets have voluntarily given up offering liquor deals to encourage customers into stores where they buy other goods.

The decision follows criticism from the Liquor Licensing Authority that loss-leading "promotes the abuse of liquor" and may breach the law aimed at reducing abuse.

The two supermarket companies, Foodstuffs and Progressive Enterprises, have quietly made the decision at the same time.

Between them they own New World, Pak 'N Save, Foodtown, Woolworths and Countdown as well as the Liquorland chain.

Loss-leading is widely cited as the reason for the cheaper beer and wine in supermarkets.

But Foodstuffs and Progressive say it happens only rarely.

Labour's justice spokeswoman, Lianne Dalziel, said independent bottlestore owners had told her they could buy beer more cheaply from their local supermarket than from their regular wholesaler.

The voluntary ban was the first admission by supermarkets that loss-leading happened, and had only come about because of the Liquor Licensing Authority ruling.

"This sudden desire to fix up loss-leading is because they don't want the public to look at their practices," she said.

Loss-leading should be banned by law because it "literally pours alcohol into the community".

Alcohol Healthwatch director Rebecca Williams said she was "grateful but cynical" about the decision to stop below-cost alcohol sales.

"It is no secret that New Zealand has significant problems with alcohol consumption ... and price is a major contributor to availability and accessibility," she said.

"Their behaviour has been despicable really in the light of New Zealand's situation."

She hoped the supermarket's voluntary ban would not sway the Law Commission's review of liquor laws.

Alcohol Advisory Council chief executive Gerard Vaughan said:"I would only be convinced about their decision when alcohol is no longer cheaper than water in supermarkets."

Foodstuffs managing director Tony Carter said it was an "urban myth" that loss-leading led to supermarket specials, and the change would not lead to price rises.

There had been no collusion with Progressive over the decision.

Loss-leading promotions were done fewer than five times a year.

The change in policy was revealed after Herald inquiries. Mr Carter said this was because it was not viewed as a consumer issue.

He would not say how much alcohol Foodstuffs sold, but it was less than 10 per cent of the company's $7.5 billion turnover.

A Progressive Enterprises spokesman said it had also changed its policy to be responsible, and that loss-leading had happened rarely to match competitor activity.

Ms Dalziel said the ban on loss-leading should be made explicit in the law through an amendment to the Sale and Supply of Liquor and Liquor Enforcement bill now before Parliament.

A spokesman for Justice Minister Simon Power said this would not happen, although outlawing loss-leading would be looked at as part of the Law Commission's wider review.