Busted selling booze

Alcohol priced to clear. Photo / Herald on Sunday

Supermarkets are wooing drinkers by selling alcohol for less than the breweries' listed wholesale price.

The two big supermarket chains - Foodstuffs and Progressive Enterprises - say they promised the public and Parliament they would abandon controversial "loss-leading" on alcohol.

That is the practice of selling beer and wine to shoppers at a loss to themselves, a tactic that can make the supermarkets money because people buy other more expensive products at the same time as coming in for cheap booze.

But health experts say it can have a huge negative impact on the community by encouraging binge and problem drinking.

Justice Minister Simon Power told the Herald on Sunday he was giving the industry a year to voluntarily disclose its pricing information.

"If the industry is not prepared to do this, the Government will consider regulatory options," he said.

The supermarkets insist their low prices are not loss-leading. Instead, they say they get confidential discounts that the breweries will not offer other retailers like liquor stores.

The Herald on Sunday has discovered instances of New World and Countdown selling beer for less than the cheapest bulk wholesale price listed by the breweries.

The newspaper compared the supermarket prices with price lists it obtained from DB and Lion Nathan.

They show that if retailers buy in bulk - at least 26 pallets of a single product - they can get it heavily discounted.

New World in Freeman's Bay sold 15-packs of DB Export Gold and Tui for $19.99 this week. But the cheapest bulk deal offered by the breweries works out at $23.04 a pack ($20.48 plus GST).

Foodstuffs' Freeman's Bay, New World and Pak'n Save, New North Rd, were also selling some of DB's Monteith's beer range for $21.99 a dozen, though the lowest listed trade price works out at $22.24 ($19.77 plus GST).

Their sister store, Pak'n Save at Sylvia Park, was selling 15-packs of Heineken bottles for $29.28, effectively $1.72 below the best listed trade price.

Countdown Sylvia Park was selling 24-packs of DB Draught for $29.99, working out at $5.43 below the listed trade price, including GST.

Foodstuffs executive manager Melissa Hodd said her supermarkets were able to negotiate "special" deals even better than those the breweries said were their best.

She said the deals were commercially sensitive and would not reveal details.

"The 'list' prices obtained by the Herald on Sunday do not reflect the pricing negotiated between us and DB."

Foodstuffs had promised not to loss-lead on alcohol, in recognition of "a change in public sentiment," Hodd said.

"We wanted to be seen as a responsible retailer."

Progressive, too, said it wanted "to be seen as a responsible seller".

The company's merchandise manager, Steve Sexton, said Progressive's supermarkets negotiated "additional discounts" to the list prices, so as to not lose money.

"The Government can audit us and they won't find any loss-leading."

For instance, DB discounted its prices further because it did not have to truck the stock to the supermarkets, he said.