Stronger liquor structure predicted

By TOM CLARKE

THE liquor industry will go through at least another five years of continuing change before it settles down, says change management specialist John Whigham.

Mr Whigham has become chief executive of New Zealand's largest independent national liquor operation, New Zealand Spirit Merchants Ltd, which represents 350 outlets around the country. The liquor industry is going through some fundamental changes that have opened up some huge opportunities, he says.

"Alcohol consumption in this country is falling, albeit marginally, replacement products are coming into the market, there's increased competition such as beer sales through supermarkets, there are falling margins and there are a large number of brands operating in a finite market," he says.

"Those factors can only add up to consolidation and rationalisation of the various structures within the industry, and particularly between brands, distribution channels and retailers. But I believe that out of that will come a much stronger structure to the industry that will be very beneficial to the end consumer."

Mr Whigham says many of these changes are already evident, such as the announcement by Allied Liquor that it will exit the market, the creation of the Continental Spirit Company through the amalgamation of Fosters and Seagrams in Australia and New Zealand, and Liquorland's rationalisation of its Robbie Burns outlets.

These changes are a function of the pressures now on the industry, he says, but they present New Zealand Spirit Merchants with opportunity. It is owned by the largest group of independent and major retailers in New Zealand, he says, and has the largest distribution channel in the country.

As a result of the Allied decision, many brand principals will have to consider their options, he says. Setting up their own distribution infrastructure in New Zealand would be a costly move that still would not guarantee them national access.

Alternatively, they might consider abandoning a competitive market altogether because everyone is struggling for profitability, or utilising a well-placed existing organisation like New Zealand Spirit Merchants.

Mr Whigham says the firm is already having discussions with some brand principals over representation in New Zealand. This, he says, will ensure a better balance to the market place and end some of the fragmentation in the liquor market which has always been a problem for major overseas brands.

The firm has already overhauled its storage and distribution system and has ended a strategic alliance with another independent group.

Mr Whigham, who has a background in change management and marketing, worked for some years with a British brewing company and later with Leyland Group, before joining Thorn EMI in Britain.

In 1993 he emigrated to New Zealand and continued working with Thorn EMI here until 1995 when he joined Budget Rent a Car as general manager. But in 1997 a family issue drew him home to his native Scotland and earlier this year he returned to live in New Zealand permanently.

Mr Whigham replaces the previous chief executive Ian McAteer who has retired.