AUS: Wine warning from former Treasury boss

(SMH) - The former boss of the world's biggest winemaker, Treasury Wine Estates, has warned that Australia's highly fragmented wine sector needed to consolidate to give it enough muscle to push back against the supermarket duopolies Woolworths and Coles who were demanding fatter profits for themselves.

David Dearie, who was ousted from Treasury Wine in September, is reported to have told the Wine Vision 2013 conference in London this week that recently one unnamed Australian supermarket group had set out a goal of reaping 35 per cent margins from its sales of wine.

Mr Dearie is reported in industry website Beveragedaily.com to have told the international wine conference that Australian wine brands were too weak to force a better deal from the two leading supermarket chains as opposed to brewers and some spirit producers who could resist the cash grab.

''I'm a brand junkie – and if you look at [the] wine industry, I would say that brands are not as strong as they are in many other parts of the world,'' Mr Dearie is reported to have said.

There are 2500 wineries in Australia, Mr Dearie told the conference, each with multiple brands which meant that tens of thousands of brands were competing for shelf space – shelf space dominated by Woolworths and Coles which together controlled more than 60 per cent of the wine category at the retail level.

The supermarkets were using their relative strength, and the wine sector's weakened fragmented state, to demand thicker margins than compared to other beverage categories.

''Recently one of them came  and said – we want 15 per cent margin from beer brands, 20 per cent from spirits brands and 35 per cent from wine brands,'' Mr Dearie is reported to have told the conference. Although he is not reported to have named the supermarket that allegedly made this demand.