Small firm takes on brewery monopoly

Press, 1 November 1978, Page 33

Small firm takes on brewery monopoly

PA Dunedin The breweries’ tight control of mueh of the New Zealand liquor industry is being challenged by a relatively small Dunedin firm, Wilson Neill Wines and Spirits, Ltd, in a three-pronged attack.

The hotel-leasing system. the sales policy of Distillers New Zealand, Ltd, and the regulations governing liquor sales to sports clubs and other an-cillary-licence holders are all being taken up with the appropriate authorities by Wilson Neill

In the case of Distillers, the part brewery-con-trolled company that makes nearly all of the New Zealand’s gin and vodka supplies, the challenge relates to Wilson Neill’s inability to obtain bulk supplies of the spirit. Wilson Neill’s general manager (Mr M. Smith), said his company requested bulk supplies but had been told by Distillers that it would supply only bottles.

“We were prepared to supply our own drums and take something like 600 gallons of vodka and 1000 gallons of gin a month to sell in flagons or to let the public fill their own,” he said. “We estimate a saving of up to 36 per cent to the customer purchasing gin or vodka in fill-your-own flagons. It can be related to our experience with whiskey, where the fill-your-own-flagons system gives the customer the equivalent of three bottles for the price of two.”

The standard price of a bottle of scotch is about $8.75. Wilson Neill sells flagons at $16.95. Wilson Neill has asked the Department of Trade and Industry to examine the situation and is seeking a ruling that Distillers is acting in a manner contrary to the public interest in declining to sell its products in other than quart bottles or similar.

Action under the Commerce Act is being considered against the present hotel-leasing system. The Department of Trade and Industry is studying representations made by Wilson Neill and if it considers there is a strong enough case the matter will go to the Commerce Commission.

Mr Smith said the Sale of Liquor Act did not allow a reduction of mortgage or interest rates on the condition that a lessee purchase liquor from a particular supplier.

He believed some leases now in force were in breach of sections 296 and 297 of the act in that interest reductions were given if purchases were made from a nominated supplier or if certain brands of products were bought.

Such activities were also illegal under the Commerce Act because the lessee offered only one brand of bulk ale and a range of products deemed by his supplier to be agency lines. The advantages of changing the present leasing system would be to give a fuller range of products in all leased hotels and to reduce prices to the lessees and the consumer as a result of increased competition. In the past, lessees had not been willing to buy liquor from different sources because of fears that leases might not be renewed. For 115 years Wilson Neill had dealt largely with hotels and in one year had lost 85 per cent of this business because of the acquisition of the hotels by monopolies.

This had led to the loss of big agencies such as for Johnny Walker and White Horse whiskeys. Wilson Neill was taking action because it had nothing more to lose in this field.

The third prong of the Wilson Neill attack is to ask the committee on ancillary licences to recommend a change to the

regulations governing the licences to prevent a situation similar to the hotellease system arising.

Mr Smith said it was not the intention to stop breweries from offering to install facilities for cluba but to prevent them from doing so in return for the sole use of their products or the products of their associate companies. "The biggest advantage of our moves, if they succeed. will be that the average New Zealander will be able to purchase a much wider range of products from his usual hotel or drinking place.” The public relations officer for Lion Breweries. Ltd. (Mr D. J. Fitigerald) had little comment to make except to say that the terms of hotel leases were well known to the Commerce Commission. The country's biggest gin and vodka supplier, the Distillers Company (N.Z.). Ltd. has commented that part of Wilson Neill's challenge was in asking the Department of Trade and Industry to rule on whether what it referred to as

the part brewerycontrolled company, Distillers New Zealand, Ltd.” was acting in the public interest by not selling its products in bulk. The general manager of the Distillers Company (Mr G. W. Hannah) said hi. firm was “neither part-owned nor influenced by brewery interests.” Mr Hannah said the company international policy prohibited the supply of anonymous bulk gin or vodka to protect the reputation of all brands on the market.

"The company does not believe in acting in a manner contrary to the public interest,” he said. "By marketing branded products in bottled form only, consumers can be secure in the knowledge that the product is true to libel is always of the highest and most consistent quality and is backed by the reputation and expertise erf several hundred years experience.”