House brands squeeze out Tahbilk
Tahbilk chief executive Alister Purbrick said the growth in house-brand wines was not limited to the major liquor chains owned by Woolworths and Coles, but was also becoming a feature of the large independent banner and supermarket groups.
The other hidden impact, according to Mr Purbrick, was the strength of the Australian dollar, which made imports more competitive.
"So you have got the double whammy of own-brand and imports taking space away from us, up go our promotional slot costs and there is less opportunity for us in any case," he said.
Mr Purbrick said Tahbilk would walk away from uneconomic promotional and discount deals with retailers.
Last year Ross Brown, the former boss of 121-year-old winery Brown Brothers, used an industry function to launch a spray against leading retailers for flooding stores with private-label wines that he said were "hollow", "copycats" and "masquerading as real brands".
The retail squeeze affected Tahbilk's sales for the 2012 financial year, with domestic sales weaker for the 153-year-old winemaker. But the resilience of its popular Tahbilk Wine Club bolstered the bottom line and allowed the family-owned company to post an improved full-year profit.
Revenue for 2011-12 was $13.187 million, down slightly from $13.675 million in the previous year, while pre-tax profit increased to $776,768 from $736,430. However, after accounting for a dividend payment of $113,805, Tahbilk's full-year profit was $51,168 against $235,137 recorded in 2011-12.
"Our wine club generates about 65 per cent of the total Tahbilk branded sales," Mr Purbrick said.
He said the wine club allowed the company to perform well in the face of the strong Australian dollar and collapsing margins.
"There is not a lot of margin in exports, so the best way to describe our exports at the moment is that we have them in a holding pattern. We are not going out aggressively to grow because we can't make margin out of it, but we want to maintain our presence in those markets."
China is still a growth market, as the exchange rate with the yuan is more favourable to exporters such as Tahbilk.
Frequently Asked Questions about this Article…
Tahbilk says the squeeze is driven by the growth of private‑label or house‑brand wines from major chains (including Woolworths and Coles) and large independent banners, combined with more competitive low‑cost imported wine made cheaper by a strong Australian dollar. Together these factors are reducing space for proprietary brands on liquor store shelves.
The company reports weaker domestic sales during the 2012 financial year and rising promotional slot costs as own‑brand and imported wines take space and push down margins. Tahbilk described this as a 'double whammy' that reduced opportunities and pressured profitability.
Tahbilk’s CEO Alister Purbrick said the winery will walk away from uneconomic promotional and discount deals with retailers — choosing not to participate in promotions that don’t deliver acceptable margins.
Very important — Tahbilk says its Wine Club generates about 65% of total Tahbilk‑branded sales. That recurring direct‑to‑consumer channel helped bolster the bottom line and supported an improved full‑year profit despite weaker retail sales.
For the 2011–12 year Tahbilk reported revenue of $13.187 million (slightly down from $13.675 million the prior year). Pre‑tax profit rose to $776,768 from $736,430, but after a dividend payment of $113,805 the full‑year profit was $51,168 (compared with $235,137 previously), according to the article.
Tahbilk said exports have 'not a lot of margin' at present, so the business has put exports in a holding pattern — maintaining presence in overseas markets but not aggressively pushing to grow export volumes while margins are compressed.
Yes. The company sees China as a growth market because the exchange rate with the yuan is relatively more favourable for exporters, making that market more attractive compared with some others.
Industry figures such as Ross Brown (former boss of Brown Brothers) have publicly criticised major retailers for flooding shelves with private‑label wines, describing some as 'hollow', 'copycats' or 'masquerading as real brands' — a concern that aligns with Tahbilk’s comments about retail squeeze and brand displacement.
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