30/07/2009 - 00:00

Back to the future in liquor store battle

30/07/2009 - 00:00

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Liquor storeowners believe their nemisis, the supermarkets, have been handed a big victory.

Back to the future in liquor store battle

TO an impartial observer, the granting of a liquor store licence to a Nedlands supermarket two months ago may have been innocuous enough, but to local industry players it is like a phoenix rising from the ashes.

A decade ago, five licensees won a long and expensive battle in Western Australia's Supreme Court to overturn a new licence approved for what was then a new style of bottle shop, a large format store that entrepreneur Patrick Stephenson was pioneering under his Big Bomber brand.

It was an important precedent at the time, a fact underscored by the legal firepower that worked on the case. Queens Counsel Malcolm McCusker, Christopher Zelestis and Wayne Martin were all involved.

Liquorland, a posse of local independents and a company linked to the Wordsworth family, which owned but didn't run the nearby Captain Stirling Hotel, stopped the development at 152 Stirling Highway after a marathon legal action, which included two appeals before the licence was overturned.

Some of those involved in the case recall the immense cost and emotional burden of the case, which they considered a matter of principal.

At the time, a crucial test of for liquor licensing authority was that of need.

But, 10 years later, the laws have changed and Liquor Licensing director Barry Sargeant is guided by a new test - public interest.

The legislative change in 2007 has severely watered down the ability for existing licence holders to object. Many would suggest this is a win for the free market.

Since then, 25 new liquor licences have been granted, including one as part of an IGA supermarket at the previously contested Nedlands site.

Liquor Stores Association executive director Lindsay James believes the trend is alarming, not because of the volume of new licences or to whom they have been granted, but simply because no-one has been turned down since the new act came into force.

"The only way it will not be granted is if it is across the road from a school or a church or there is a drinking problem in the immediate vicinity," Mr James said.

He said the consequence could be a proliferation of licensed venues as had been seen in Victoria, which was not the intention of the Labor government that enacted the new laws.

"The pie is only so big and once you create all these others and they start eating the pie, it is not sustainable," Mr James told WA Business News.

Industry sources suggest the benchmark price for WA liquor stores of three times net profit is already below recent highs and could fall to levels seen in Melbourne, which are less than 1.5.

Ultimately the concern is the same as it was 10 years ago, that disruption of the current status quo will only benefit the major supermarket players. Then it was Coles and Woolworths, owners of the big brands such as Dan Murphy, Liquorland, Vintage Cellars and First Choice.

These days, protected by retail trading laws, the IGA supermarket franchisees are equally in the frame.

Long-term industry player John Sanford, who now runs Thirsty Camel in WA, believes the Nedlands IGA win is a precedent because of the type of business that won it.

"The impact on the existing licences is not, in this instance the real issue, it is the proliferation of licences that could take away the value and service provided by that outlet due to the proliferation," Mr Sanford said.

After his exhausting and expensive experience as part of the ultimately victorious legal case against the Big Bomber a decade ago, Liquor Barons Claremont owner Bernard Hubbard is reluctant to consider further challenges to the decision to grant a licence at 152 Stirling Highway this time around.

"It is not in the same mode as before, it won't be a huge liquor store," said Mr Hubbard, who acknowledges he is acting in his own commercial interest as much as concern that the industry will continue to consolidate into the hands of two or three large players.

"But it opens the floodgates for IGA, Coles and Woolies and, possibly, if the interest test is pushed to the fullest degree, to service stations."

"I think the key here is 16 liquor stores in a three-kilometre radius.

"Need and interest; if the Supreme Court says needs are being met I would say that is a stronger word, but the test is all on the interest."

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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