re has been a “misalignment on major issues” between the views of the national body and the interests of independent retailers. The fracturing of another peak retail industry body is a similar scenario to the defection of the Coles Group and Woolworths in 2006 from the Australian Retailers Association (ARA) to form a new industry body to represent Australia’s largest retail chains – Australian National Retailers Association (ANRA). But on this occasion, the major voice of independent liquor retailers in Australia has decided to quit the peak body rather than the major chains. The Victorian-based MGA formally merged with the Liquor Stores Association of Victoria in 2009 and has expanded its activities nationally to cover more than 2500 independent retailer members around Australia, including more than 1000 members with packaged liquor licenses. MGA/LRA’s members trade under a variety of brands, including Cellarbrations, Duncans, Foodland, FoodWorks, Friendly Grocers, IGA, Supa IGA, IGA Xpress, Local Liquor, Supabarn, Spar, and The Bottle O. While membership includes some independent liquor stores, the backbone of the MGA/LRA’s national footprint is supermarket retailers with liquor licenses that have Metcash as their wholesaler. Jos de Bruin, MGA/LRA CEO, told Inside Retail PREMIUM the decision to quit ALSA had been a long time in the offing and had “not been taken lightly”. de Bruin said the decision followed extensive consultation with industry stakeholders as well as members. He said the misalignment on major issues that are continually raised by MGA/LRA members were crucial to the decision as they affected the “viability and sustainability” of the independent liquor stores. MGA/LRA has been a member of ALSA for more than 20 years, initially as two separate entities – the Master Grocers Association of Victoria and the Liquor Stores Association of Victoria – and since 2007 as one industry association member. Before the withdrawal of the MGA/LSA, ALSA claimed to represent around 3000 liquor store members and around 85 percent of the retail market. ALSA has Coles and Woolworths as members with representatives on the national board, as well as four state bodies – the Liquor Stores Associations of NSW, Western Australia, South Australia, and the Northern Territory. As the peak industry body, ALSA has provided submissions to government inquiries, most recently the Productivity Council review of the costs of doing business for retailers in Australia and offers public education programs, training, and workplace relations services. The MGA/LRA itself provides legal, industrial relations, and HR services; training and compliance programs; and industry representation. It also provides a platform for independent retailers in their trading and a support service relationship with Metcash and liquor suppliers. The overlap in services had been accepted on the basis that it was advantageous for the retail liquor industry to have a national voice, but the relationship has been strained due to a range of issues including trading hours, creeping acquisitions, and marketing tactics of the chains. Final straw Inside Retail PREMIUM understands the final straw was the competition policy review by commissioned by the Federal Government, which is being vigorously contested by the chains. In a media release issued last month, de Bruin railed against Coles and Woolworths’ efforts to torpedo the introduction of an effects test to gauge misuse of market power, in section 46 of the Competition and Consumer Act. “Big business certainly knows how to pull all the right levers when it comes to minding their own business,” de Bruin said. “Clearly, Wesfarmers and Woolworths have engaged the big guns in former Federal Treasurer, Peter Costello and former ACCC chairman, Graham Samuel, to rally against the introduction of an effects test. “The big boys are concerned that with the introduction of an effects test their market power and dominance may be put on hold and they will not be able to grow their combined Australian grocery market share above 80 per cent and their packaged liquor share above 75 per cent. “Peter Costello and Graeme Samuel are clearly out of touch to assume that competition will be enhanced without an effects test. “They are deliberately avoiding the devastating impact of the market power of Wesfarmers and Woolworths is having on small business, particularly retail across Australia.” de Bruin said Wesfarmers and Woolworths size and market power are destroying competition and ultimately, the consumer will pay, with less retail diversity, less choice, and higher prices. “The introduction of an effects test will indeed foster and protect robust competition, provide incentive to innovate, drive Australian productivity, drive investment, and ultimately the consumer will benefit. “Competition is not about the last man standing,” de Bruin said. Terry Mott, ALSA CEO, has expressed disappointment over the resignation, which he blamed on an ALSA restructure that will provide “a significant boost to resources and policy focus”. Mott said ALSA has been growing its membership, with the number of independent retailers in NSW almost doubling in the past five years, and will continue to focus on representing small independents through to national chains. Both ALSA and the MGA/LRA have indicated a preparedness to continue to collaborate on common industry issues despite the MGA/LRA’s withdrawal from the day to day workings of the national body. The split is expected to prompt discussions on the future of ALSA as the peak industry body as independent retailer members in the four state associations assess their membership options. Unlike the exodus of the Coles Group (now Wesfarmers) and Woolworths from the ARA, ALSA will not be severely impacted in financial terms by the MGA/LRA resignation because it would be in the interests of the chains to lift their funding support in order to maintain the credibility of the peak body. The ARA has never recovered from the loss of funding and in kind support provided by the major chains to the state-based organisations and the national body. The four state-based liquor store association bodies in NSW, WA, SA, and NT would also be unlikely to have the capacity to continue as standalone bodies if they were to lose the funding support of Coles and Woolworths’ liquor groups. Despite this, the state bodies could well see defection of members to the MGA/LRA as competition issues polarise the industry, with both the majors continuing to rollout stores and expand online retail platforms.