Purple Palate Blog

Deal with the Devil-Investment into Liquor Industry

deal-witrh-the-devil

History repeats time and time again, and people think they will be different-unfortunately they aren’t.

The liquor industry is populated by passionate, hardworking people doing their utmost to make the best product they can, and to market it at a fair price.

It is also populated by corporations, and faceless entities interested only in moving boxes, and making money for itself and/or shareholders.

Both groups can be both good and bad.  Today we are going to discuss a practice that occurs all too frequently in this industry.

A small outfit (Beer, Wine or spirit producer), makes excellent product, and (through other passionate people) markets itself and builds a great reputation.

They don’t produce enough product to service all their potential customers, but do well enough to keep it out there.

Along comes a large company, or investment backer who offers to put a lot of money into the business.

Usually by way of purchase of the company, or buying a large portion of the company.  Money = Ownership.

There are always verbal agreements, and press releases saying “We want the company to remain focused on quality, and our input will be minimal.”  And for a few months/years it will be.

However we live in a capitalistic society.

Soon the company wants to see a return on it’s investment.  It wants to generate money for it’s owners or shareholders, and will suggest “maximising profits”, by “cost cutting” and “increased production levels”.

Agreements with large distribution houses and retailers will be put into effect to “maximise our market share”, and production will be ramped up to fulfil these “big box movers”.

Marketer and advertising specialists, then promote the product in “fashionable and exciting ways”, spending large sums of money “getting brand awareness”, all at a substantial cost.

The company will have to make the product in bigger volumes, more mass production, less attention to artisanal values that started the business.  Using lesser quality goods to achieve an outcome that will satisfy the Shareholders, rather than the original producer.  Changing blends, or grains, or hops, whatever to get more from less.

In 6 to 12 months, if the product isn’t “turning over” quickly enough, then offers to reduce price to make it “more attractive to the market”, and to move the stock out occurs.

The production is usually moved to a more “logistical friendly” location, and the original site sold off.  By this time the original passionate people have moved on, sadder and hopefully wiser.

Their own deal with the devil teaching them not to sell out without reading the fine print first.

Sadly it still continues……..

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Purple Palate supports the Responsible Service of Alcohol. New South Wales: Liquor Act 2007. It is against the law to sell or supply alcohol to, or to obtain alcohol on behalf of, a person under the age of 18 years. Victoria: WARNING: Victoria Liquor Control Reform Act 1998: It is an offence to supply alcohol to a person under the age of 18 years (Penalty exceeds $7,000), for a person under the age of 18 years to purchase or receive liquor (Penalty exceeds $600). WARNING. Under the Liquor Control Act 1988, it is an offence: to sell or supply liquor to a person under the age of 18 years on licensed or regulated premises; or for a person under the age of 18 years to purchase, or attempt to purchase, liquor on licensed or regulated premises. South Australia: Liquor Licensing Act 1997, Section 113. Liquor must NOT be supplied to persons under 18. Queensland: Under the Liquor Act 1992, it is an offence to supply liquor to a person under the age of 18 years. ABN 79 089 224 493. Licence No 82612