Australia’s Dan Murphy’s plans China expansion

Australia’s drinks retail giant Dan Murphy’s is reported to be planning its expansion into Mainland China, according to a report by Chinese language media Wine Business Observation.

Photo credit: Wine Business Observation

One person close to the company told the website that plans to tap into China market were back on the company’s agenda and were discussed at an internal meeting a few days ago, the report said.

Details of the company’s expansion strategy are not revealed in the report, nor the specific timeline for the expansion.

The person with knowledge about the expansion said the company is banking on China’s vast potential, as demand for international wine imports grows. 

However, China’s fragmented wines and spirits market and distribution networks is still developing, which could pose problems for the retail giant’s ambition, Xi Kang, assistant to secretary general of China National Association for Liquor And Spirits Circulation’s Imported Alcohol Division, told the website.

“China’s alcohol market is very different from Australia’s,” Xi explained. “Australia only has a couple dozens of millions of people, and most of them live around coastal areas and speak the same language”, making it relatively easy for a retailer to dominate the market.

“China’s market on the other hand is very fragmented, many established wine and spirits merchants here only opened stores in or two cities within a province.” 

“China’s business environment is still developing and consumption of wines and spirits is far from mature. These factors make China market much more complicated than Australian market,” he continued. 

According to a study by Roy Morgan Research, Dan Murphy’s has 23.9% share of Australia’s alcohol market. In addition to its well-stocked stores, its low-price policy has been a big draw for customers with 1.2 million Australians visiting the store each week.

It has more than 200 stores in Australia and is owned by Woolworths Liquor Group, the same company that bought Summergate in December 2014.