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Salient. Victoria University Student Newspaper. Vol. 37 No. 3. March 20, 1974

Beer power consumes all

page 7

Beer power consumes all

Confrontation between Dominion Brew-eries and NZ Breweries ended on February 28. It was a sordid battle which did little for the image of the Breweries or the sharemarket. Market observers "heaved a sigh of relief" when the New Zealand Breweries signalled defeat in the bidding for the shares of Barraud and Abraham Ltd, one of the largest wholesale general merchants in New Zealand.

Barraud and Abraham, a Palmerston North company, had something of a monopoly in the wholesale grocery business in the Manawatu. But no doubt its main attraction to both breweries wars its liquor connections.

Dominion Breweries announced a take-over scheme for the company on January 24. DB wanted to acquire B & A Ltd to provide outlets for its new brewery and for marketing the company's wines and spirits. DB would then have a firm hand on the supply of all liquor in the Manawatu.

New Zealand Breweries entered the fray on February 11 provoking a true but unpleasant comment on the values of share-holders. "It must be a happy thought for some," wrote the Post's commercial editor, "that no matter what the outcome of the brewery battle, the B & A shareholders must surely win."

The irresponsibility of those with holdings in the sharemarket is highlighted here. Shareholders would not care if the liquor supply was monopolised by one or other of the breweries. All they are interested in is making a packet from the auction of shares. In the final outcome the Chairman of Barraud and Abraham advised acceptance of DB's offer which, he said, "should satisfy the various interests of the shareholders". What about the interests of the consumers?

As well as getting a large slice of the liquor outlets in the Manawatu the successful bidder for B & A extends fingers into many other pies. The subsidiaries of B & A include Fridge-heat, refrigerator and central heating engineers; Hay and Watson, hardware merchants; Jan Romans Ltd., Levin wine and spirit merchants; and William Bacon Ltd, general importers with branches in Auckland, Wellington and Christchurch.

The value of B & A shares rose from $1.60 to $3.50. A report in the Evening Post 23/2/74 stated: "A company's share, or a pound of saveloys, is "worth" what someone is willing to pay for it. This is the law of the market place."

What an insight into the price arranging of big business! It's the old idea being confirmed that producers will set prices at a level which only allows the consumers survival and the raising of a new generation of consumers.

The breweries' battle to gain a near monopoly hold of the liquor supply in the Manawatu has provided ammunition for a vigorous attack on them. The breweries are often criticised for their lack of concern for the victims of the liquor industry. In this case they warrant a great deal more criticism.

Dominion Brewery beer label with graffiti

It is ironic that at a time when the breweries are looking for an increase in the price of their wares they have found funds to conduct an expensive auction for shares. We understand that B & A Ltd is only "small beer" to the breweries but demand to know why the funds used were not allocated to cut or stabilise prices. NZ Breweries challenge to DB cost the latter a further $1 million in outlay of funds. That's money that could be put to better use.

New Zealand Breweries withdrew from the takeover battle on February 28. It was on March 4 that DB's offer was accepted.

But that's not all. Hard on the takeover of this Palmerston North company DB purchased the Central Otago Wine and Spirit Co Ltd of Alexandra, one of the few remaining liquor wholesalers to be independent of the brewery groups. Dominion Breweries already has one other substantial investment in Alexandra, the Golden Central Hotel and Motel Inn.

So in New Zealand the liquor industry is being increasingly concentrated into fewer and fewer hands. This progress of greed and power can only endanger further the New Zealand worker and consumer.

— Brendan Smith