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Non-alcoholic supermarkets: the city with the monopoly on bottle stores

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Photo: RNZ / Samuel Rillstone

Walk into any supermarket in Invercargill and you may notice that the alcohol section is missing.

This is because the community-owned Invercargill Licensing Trust (ILT) has exclusive trading rights for public houses, hotels and off-licences in the city.

It is a unique system with the key function of redistributing benefits to the community, dating back to the 1940s.

As of 2024, only 17 of the 30 have survived and none have been established in almost 50 years.

The Invercargill version operates 23 businesses and made a profit of more than $11 million in the 2022/23 financial year, before taxes and grants.

During that same period, he returned more than $8 million to the community.

Income included money from gaming machines at trust locations, which accounted for 70 percent of donations.

“The concept of community ownership is both our uniqueness and our raison d’être,” proclaims the trust’s website, declaring its vision for a “vibrant Invercargill.”

But is the trust model really a good thing for the community? Or controversial by nature, due to the product on which it depends?

Professor Joe Boden of the University of Otago has been involved full-time in the Christchurch Longitudinal Study for 19 years, allowing him to examine the effects of alcohol across the lifespan.

He spoke positively about the model.

“I actually think they are theoretically good entities,” Boden said.

“In terms of benefit redistribution, we have two options.

“One in which parts of the profits are redistributed to the community… or all profits magically disappear into the hands of multinational corporations.

“Overall, I think we have a serious problem with large multinational corporations making huge profits from people who drink and cause serious health problems.”

The statistics make for sobering reading; According to the most recent data from Amohia Te Waiora (2017/18), 79 per cent of adults consumed alcohol in the past year, and a quarter of them did so dangerously.

Boden didn’t mince words when he talked about those dangers.

“As consumption increases, the social and health problems associated with alcohol increase. It’s completely linear,” he said.

“We could really reduce a lot of lifestyle-related diseases if we could reduce our alcohol consumption.”

System defects

Ana Ika, a social policy analyst and advocate for the Salvation Army, understood the cost of alcohol to society better than most.

While positive about the trust model in general, she was quick to point out its flaws, as demonstrated by a situation last year at Glen Eden where profit became the driving force.

In that case, the trusts ignored the wishes of the community by trying to open a new bottle shop, ignoring the objections of more than 200 people, he said.

He was ultimately thwarted, but only after a hearing was held.

“If they don’t listen to the community and continue to create liquor stores in areas where there shouldn’t be any more liquor stores, then that’s the problem and the challenge we have,” Ika said.

On the other hand, the trust model could be beneficial by reducing the visibility of alcohol.

The Salvation Army was aware of some tangata whaiora (health-seekers) who would shop in the section of West Auckland controlled by the trust, so as not to have to see alcohol in supermarkets.

Ika also believed the extra layer of transparency in reporting set it apart from the controversial pokie subsidy system, which his organization criticized due to a lack of clarity around data from the Department of Home Affairs.

“The reason we like the trust model is because it’s supposed to be pro-community.

“When the trust works for the intended purpose for which it was created for the betterment of communities, that is when the trust model is much better.”

Professor Joe Boden of the University of Otago, Salvation Army social policy analyst and advocate Ana Ika and University of Otago marketing professor Rob Hamlin have given their opinion on license trusts, speaking positively about them in general.

Professor Joe Boden of the University of Otago, Salvation Army social policy analyst and advocate Ana Ika and University of Otago marketing professor Rob Hamlin have given their opinion on license trusts, speaking positively about them in general.
Photo: Supplied via LDR

The great opponents of trusts

For trusts to be effective, they must be transparent.

Those are the thoughts of Dr Rob Hamlin, marketing professor at the University of Otago.

Hamlin described the system as a monopoly that requires a high degree of accountability, primarily because any breach of trust could be used against it by those who would like to see its downfall.

The license trust model was not possible to establish from scratch in today’s world, he said.

“The main opponents of licensing pools, especially in this country, are the supermarkets.

“I think it’s pretty clear that companies like Foodstuffs and Woolworths Australia and all the other liquor stores would not put the same amount of money back into the community as the licensing trust.”

Hamlin had a personal opinion that the money should not go to sports clubs, noting that slot machine money was undesirable in the sense that it caused the lower classes to support the recreational activities of the middle classes.

“I think the main thing is that the decision-making about where the money goes has to be transparent.”

So to what extent are trusts liable?

As a public entity, they fall under the mandate of the Auditor General, who in 2014 highlighted key concerns about their oversight.

Comments included that they were a high-risk but little-known part of the public sector with little or no visibility in Parliament, and that there was a lack of general oversight other than that of elected administrators.

“A large proportion of their transactions are in cash and they deal in small but attractive items,” the Auditor-General said at the time.

“These factors increase the risk of fraud and theft by customers and staff.

“I have long been concerned that license trusts are one of the most under-scrutinized parts of the public sector.”

A spokesperson for the office, contacted for the story, indicated that not much had changed from an oversight perspective, but that there were plans for a follow-up report later this year.

Two years ago, Invercargill Licensing Trust opened a 4.5-star hotel in the CBD for a reported $52 million.  ILT Group consists of two brands: ILT, which redistributes money from alcohol sales, and ILT Foundation, which redistributes money from slot machines.

Two years ago, Invercargill Licensing Trust opened a 4.5-star hotel in the CBD for a reported $52 million. ILT Group consists of two brands: ILT, which redistributes money from alcohol sales, and ILT Foundation, which redistributes money from slot machines.
Photo: Supplied / Layton Findlater

What does Invercargill Licensing Trust think about all this?

In response to questions from Local Democracy Reporting, ILT chief executive Chris Ramsay said no two licensing trusts were the same.

Ramsay said his trust was more diversified than others because only six of its 23 businesses were independent bottle shops.

The trust believed strongly in ensuring that shareholders and the people of Invercargill received as much information as possible about its performance.

“We always organize a monthly public meeting. This is announced and each month we send the open agenda directly to all local media.”

The trust’s only true monopoly was its retail bottle shops, which was questionable given changes to online alcohol purchasing, Ramsay said.

Several competitors in Invercargill ran what were essentially bars, and competing hotels had existed in the city for decades.

While some sections of the trust’s meetings were made private due to “commercial sensitivity”, the arrival point of donations always remained visible.

ILT’s most recent annual report, published in 2023, lists more than 300 grants.

They ranged from $350 for the Grasmere Indoor Bowls Club to $500,000 for the refurbishment of the Invercargill Town Hall Museum.

Rugby Southland received $555,000 in two donations.

With fewer than 20 remaining nationwide and their existence an upset for the supermarket industry, could the licensing trust’s days be numbered?

Hamlin said one thing was certain: Public support has been crucial to those who have lasted this long.

“Otherwise, they wouldn’t survive.”

LDR is local body journalism co-funded by RNZ and NZ On Air.

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