The Motley Fool

Alcohol and gambling attracting buyers

Woolworths Limited (ASX: WOW) has continued its pub buying spree, reportedly agreeing to purchase another 6 hotels after obtaining approval from the Australian Competition and Consumer Commission.

The partial approval still leaves 5 hotels under ACCC consideration, as the Commission evaluates the impact of competition in the local areas.

Woolworths has continued to purchase pubs and their attached bottle shops through its 75% ownership of the Australian Liquor and Hospitality joint venture.

The pub industry has been struggling in recent years after a string of high-priced and often debt-fueled acquisitions. With few other cashed-up buyers in the market, Woolworths and Wesfarmers (ASX: WES) have been busily consolidating the industry as both groups compete for market share, particularly in the packaged liquor sector.

Not everyone is happy with the consolidation, as my colleague Mike King outlined recently. Lobby group Getup! and other interested parties have been campaigning for a maximum bet cap to be placed on poker machines owned by Woolworths.

The purchases come as machinations continue over Echo Entertainment Group (ASX: EGP) with James Packer’s Crown Limited (ASX: CWN) and Malaysian gaming business Genting jousting over the business.

It’s said that gambling and alcohol (along with cigarettes) are largely recession proof (and perhaps even counter-cyclical as people stay home more. It’s certainly true that Woolworths and Crown are happy to take advantage of depressed prices to add to their respective empires.

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Scott Phillips is an investment analyst with The Motley Fool. He owns shares in Woolworths. You can follow Scott on Twitter @TMFGilla. Take Stock is The Motley Fool Australia’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691).

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