Drinks Industry v UK Supermarkets - where are you?
By: Olly Wehring - 2 August 2006 16:59
When Scottish & Newcastle came out against the UK’s supermarkets earlier this week, how many of you rejoiced that, finally, someone was saying what you’d been thinking for a long time?
In my almost three years at just-drinks, any mention of UK supermarkets to an interviewee has been met by a knowing look and the blandest of bland comments. No-one, but no-one, dared go on the record with their true feelings on the matter.
In a submission to the UK’s Competition Commission - currently looking into the power of supermarkets - S&N said: “We view with concern the willingness of the major multiples to invest in relatively cheap beer and cider prices, to drive ‘footfall’ within this sector.
“We strongly believe that the sale of alcoholic drinks at low cost, used primarily to drive ‘footfall’ into stores, is not consistent with the promotion of responsible drinking.”
The response from the drinks industry has been silence. The supermarkets, however, have come out all guns blazing. A spokesperson for the British Retail Consortium laughed out S&N’s claims. The brewer had “no evidence” to back its claims, he told just-drinks.
“It’s a very competitive market and what retailers do is try to achieve the best possible price. They then pass those costs on to consumers - that’s what competition is.” He even went so far as to suggest that S&N’s claims could be a way for the brewer to achieve “better prices” from retailers when selling their products to supermarkets.
While inter-industry squabbling may open the back door for governmental interference, S&N should still be applauded for its stand. The influence wielded by this country’s supermarkets on drinks pricing has gone unchecked for too long.
I know a lot of you will be quietly cheering them on. But will any of you stand up and be counted?
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Comments on this blog post
James Maitland of Seckford Wines Ltd says that supermarkets are a great nursery for developing wine interest. http://www.newsquoter.com/ViewQuote.aspx?QuoteId=347
Newsquoter, United Kingdom
Olly, As one who earns a living selling wine to the supermarkets I have watched supplier margins being squeezed for 13 years now. Pretty soon there won't be enough there for many of us to survive on! However I have always maintained that 'if it's too hot then get out of the kitchen'. So while I can still enjoy doing a deal or two I will....but when it all finally gets too tight then I guess I'll have to look elsewhere. Shame...but that's life I guess?! MD
Mark Denison, United Kingdom
The argument over supermarket discounting neatly ignores the uncomfortable fact that most of us now live in a discount culture. Before giving a presentation on the UK wine trade recently to a group of Argentine producers, I spent half an hour walking around my nearest shopping centre photographing promotions for half-price offers. These included pizzas, movie tickets, shampoo, sofas, knickers and potatoes. Members of the drinks industry who complain about under-pricing in supermarkets should take a look at the price they paid for the Ryanair and Easyjet flights they took to get away to the sun this summer. That's if they're not too busy reading their BOGOF novel. There's nothing remotely laudable or attractive in pretending that a carpet, a kitchen, a leather sofa or a bottle of Aussie wine is really being sold at half the price that it ought to cost. But, since when was unbridled capitalism supposed to be laudable and attractive? The idea of bringing in rules of some kind is appealing, but it's worth noting that the Irish have just thrown out a whole batch of theirs that were supposed to prevent selling at below cost - because they were too hard to implement.
Robert Joseph, United Kingdom
As an operational marketing person, I certainly believe there may be increase in traffic and I doubt whether it will have a major incremental growth on the incidence. If the manufacturers are to create a focussed ATL and BTL efforts to expand their landscape as per their target clientele, then it will have a major growth. As a community and corporate social responsibility, the corporates need to play pivotal role on educating responsible drinking....the classic example I can quote is the markets like S.Africa where the corporates play a major proactive role on educating the public on 'responsible drinking'.
Rajan, India
Speaking COMPLETELY as an individual voicing his own PERSONAL opinion. I would like to float the idea of an alcohol commodity exchange as a way round these issues. If alcohol were traded as a commodity then seasonal problems could be smoothed over and flourishing derivatives and futures markets created. Being regulated it would also enforce a great deal of transparency too. Any takers? Joe Claxton
Joe Claxton, United Kingdom
Olly The damage done by supermarkets in Australia to the wine industry is imponderable. Supposedly taking advantage of a surplus, supermarkets have cut margins so badly the wine industry is struggling to survive in Australia. Sometimes supermarkets need to protect the industry they are making profits on, not rape it to death! Warm cheers, Peter
Peter Saunders, New Zealand