Together, we can stop the supermarket bullies

Together, we can stop the supermarket bullies

Here’s a true story, though in deference to its teller I have changed all names and locations. David helped run Watson and Holmes, a company importing wines to the UK market from Italy. Working with a cooperative in the south, he helped create a set of wines which he thought would be ideally suited for sale via a large supermarket chain in the UK, targetting the £4.99 price point… with the possibility of promotion at £3.99 to gain some market foothold.

After great efforts, David managed to persuade two buyers from one of the UK’s dominant supermarket chains to visit the winery; he travelled to Italy himself for the meeting, and was careful to explain the potential deal to both sides in advance.

The great day arrived; the buyers tasted. They made approving noises. Everyone smiled. Then one of the buyers, the smile fading from his face, stated that he wanted to make it clear that he was only looking for a £2.99 wine. Alarm bells began to ring for David. He remonstrated good-humouredly, pointing out that he had always made clear the price point would be £4.99 with the possibility of promotion to £3.99, and that everyone had travelled here on this basis. At that point, the buyer snapped his file shut and said that there wasn’t any point in staying any longer. The Italians, who spoke no English, looked concerned at this sudden change of mood; humiliated, David had to explain to them what was going on, and asked them what they wanted to do. The stony-faced buyer said that it was £2.99 or nothing, and that he wanted an answer in 15 minutes or they would leave. David and the Italians realised that they had been duped – but they needed to sell their wine.

After a few wretched minutes, the powerless suppliers decided to sell at the profitless price, hoping that it would be the start of a long and more beneficial relationship. Subsequently, the supermarket required (and got, with a slight blend change) a loss-making ‘two for £5’ offer, followed by a pittance-making stint at £2.99. Stocks arrived in the UK, churned nearly a million bottles, and finished. For the following vintage, the ‘mechanic’ was changed, taking the wine above £3. The ‘direction of category’ was then altered and, 20 months after its launch, the wine was ‘de-ranged’.

The supermarket buyer left that post for another retailer soon afterwards, and has now also left that subsequent job – each time for promotion, a higher salary and greater commercial acclaim. David, too, left his job, to take one where, to his great relief, he now has to sell wine to the public rather than supermarket buyers. And the Italians have learned to distrust commercial relationships with the people who control 70% of the UK’s wine.

Who has benefited from this bullying and coercive half-hour? The buyer in question? Certainly, unless you take karma into account. The supermarket? Probably; in a world with a surfeit of wine, there will always be more hopeful offers to grind down on the stone of exploitative demand. The customers of that supermarket? Superficially, though the idea that low price is the great retail desideratum is one of the principal reasons why we as a nation eat and drink less well and less healthily than our neighbours. The Italian wine producer? Not at all, save for the acquisition of experience. A fair price would have enabled the Italians to improve their viticulture, lower yields, and move forward with their winemaking. The pressured ultimatum meant another year where they merely survived.

Perhaps this was an exceptional case. I feel sure that most of the supermarket buyers I know would never behave in this way. But one of their number did behave like that, and given that deals and discounts (sometimes from spurious opening RRPs) now appear to be the main sales pitch in all supermarkets, I suspect that buyer is not alone.

At the same time, discussions I have had with suppliers suggest that the gross profit taken by supermarkets on wine is rising all the time, with 35% now the average for middle-range wines for most, whereas prior to 2000 they looked for 25–28%.

The overall trend is clear: more profit to the retailer, less to the producer. We are dominated by piggy supermarkets which gobble up the weaklings in their own farrow; it is only suppliers who furnish new life in retail. Britain’s wine trade, in this respect, is sick.

And the blame for all this? It lies with you and me. We fall for it every time. Next time you see ‘a bargain’, think it through. Say no, go elsewhere, pay more, and help create fair, sustainable and mutually advantageous trading relationships.

What Andrew’s been drinking this month

Marlborough Sauvignon

My relationship with Marlborough Sauvignon is ambiguous: is that grassy zing enough, or should there be something more? Three wines this month have provided different paths out of the leafy cul-de-sac. Sam Weaver’s 2006 Churton Sauvignon Blanc braids summer fruits with impressive subtlety, while Staete Landt’s 2005 has concentrated floral power. Steve Smith MW hasn’t yet quite achieved the stoniness he’s searching for in the Craggy Range Old Renwick Vineyard – but every year gets nearer, as the 2006 proves.

Written by Andrew Jefford