Big wholesalers avoid Diageo cuts

Major wholesalers Par­fetts, United Wholesale Grocers and Bestway are among the companies that will not be affected by supply cuts from Dia­geo, Better Retailing understands.

Last week, Better Retailing revealed that the Guinness and Baileys parent company will no longer be trading with wholesalers who are unable to meet an annual minimum-order value of £2m from April. The alcohol firm sent communication to wholesalers, seen by Better Retailing, informing them the restrictions would be put into place from 1 April. 

In the letter, Diageo GB managing director Nuno Teles said: “As a valued customer, we are writing to inform you that following a review of Diageo Great Britain’s (Diageo) wholesale and independent free trade business we are implementing a transformation of our route to market strategy.” 

The decision faced criti­cism from the wholesale industry, as it is expected to affect smaller regional wholesalers and availabil­ity for retailers.

One wholesaler told Better Retailing they would be open to helping smaller compa­nies affected through secondary supply. However, this had pre­viously raised concerns that wholesalers securing Diageo products through secondary wholesale would be forced to raise prices for retailers.

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Other wholesalers told Better Retailing they were holding meetings with Diageo following the announce­ment, but stressed “it was still too early” to deter­mine the impact.

One senior wholesale source, who asked not to be named, said: “We are having a board meeting to assess how it will affect retailers. I’m struggling to see the rationale behind Diageo’s decision. One area of concern is that it may force retailers to stock more straight-pack Diageo products. Price-marked packs communicate value to customers, which is important in the cur­rent economic climate.”