Christmas drinks sales hit by price cuts and fraudsters

Sales of spirits and beer through the wholesale channel have been decimated during the key selling period by a combination of savage below cost price cuts by the major multiples and a resurgence in duty fraud.

As ProWholesaler went to press most wholesalers were still finalising their figures for the Christmas and New Year period, and overall sales appeared to have held up, but all reported spirits had been hit badly by the multiples’ actions.

Today’s managing director Rodney Hunt said: “For some of our members booze just didn’t happen this year. We have members who have increased drinks sales every Christmas for the past seven or eight years, and they are down this year.”

He said Tesco, Sainsbury and Asda all offering two 1-litre bottles for pound;20 had been tough competition, but at least it was differentiated from pound;9.99 price-marked standard bottles independents were able to offer. The worst blow had been when Morrisons came in with three standard bottles for pound;20, and the Co-op followed for a short time.

Wholesalers’ sales of beer were also hit by the return of duty fraudsters in some areas.

Younus Sheikh, managing director of Bestway Cash Carry, said: “We thought that duty fraud had been sorted out, but it has returned in the past two months.”

Landmark Wholesale managing director Martin Williams said duty fraud had hit some members but it appeared to be a regional problem. “Some areas sold lots of beer, but the grey market is back with a vengence.”

He said wine was one bright spot in the licensed sector, which did well despite a lot of cut-price deals in the multiples.

Steve Parfett, managing director of Parfetts Cash Carry, said: “We were encouraged last year because the multiples took a reasonably sensible attitude, but this year they’ve absolutely blown their brains out.” He said on trade business had been particularly poor.

Booker could not comment because of stock exchange rules governing listed companies, but it is believed it was not as badly affected by the duty fraud problem as some.

Paul Downing, RTM channel director at the number one spirits supplier, Diageo, commented: “The very aggressive early promotional prices in the grocers set difficult pricing expectations for consumers in the marketplace, which have had a knock-on effect on the independent channel.

“It is important that all spirits suppliers refocus on how we can drive the independent trade over the coming months. Opportunities such as the Putting Leaders on Display’ initiative, recently signed off by the FWD and leading spirits suppliers, offer great potential to drive new volume and value in this channel.”

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