Asda opens bottling plant in supply shake-up

26 November, 2010

Asda has signed a deal with Broadland Wineries to build its own bottling plant as part of a radical overhaul of its wine supply.

The facility at Snetterton in Norfolk will be used to bottle wines bulk-shipped exclusively for Asda to the UK in a bid to cut out the costs of “middlemen” and deliver keener prices in-store.

Asda said the wines will be sourced directly from producers and it is recruiting specialists to manage the buying and logistics role in key regions around the world.

According to the retailer, 23 jobs will be created as a result of the shake-up, including 13 at the Snetterton site, which will operate as a joint venture under the name Vinpack, although Asda has the option to buy it outright after three years following its opening next autumn.

Adrian McKeon, category director of BWS at Asda, stressed that while the buying strategy “will evolve over the next few years to reflect our new way of working”, its Leeds-based wine-buying team would not be affected “in the short term”.

He added: “The new model is good for the environment and by cutting out costs from middlemen we will be able to deliver a first-class wine offering at great prices.

“Our plan is to put significant quantities of wine though Vinpack facilities – this will apply to own-label products as well as branded. We have spoken to a number of top-branded wine suppliers here – many of whom currently bottle in the UK – and the response has been almost unanimously positive.

“We work closely with a number of agents who will be affected by this. The response we have had from them would suggest they intend to work with us to help deliver this outcome and develop solutions on a longer-term basis.

“These new initiatives will secure a sustainable platform for the future in terms of efficiency and cost management, which in turn will allow us to invest in the wine category via enhanced efficiencies – relating to waste and inventory management, in particular.”?A leading supplier told OLN: “The only way for this to work is if Asda savagely cuts the supply base.

“We will give some product to them at cost and trade on the other SKUs, which is how we normally work. But I don’t think many brand owners will let Asda produce their brand for them, though it might work for merchant-exclusive brands.

“The reality is no other retailer would want to buy branded wine that has been bottled at Asda’s facility and they might also think we’re giving Asda better terms, which could create problems.”

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