Majestic demands 5% from Portuguese suppliers

23 March, 2012

Majestic has contacted Portuguese suppliers demanding they make a contribution towards promoting the category or jeopardise future listings. 

The chain sent what one supplier called a “terse” email asking for a 5% contribution after generic marketing body ViniPortugal pulled its funding of retailer promotions to focus on activity targeting consumers, independents and the on-trade. 

In an email to suppliers seen by OLN, Majestic said: “Without this level of support, new listings and the promotion of Portuguese wine becomes an extremely tenuous proposition for Majestic. 

“We have calculated the cost of this lost funding based on current volumes by product and cost price. Unless the generic body reverses this decision in the next fortnight, we will be invoicing each supplier equal to 5% of your cost price on all orders received after January 1, 2012 in order to recoup this lost support. I accept that this will not be popular. You have the option to withdraw your listing from Majestic if you are unable to agree to this.”

It continued: “I would like to state that Majestic’s position on this is very much one of last resort. I have appealed at length to reverse what I consider to be a very short-sighted decision. With year-on-year growth of over 30%, an average Portuguese bottle price of £7.76 and over 500 WSET-trained members of staff, one would have thought we were an ideal partner for Wines of Portugal.”

The communication came just days after the Association of Portuguese Wine Importers voted Majestic national retailer of the year at its annual awards in London. It is understood Majestic failed to pick up the award.

One supplier told OLN: “It basically said that as ViniPortugal had withdrawn funding the entire category was in jeopardy. Unless we as suppliers recompensed the funding we would be delisted. We rolled over and agreed.”

Another added: “I understand Majestic’s point of view. But its reaction was quite extreme. If Portugal wants to build itself in the UK, it has to support retailers. However, if it doesn’t think it’s delivering ViniPortugal value it has to seek alternatives. We will find a way to support what Majestic is asking for.”

A former Majestic supplier, who has already moved its brands away from larger retailers to target independents, added: “It’s a sign of the times that retailers think they are in such a good position. But times are changing and it could be that there’s a shortfall, not an oversupply, of wine soon – it won’t always be a buyers’ market.”

A spokesman for ViniPortugal said: “We made a policy decision to explore alternative and potentially more effective ways of using our producers’ money. 

“We have always enjoyed a great relationship with Majestic, and respect what they do, but we now have a chance to do something really exciting with Portuguese wines and hope they will work with us to ensure they can benefit.”

A spokesman for Majestic said: “We are obviously disappointed with ViniPortugal for withdrawing its support. But 80% of the suppliers we have contacted have decided to support it [Majestic’s proposal].”





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