Gulf in supplier profits widens

31 May, 2013

The gulf between the richest and poorest companies in drinks supply is widening.

A report from financial analysis company Plimsoll shows the most profitable wine and spirits wholesalers operating at margins more than twice the national average, while almost three out of 10 are running at a loss.

The company said 56 of 711 wholesalers it had assessed were making record profits and achieving average profit margins of 12.7%, against an overall mean of 5.2% – down from 5.9% in 2011.

Average sales per employee in these companies are in excess of £500,000 and half such businesses are operating debt-free.

Of the 211 companies Plimsoll found to be running at a loss, 107 were doing so for the second year in a row and 90

were considered a high financial risk. The average loss is 2% of total sales.

Senior analyst David Pattison said: “The industry is being split into two types of company and the gap between rich and poor is getting bigger and bigger.

“For the companies that are falling behind, they need to re-evaluate their strategy and retain profit to improve their financial strength.”

Pattison added: ”Sometimes the pub- lic perception of profit is wrong. It’s seen as companies taking advantage of their position or exploiting their commercial advantages unfairly.

“But these successful companies should be proud of their achievements. In an industry not known for its successes, these business should act as benchmarks to the rest of the industry showing what can be achieved.”

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