OLN’s annual Wine Report survey revealed growing tensions between producers and retailers, with 36% of suppliers reporting trading relationships were more strained over the past year and just 3.6% feeling negotiations had become easier. The remaining 57% said tensions remained the same.
Nick James, managing director at Pol Roger, said: “Across-the-board increases in duty, prime cost of product, distribution and currency have imposed additional pressures. Where price points are key and where a particular product can’t sustain an increase in terms of cost versus value then I am quite sure relationships become stretched.”
Jim Elliot, national accounts director at CYT, added: “Some retailers’ margin requirements are totally out of step with the rest of the market, making for tense discussions.”
Nick Oakley, director of Oakley Wine Agencies, said some buyers’ demands were out of touch with producers’ profits.
He said: “There is an expectation that we can continue to provide wines at ultra-competitive prices, but such liquid, with quality, exists in less and less quantity. What does is unprofitable to the producer.”
In April, OLN reported the extent of suppliers’ frustrations with the skills of buyers, who were criticised for being too inexperienced following the departure of a swathe of long-established names from supermarkets’ teams.
When asked about their views this month, 53.6% of suppliers said teams had sufficient skills and expertise to trade wine to its best potential, while 32% disagreed.
More positively, 76% of suppliers said most promotions were well executed in store with 20% feeling the reverse. However, when suppliers contact buyers to flag up problems they’ve discovered with their products on shelf – such as out-of-stocks or poor promotional executions – 40% said retailers promise to look into the issue but there is often no resolution. An equal number of suppliers feel buyers are quick to respond.
Our poll also highlighted concern among 46.4% of the supply base that personnel changes in buying teams were preventing them establishing long-term, effective relationships.
But, although suppliers acknowledged there had been big changes to teams in the last year, some saw it as a positive.
Kim Wilson, director of sales at Ehrmanns, said: “There has been a lot of churn and it is difficult when you are trying to build long-term partnerships to have to start from scratch. But, likewise, this natural churn does add something different and can prove to be a more successful relationship.
“What really helps is having a combination of roles: an experienced winemaker or product selector who understands the market and that wine cannot be treated like a commodity, and then someone in a strong commercial role.”