from John Noble, director, The British Brands Group
Sir; It is naïve to infer that the solution to grey trading lies in the hands of suppliers (Opinion, The Grocer, 26 April 2003). This suggests that price is arbitary and that brand suppliers could charge one price across all countries without detriment.
The reality is that the "single market" is unified in name only. It contains enormous diversity, of populations, tastes, geography and cultures. Costs of doing business (and building brands) vary significantly. Formulations may also vary. The marketplace, and its inherent competitive pressures, most certainly varies.
A brand may be hugely popular and sell in vast quantities in one country but in another country be a niche player, selling only in small quantities. The economies, and price options, are very different. Similarly, a brand may be under severe price pressure in one country, from aggressive competitive price promotions or below-cost selling for example, but not in another.
Were suppliers to be placed in the moral straitjacket of only selling at the lowest price prevailing in Europe, as your Opinion infers, some markets may become uneconomic to serve and volumes are likely to be severely hit, destroying economies of scale and thereby inflating prices for many.
The diversity of the European market is just another factor that favours retailers who may legitimately source at the lowest prevailing price with little regard for the impact on a brand's sustainability. At the same time, it is a further level of the complexity that brand manufacturers must manage if they are to continue to compete and innovate.
Were the problem as easy to solve as your leader suggests, it would have been solved a long time ago.
{{COMMENT & LETTERS }}
Sir; It is naïve to infer that the solution to grey trading lies in the hands of suppliers (Opinion, The Grocer, 26 April 2003). This suggests that price is arbitary and that brand suppliers could charge one price across all countries without detriment.
The reality is that the "single market" is unified in name only. It contains enormous diversity, of populations, tastes, geography and cultures. Costs of doing business (and building brands) vary significantly. Formulations may also vary. The marketplace, and its inherent competitive pressures, most certainly varies.
A brand may be hugely popular and sell in vast quantities in one country but in another country be a niche player, selling only in small quantities. The economies, and price options, are very different. Similarly, a brand may be under severe price pressure in one country, from aggressive competitive price promotions or below-cost selling for example, but not in another.
Were suppliers to be placed in the moral straitjacket of only selling at the lowest price prevailing in Europe, as your Opinion infers, some markets may become uneconomic to serve and volumes are likely to be severely hit, destroying economies of scale and thereby inflating prices for many.
The diversity of the European market is just another factor that favours retailers who may legitimately source at the lowest prevailing price with little regard for the impact on a brand's sustainability. At the same time, it is a further level of the complexity that brand manufacturers must manage if they are to continue to compete and innovate.
Were the problem as easy to solve as your leader suggests, it would have been solved a long time ago.
{{COMMENT & LETTERS }}
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