New minimum order criteria for wholesalers to retain direct supply from Diageo could be even harder to meet than previously thought, The Grocer has learned.
The drinks giant wrote to wholesalers last month to inform them of its new £2m per annum minimum order quantity, and plans to stop supply for those businesses that do not meet the threshold from 1 April.
It was thought at the time the new terms could rule out all bar the top 10 to 12 UK wholesalers. However, The Grocer has learned the figure does not include duty, which once factored in would require a much higher invoice value in order for wholesalers to continue to be supplied directly.
The exact amount of extra invoice value will differ depending on product mix, but given most of the products wholesalers order from Diageo are spirits, which will carry the highest level of duty, the final invoice value will need to be much higher than £2m.
“Alcohol duty is an indirect tax applied to producers, which can change at the discretion of the UK government,” said a Diageo spokesman. “The MOQ is the number that Diageo directly controls. We urge the Chancellor to back the industry and cut duty in the spring.”
One of the criticisms by wholesalers of the move is that it will limit choice for independent retailers and hospitality operators. However, this week Diageo said it was launching a new online support platform it claims will “revolutionise” the way it works with independent retailers.
‘Diageo One’ – previously only available to on-trade customers – would now roll out to independent retailers to help “supercharge” their business, it said.
New features included direct Diageo support “at the touch of a button”, free marketing tools, “exclusive” training material and insight into category trends, it said.
It showed Diageo’s “commitment to providing the best support to independent off-trade retailers”, according to Andrew Fell, strategy & transformation director at Diageo GB.
“Diageo is deeply committed to forging strong connections with our customers – supporting them in delivering the best possible service which drives tangible results,” Fell said. “This is why we are really excited about the transformation of Diageo One, which looks to supercharge businesses with a range of incredible tools.
“The platform has a whole range of resources specifically tailored to support our off-trade partners, providing them better access to support and guidance from Diageo than ever before.”
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