Thursday, May 21, 2009

Giant(s) Exodus from the UK?

Nothing ever stays the same. The wine scene in Britain - and, to a lesser extent the world - was radically altered with the arrival/development of multinational vinous giants like E&J Gallo, Fosters, Pernod Ricard and Constellation. Companies like these, with their portfolios of brands entered into initially happy relationships with the bigger UK retailers who gave them the shelf space they needed to sell their wares. Naturally, those shelves were the setting for a certain amount of robust competition, but essentially, the system worked. It all began to go wrong when, with the encouragement of the supermarkets, the wine companies descended into an orgy of discounting with BOGOFs - Buy One Get One Frees- Three-for-Twos and most recently Three-for-Ten (pound) offers. The blame for these usually goes to the supermarkets who are portrayed as evil torturers squeezing the lifeblood out of their suppliers. Those closer to the picture, however, recall plenty of occasions when the wine companies almost pleaded with the chains to let them offer their wines at rock bottom discounts.

But, as I say, nothing remains the same. Now that the great British public has become thoroughly used to getting its Lindemans and Hardys wines for unrealistically low prices, the companies that produce these wines have - reportedly - finally become fed up with the game of supplying them. So, the big companies are laying off staff, refusing to agree to the deals the supermarkets are proposing and taking steps to largely withdraw from the UK market. As one exec said to me, Poland may be a much smaller market, but it's actually looking a lot more attractive to us in profit terms at the moment... Some people will be sorry to see them go; others less so. But like the western troops that will one day have moved out of the Gulf, no-one can ever say that the giant wine companies won't have left their mark.


  1. I was having this discussion with someone in the US last night. It's the biggies faults and they have only themselves to blame for the mess they are now in

  2. That's as true of the wine business as it is of the automobile industry in the US, and of plenty of other sectors, I guess. Being big leads to inertia...