Diageo to stop supply to wholesalers under strict new criteria

Diageo is to cease supply to convenience wholesalers unable to meet strict new ordering criteria, including an annual minimum order value of £2m.

The alcohol firm sent communication to wholesalers, seen by our sister title Better Retailing, informing them the restrictions would be put into place from 1 April.

In the letter, Diageo GB managing director Nuno Teles said: “As a valued customer, we are writing to inform you that following a review of Diageo Great Britain’s (Diageo) wholesale and independent free trade business we are implementing a transformation of our route to market strategy.

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“In pursuit of continually improving the way we do business, we have reviewed our current ways of working and after careful consideration have decided to change the criteria which wholesalers must meet to be directly supplied by Diageo.

“From Monday 1 April 2024, all wholesale customers will be required to meet a set of pre-defined criteria to be directly supplied by Diageo.”

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It means retailers will be unable to get core brands such as Guinness, Baileys, Smirnoff, Tanqueray, Captain Morgan and Johnnie Walker from affected wholesalers when the terms come into force.

The letter stated that those impacted will be contacted by their account manager to discuss alternative options, which include the firm’s relaunched “Diageo One platform”.

The criteria for wholesalers to receive supply from April includes;

– Meeting a minimum order quantity of £2m annually.  This is equivalent to 1,565 four packs of Guinness sold a day at cost price

– The wholesaler must have own or full control of all its warehouses where Diageo products are stored and delivered from.

– Firms must be able to ensure legal compliance and have appropriate policies to “protect against damage to “Diageo’s reputation.”

– Evidence must also be provided by the wholesaler that it can build a long term relationship with Diageo

Asked to comment on the decision, a Diageo spokesperson said: “Following a strategic review of Diageo GB’s wholesale and independent business, we are implementing a transformation of our route to market strategy. We have seen significant changes in how the industry is structured and operated, and as a result we have updated our criteria which wholesalers must meet to be directly supplied by Diageo, as well as our wholesale trade terms. This will promote efficiencies, encourage sharing of data which will drive insight-led decisions and help enable Diageo to better service the independent operator.”

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Alex Yau has four years of experience breaking exclusive news stories across the retail, wholesale and telecommunications markets. He is a wholesale and convenience expert, and has interviewed c-level executives from Booker, Tesco, Spar, Co-op, EE, BT, Vodafone and Samsung, alongside Labour leader Jeremy Corbyn. Alex can be reached on alex.yau@newtrade.co.uk or www.linkedin.com/in/alexianyau

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