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Multiples are bad business

Published:  18 January, 2007

More depressing than the sight of Coco the Clown being elected London mayor has been the latest indication that the middlemen in the UK wine industry are finding life very tough indeed.

Orders from a major multiple grocer were suddenly taken away from Orbital in the middle of last year. As for Darlington, one observer commented that the person who did a deal for supplying own-label "should have been kicked up the backside". Darlington had to source the wine, ship it, label it, and then take a tiny profit that ended up being a loss. It would have probably been better to stick the money in a high-interest account.

Yet supermarkets possess a vast hold over the minds - and the accounts - of so many in the wine business. You implore them not to do it; but like the solitary person walking into the large house on the hill with the creaky door, so many salesmen continue to chase on-shelf listings.

It's obvious why they do it: supermarkets can give such an uplift in volume. But what else accrues as a result? It's common for wine writers to talk about how much supermarkets have done for wine in the UK. But who keeps the 2 billion profits, while many on the distribution side are now struggling?

There is an upside, as the recent rise of Pink Elephant has shown. Buyers at Tesco have helped built this ros brand, a high-quality example of seign winemaking, and it's now available at a good price to many consumers.

But after a decade of subsidising gondola-end promotions, bogofs and money-off deals, the Australians are staring down the barrel of becoming Germany mark II, the next Liebfraumilch, because their wines are sold at bargain rates. Now that's the kind of circus you would do well to avoid.

James Aufenast is Deputy Editor of Harpers