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Naked Wines urges suppliers angered by Majestic's funding request to switch supply to them

Published:  04 November, 2014

Naked Wines is offering any Majestic supplier angered at being asked to pay an extra 4p on every bottle sold to help fund its new warehouse, to switch supply to itself where it will promise the price agreed will be the price paid.

Rowan Gormley, chief executive of Naked Wines, told he would like to "offer an open invitation to any small Majestic supplier" that does not want to "fund Majestic's capital expenditure budget". "We will happily help fund their capital expenditure budget instead," he added.

He said Naked Wines' business model was based on being up front and transparent about the cost of supply and that any agreed price was the amount due. Suppliers, he stressed, are not then asked for extra payments for listing fees, promotions, adverts in magazines or other hidden costs. A "route to market" where the "price is the price".

"Our model helps suppliers fund a large part of their production costs," stressed Gormley.

He said Majestic's request for suppliers to dip in to their own margins to help fund its new warehouse, exclusively revealed by Harpers last week, by paying 4p for every bottle sold up until next April,  was a further example of the battering in relations between suppliers and major retailers.

The Majestic revelations follow in the wake of the TescoGate scandal which has resulted in the Serious Fraud Office now investigating what payments suppliers were asked to pay Tesco to help foot its £263m profit overstatement.

"We have now reached a tipping point where the big chains have screwed suppliers in to the sand so much their heads are below the ground," added Gormley.

"For some suppliers with decent products it is time to go somewhere else. Up to now they have had the choice of low volumes and high margins in the independent sector, or high volumes and low margins with the multiples. But with Naked Wines they have got the choice of decent margins and volumes," he explained.

A "route to market" where the "price is the price".

"It means that we negotiate a price upfront which remains fixed and does not have any rebates/listing/advertising fees deducted," explained Gormley.