Spirits giant Diageo has confirmed that it has updated its criteria and trade terms that wholesalers must meet for direct supply.
Under the new terms, from April 1, wholesalers are required to order a minimum of £2 million worth of Diageo stock per year to maintain direct supply.
Confirming the reports, Diageo Spokesperson told Asian Trader, “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.”
Diageo’s letter to wholesalers have raised concerns as the decision is expected to limit retailer choice and reduce distribution. It also might result in price rise for retailers as well as end consumers.
The move benefits the bigger wholesale players and penalises smaller, independent operators, while limiting retailer choice. It is understood that around just 10 of the UK’s largest wholesales will continue to meet the criteria to qualify for direct supply under the new changes.
There are also growing concerns that other suppliers could do the same.
Wholesale buying group Confex has expressed displeasure over the move, while saying that Diageo wasn’t doing anything new and this has been happening for the last 20 years with a ramping up post-Covid.
