Distil Share Discussion Threads

[suneday] 09/1/2018 09:47

The supermarket class of retailer all do promotional deals. Who's to say they have or have not all been given opportunity to take advantage of various incentives/opportunities/ promotional support at supply agreement stage.

[haggismchaggis] 09/1/2018 09:15

Berny,Brand positioning in a store has nothing to do with competition law.If you think I'm wrong about the application of competition law to Distil PLC, copy my post verbatim and send it to Distil HQ and ask them, I'm sure they can say whether I am right or wrong, without giving away any trade secrets.

[haggismchaggis] 08/1/2018 23:47

Berny, There seems to be confusion between brand promotion and retailer promotion.If a brand wants to promote its products with a special offer then than offer is made by the brand owner via the retailers that want to take part in that offer. Some might not want to take part because it means more man hours for their staff, or alterations to displays that they can't accommodate. But the promotion is offered to all the retailers. This is fine as it's within the competition law.The other promotion is where a retailer wants to do a special offer on a product, in this case the retailer can't go to the brand owner or the distributor and ask for a cut price deal, because if the brand owner or distributor gave that one retailer discount pricing below what other retailers are paying, it would be illegal as it breaches the competition law.The retailer could possibly take advantage of bulk buy discounts which brand owners and/or distributors have in place for ALL clients, such that a very large order might get 10% off for example, and this could be passed on to the retailers customers. This is not in breach of the Competition law, because all retailers can take advantage of the same bulk buy deal if they desire.

[berny3] 08/1/2018 23:27

Haggis this is the best link I can find to explain marketing strategy through pricing by a brand owner. The brand owner has to control pricing to ensure they are getting their strategy right. It does not make logic sense that you would pass the responsibility of promotion over to the retailer. It is a fundamental control in a marketing strategy.

[suneday] 08/1/2018 22:44

This from the Government Groceries Supply Code of Practice dated 4th. August 2009. Groceries includes alcohol. This is geared to protecting suppliers from bullying supermarkets, but nevertheless appears relevant. It appears to permit promotional support within the terms of the original supply agreement.

Promotions
(1) A Retailer must not, directly or indirectly, Require a Supplier predominantly to fund the costs of a Promotion.

(2) Where a Retailer directly or indirectly Requires any Payment from a Supplier in support of a Promotion of one of that Supplier’s Grocery products, a Retailer must only hold that Promotion after Reasonable Notice has been given to that Supplier in writing. For the avoidance of doubt, a Retailer must not require or request a Supplier to participate in a Promotion where this would entail a retrospective variation to the Supply Agreement.

[haggismchaggis] 08/1/2018 20:47

Berny, I'm not wrong at all. It would be price rigging and in contravention of the Competition Act 1988. If DIS colluded with individual Supermarkets on offers that beat their competitors, it is without doubt against the law. The ONLY way DIS could allow more competitive prices is to offer the SAME PRICE to all retailers, for example if they wanted to clear stock with old branding.


"The supermarkets and several dairy companies fell foul of the Competition Act 1998, which prevents businesses from colluding in a way that harms competition in the UK."



Specifically this part.

"apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage"

[suneday] 08/1/2018 19:52

Give it a go if it's bothering you. May at least give a general idea - who pays the cost of an in store alcohol offer, retailer or supplier, which I think is what you were asking, and having got contradictory answers. Don't want to know how many beans.
But nothing new about it. It's the business they're all in. We shall see if they're shifting it soon enough, and what, if anything, they've made with results.

[petersinthemarket] 08/1/2018 18:40

Can you really believe they would tell us how the beans are shared out!

[suneday] 08/1/2018 15:08

Here's simple. Phone them for a definitive answer on their contractual or other arrangements or guess at it.

[petersinthemarket] 08/1/2018 14:17

Apparently, not such a 'simple' question then? Is there really no-one here on the inside track who would care to contribute? pete

[acdc52] 08/1/2018 13:19

Next week trade update should be out...Touchwood.

[thepopeofchillitown] 08/1/2018 12:19

I would imagine discounting is part of the distribution deal. Not sure re spirits but usually it is the producer that funds the discount. Milk is a good example. When the supermarkets started to reduce the price it was the farmers who took the hit not their profits. Hence the headlines at the time.

[suneday] 08/1/2018 10:04

Unless seen as a loss leader, which I don't know but doubt, seems to me Tesco and the others in the pressured retail driving seat with competition for shelf space will want volume and profit, whereas Distil management may currently consider volume increase at break even job done.

[berny3] 07/1/2018 23:23

Haggis you are wrong. Pricing is a key aspect of the brand owners tool for driving volume. In supermarkets it is volume that counts. The Supermarket has a profit it wants to make on your product irrespective of the price it is sold at. You control the label of the product and the pricing. It is a competitive war between producers. Quite often large brands are being sold at cost to push others out of the market. If you can get volume in the Supermarket this translates to purchase in bars and clubs. Volume gained in the supermarket is used to sell your product to bars, clubs, on trade sellers.

[haggismchaggis] 07/1/2018 22:42

"Hello, Tesco here. We want to undercut Sainsbury's, Morrisons and ASDA by selling your product at £5 less than they are, so we need you to sell us the product £5 cheaper"

"Sorry, but we cannot be party to you undercutting our other clients, this would be price rigging and is illegal"

(Dream on, it's never going to happen!)

[haggismchaggis] 07/1/2018 22:37

It's only the brand owner that funds it if it's a brand offer! I don't believe DIS have offered any brand discounts. If the retailer decides they want to undercut their competitors (which we see all the time with RedLeg and Blackwoods in supermarkets!) then the discount hit is taken by the retailer! DIS does not have any part in supermarket competition discounts, otherwise it would be shafting its other clients!!

[berny3] 07/1/2018 22:30

pim your calculation does not take account of fee to hmrc.

As far as I know 33s is correct brand owner is in charge of promotions and wears the discount. The use of pricing is moved to increase volume. It is likely included along with advertising expense in the p&l account.

[33spindle] 07/1/2018 20:04

it’s the brand owner that funds the promotions not the retailer

[petersinthemarket] 07/1/2018 19:09

cheers cody, I'm still not sure how these booze supply chains work, which is why I posed the 'simple' question.
I have a feeling that might becomes right and unfortunately DIS is still a Tiddler.
As an ex engineer, I always like to know how things (machines and systems) work, so if anyone has personal retail experience in this sphere I would still like to pursue the topic a while longer.
pete

[cody1] 07/1/2018 18:17

pitm

Very interesting point ...this may help clarify. or not
I always thought x number of product was purchased for x price this purchase price included any profit therefore discounts were up to the individual retailer Tesco asda morrisons see below link

hxxps://www.thebalance.com/retail-pricing-strategies-2890279
http not http

[suneday] 07/1/2018 17:16

I hadn't gone that far. Just a quick look. But they obviously caught a cold few years back when cider went out of fashion and revenue dropped from I think £38mil.
Perhaps a proud but struggling family business. Good name and products no cash.

[berny3] 07/1/2018 17:05

Look at the debt - huge increase from last year to this year over £18mln in debt. Interest payments a significant amount of GP.

Begs question whether the deal had to be done.