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FWD conference call

Published:  23 July, 2008

Rogue traders are decimating the businesses of legitimate licensed wholesalers and cash and carries, according to the chairman of the Federation of Wholesale Distributors (FWD), Rodney Hunt.

Hunt, who is also managing director of NISA Today's wholesale arm, was speaking at the FWD Drinksummit held in Stratford-upon-Avon on 7 June.

Hunt said: There is a growing concern at the number of operations selling products at such ridiculously competitive prices that they can only be achieving this through either duty or VAT fraud.

HM Revenue and Customs, for some reason, seems reluctant to act against these rogue traders, who are decimating the business of those legitimate wholesalers and cash and carries unfortunate enough to trade in their immediate vicinity.

Those that try to earn an honest living by trading within the law - and that is the vast majority within our industry - could ultimately be forced out of business because it is literally impossible to compete with the fraudsters.'

Hunt urged people to turn the trickle' of calls to Customs and Excise's hotline into a torrent' to get these operators out of the wholesale sector.

He went on to point out that up to 60% of the total turnover of licensed products is still conducted outside of the major retail multiples. As those multiples become even more dictatorial, there should be an even greater resolve on the part of suppliers to preserve the independents' share or, dare I suggest, even increase it,' he said.

David Glennon, marketing manager for AC Nielsen, told the conference that as the take-home sector continues to take share from the on-trade, wine is the biggest take-home opportunity' and there is a great opportunity' for the independent trade in selling wine.

He said the independent sector over-indexes' on wines from the US, Germany and Spain, but independent retailers should not forget wines from the other New World producers.

Mike Paul, managing director of Western Wines, used his presentation to hit back at remarks by Booker Cash & Carry's wine-buying controller, Julian Twaites, reported in Off Licence News. He described major wine brands as simple and fruit-driven but also boring and unexciting, with no point of difference'.

Paul stated that with the wine sector growing by 5% and having doubled in 20 years to 120 million cases, those involved with wine were lucky to be selling wine at this time'.

He said that 10 years ago, drinkers bought their wines from France, Italy and maybe Rioja, whereas wine was now no longer an elitist drink, with regular, committed wine drinkers never spending more than 5 for a bottle.

Paul admitted that there was a certain uniformity of style', largely because the New World plays a key role in reassuring mainstream wine drinkers. Nevertheless, with the top 10 brands accounting for approximately 21% of total off-trade wine sales, he said that hardly constituted dominance.

He said it was up to the leading suppliers to ensure that the sector was going in the right direction'. He pointed out that the switch to Australian wines and to screwcap closures was trade- and not consumer-led. Consumers want leadership and guidance,' said Paul. Are we doing enough? I'm not sure we are.' He said that you could not blame suppliers for making wine in styles that were proving popular. With the Parkerisation' of Bordeaux wines to fruitier styles, you could not have it both ways', he said, criticising the Old World for not listening to what consumers want and then criticising it again for making wine that is too uniform.

With his Wine Trade Action Group hat on, Paul called for a radical solution' to applying duty increases to ease the pressure on suppliers, wholesalers and retailers. He said duty harmonisation was a dead duck'.

John Mills, formerly senior vice-president off-trade sales for Constellation Europe and now managing director of Constellation's Gaymer Cider Company, told Drinksummit that cider is the new wine', with younger consumers looking for drinks that are sweet, tasty and served cold'.

Andrea Hargrave MW, former Booker wine buyer, said that while changing tastes and the consumer's desire for experimentation still have a very important role to play, the mainstream consumer is increasingly influenced by the brands and promotional activity'. She said suppliers must ensure that the liquid is right, the packaging is effective and the commercial support is in place'.

You may think this is like teaching grandma to suck eggs, but when I was buying I was bewildered by the array of products I was sent "cold", with no supporting documentation or rationale, which, incidentally, I rarely had the time or inclination to taste,' said Hargrave.

On bogofs, Hargrave speculated: Are consumers that gullible? I have heard shoppers in Morrisons and Sainsbury's discussing the fact that the wine's price is artificially inflated and then reduced, which is hardly a sound basis for the industry to move forward on.'

She concluded: Get the basics of product quality, price and promotional activity right' and your offering will be like a well-made cake with skilfully applied icing.'