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

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 Harpers.co.uk 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. 

 

 

Readers' comments (12)

  • One cannot have anything but admiration for Mr Gormley. He's a smart dude!

    Good luck Rowan! The UK needs more people like you.

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  • I am so delighted to see all of this coming out in the open now - we supplied Majestic with well over one and half million bottles of Rose over a number of years but eventually fired them in May 2013 after we got so fed up with their continual demands for money back, unexpected retro invoices and late payments. The world of wine should expect more from all sides.

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  • Martin, glad to hear you fired them. The stories are usually when the retailer drops a supplier unexpectedly becuase they won't play ball. Well done for taking the initiative.

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  • I think that this low level tactic from Majestic is deplorable. They are a respected business in our troubled UK wine market and do not need to descend to these gutter levels of negotiating tactics! You need to be firm but fair and any trading relationship is a 2 way street. I wish that suppliers could invoice buyers for the investments they have made in their wineries and infrastructures! Anyway after " Tescogate" think that this is the most poorly thought through negotiating tactic I have come across in my 42 years in the wine industry!

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  • As an "End User" with Naked Wines, I have nothing but admiration for the way they conduct their affairs.

    I would urge these smaller producers to look seriously at taking up Rowan Gormley's offer.

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  • Nice one Rowan my friend!

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  • We are going through similar challenges in Australia where a Duopoly run by ex UK Supermarket Executives are dominating our Liquor Supply. We are seeing Treasury Wines with the flagship label Penfolds doing deals with Dan Murphy's that basically excludes all the independents from being able to compete. Fortunately many of these ex UK Tesco Employees are being found out for not being quite so successful as their resumes probably read. Well done Naked Wines. Hopefully we will not see the market control on liquor take place like we have with our Supermarkets and Fuel.

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  • Unbelievable arrogance from Majestic, or is it hubris..?

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  • Still cannot believe the stupidity of Majestic's strategy, surely we've missed something?

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  • I've had it with greedy supermarkets and large chains sucking money out of suppliers to feed their bellies. I wish the public were more aware of this, though Tescogate is a good start!... We independents treat our suppliers with nothing but respect and our company runs along modest lines. We understand that as small independent family growers/wine makers, it's hardwork. They making wine carefully and sustainably; preserving tradition and the environment. 12 years on we're still working together without a cross word. We're happy, they're happy and the customers are buying affordable, consistently good, traceable wines.

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