Retailers Rate Suppliers
CM Profit Group just released its 1st annual survey of On-Premise Chain Retailers, (after researching off-premise establishments for six years). The spirits category edged out beer and wine as the “Leading Category for On-Premise Value and Service,” with Future Brands performing the best overall.
SURVEY BACKGROUND. The survey is conducted by interviewing the 50 key decision makers from top retail chains, including casual dining, hotel, concession, sports recreation, sports bar, transportation and military segments. The questions focused on national accounts value added services and account call performance by all the major beer, wine and spirits suppliers. The scale ranges from 1 to 4: 1= Does not meet your expectations; 2= just short of meeting your expectations; 3.00 = Meets your expectations; and 4.00 = Exceeds your expectations.
WHO’S PERFORMING BEST? Now for the meaty stuff. The first question asked retailers to gauge their overall impression of suppliers in general. Three spirits suppliers achieved average ratings above 3.00 with Future Brands coming out on top. In fact, the spirits (averaging 2.90) and beer (2.82) categories outperformed wine (2.65), with spirits taking the lead. Gallo was the top wine supplier “by a wide margin,” and Boston Beer edged out Anheuser-Busch for the top position among beer suppliers.
WHERE ARE THEIR STRENGTHS? The second question asked retailers to rate and identify which supplier, by category, receives their highest rating and why. “Responsiveness/Listening/Communication” was fairly consistent across all three categories, with wine taking the lead at 60%. Beer ranked 49.1% and spirits ranked 45.5%.
However, retailers indicated that information and data analysis were not being adequately addressed by suppliers. The spirits category (20.5%) performed the best, however, followed by beer (9.4%) and then wine (8.6%).
CM Profit Group expressed “surprise” on “how little trust and objectivity there was between trading partners.” Beer (0%), wine (2.9%) and spirits (2.3%) all scored very low.
“Apparently, even among the best of trading partners, there is very little trust and demonstrated objectivity.”
WHO BEST UNDERSTANDS RETAILERS? In the third question, retailers were asked whether beer, wine or spirits best understand the beverage category’s goals, strategies and tactics and how it relates to the overall business. Beer and wine suppliers were rated about the same as a group. Beer supplier’s average rating was 2.70 and wine averaged at 2.62. Spirits clearly outperformed with an average rating of 2.87.
In addition, said researchers, “the spirits category had the highest rated supplier across all 3 categories and its lowest rated supplier was significantly higher than the lowest rated beer and wine suppliers.”
THE PRINCIPLES OF CATEGORY MANAGEMENT. Only 50% of on-premise retailers said they practice category management. CM Profit Group said it believes that many answered affirmatively because they have “attempted to manage their beverage alcohol business...as independent sales and profit centers.” However, researchers also believe fewer retailers are using a formal partnering process, or Category Captain, to manage categories with suppliers.
“We believe this ratings performance indicates that many of you [retailers], as a group, don’t believe your suppliers have earned or have shown the objective expertise necessary to move on to higher levels of business partnering...the services that suppliers do provide are perceived as being too self-serving, non-objective and not focused on meeting your [retailers] specific needs.”
ABOVE AND BEYOND THE CALL OF DUTY. In the last question, retailers were asked to identify a specific example within the past year of a supplier going above and beyond expectations. Beer suppliers received more total mentions (17) than either wine suppliers (9) or spirits (10), but there was reportedly a “distinct difference” in the commentary.
Beer suppliers typically expended more resources or physical effort. Wine, however, focused more on training, menu selection and product segment development. Spirits focused on long term initiatives that impact the entire category or helped grow specific segments. Spirits suppliers were also commended for helping retailers by providing detailed solutions.
OVERALL HIGHLIGHTS. As we mentioned above, spirits outperformed beer and wine overall as the leading category for on-premise value and service. Across all questions, only Future Brands, Gallo and Anheuser-Busch achieved average ratings between 2.90 and 3.00.
Said researchers: “This means that no supplier is meeting retailer expectations across all of the performance areas addressed by this survey.”
Across 10 different criteria, Future Brands was the #1 ranked spirits supplier in seven. Gallo remains the top wine supplier and had a comfortable lead against #2 rated Trinchero.
On-premise Retailers said industry and consumer Information is their #1 need when it comes to support services. Among beer suppliers, this was their poorest performing area, while 4 out of 7 wine suppliers were rated higher. Among spirits suppliers, 2 out of 7 criteria were rated higher.
CALIFORNIA GRAPES SURVIVE DRASTIC WEATHER
So far so good for the 2008 California harvest, says local growers. For awhile things were looking iffy after a difficult year weather wise. Not only did grapegrowers have to deal with drought, pests, high winds, extreme frosts and intense heat, but California wildfires were ever-looming.
The season began with a dry spring, followed by unseasonal frosts. However, frost damage in April was minimal despite ominous warnings early on (“worst frost in 30 years”). In addition, a dry growing season isn’t always a bad thing because it focuses the vines’ energy on the grapes. Many think the smoke from wildfires may have actually shielded the vineyards from the hot summer days and agree the smoke did minimal damage.
In a press conference, the Napa Valley Grapegrowers said yields will be lower than average this year, but the quality “exceptional.” Several AVA’s are predicting that the harvest could be 10% to 20% below average.
A lighter harvest will result in higher grapes prices for most growers, who are generally seeing lower cluster counts with small berries. However, some say it’s still too early to tell.
HARDY’S VINEYARDS WAITING ON A BUYER
Constellation may have a hard time finding buyers for more than $200 million of winery and vineyard assets in Clare and Padthaway in South Australia, as well as Mount Barker in Western Australia, reports The Australian. Constellation will retain the wine brands and essentially offer the new vineyard owners contracts to buy the grapes they produce.
Possible buyers, including Foster’s, Lion Nathan, Australian Vintage (formerly known as McGuigan Simeon), and privately held companies such as McWilliams do not appear in the position to buy at the moment. Either they are low on money or lack initiative to make a major purchase. As a result, the Australian suggests Hardy (owned by Constellation) should come down on its price.
Only Brand New Vintage (with a market capitalisation of just $8 million) said it is actively looking for acquisitions. However, ceo Sam Atkins declined to comment to the newspaper on whether BNV would be interested in any of the Constellation assets.
WHOLE FOODS TO CUT 49 JOBS
In an unusual move, Whole Foods said this week it is cutting 49 jobs at its Austin headquarters, reports local paper American-Statesman. The announcement came after the high-end grocer reported financial results for one of its most disappointing quarters last week, which it blamed on the ailing economy.
"Due to the current economic environment and the impact it is having on our business, Whole Foods Market regrets to announce that we are eliminating 49 out of its 650 positions that report to our global headquarters in Austin," the company said in a statement.
It’s not currently clear which departments will be affected.
WSD BRIEFS:
CHALK HILL WINERY HAS NAMED PEGGY FURTH co-chairman and CEO of Chalk Hill Estate Vineyards & Winery, the Healdsburg estate founded by husband and noted anti-trust attorney Fred Furth. Interestingly, the couple is in the midst of a divorce, said the San Francisco Business Times. Longtime Chalk Hill CFO Ken Born will be the new president and COO.
DIAGEO SPENT $550,000 on lobbying in the U.S. in the second quarter, reports the AP. Diageo North America Inc. lobbied on provisions to reduce underage drinking and encourage responsible drinking habits, according to a form filed July 21 with the House clerk's office. In
April-June, Diageo also lobbied for regulations on alcohol labeling, dietary guidelines, lower taxes on spirits and regulations on flavored malt beverages.
BROWN-FORMAN has named Shannon Donnell to the new position of Grower Relations Representative/Luxury Brands, focusing on ultra-premium brands Sanctuary, Sonoma-Cutrer and Fetzer Coro Mendocino. Cindy Johnson has also been named to B-F’s Grower Relations Team as Grower Relations Representative for the Central Coast and Northern Interior growing regions.
WASHINGTON’S LIQUOR CONTROL BOARD is implementing a year long pilot program where thirty grocery stores statewide will offer wine and beer tastings beginning Oct. 1. The liquor board will submit a report in December 2009 that includes public complaints and comments.
Until Monday, Megan
“My own business always bores me to death; I prefer other people's.”
Oscar Wilde
--------- Sell Day Calendar ----------
Today’s Sell Day: 10
Sell days this month: 21
Sell days this month last year: 23
This month ends on a: Fri
This month last year ended on a: Fri.
YTD sell days Over/Under: +1
WINE & SPIRITS DAILY
Subscribe or check back issues at: www.winespiritsdaily.com
Send news and comments in confidence to: megan@winespiritsdaily.com
© 2008 Wine & Spirits Daily, all rights reserved. May quote with attribution.
SURVEY BACKGROUND. The survey is conducted by interviewing the 50 key decision makers from top retail chains, including casual dining, hotel, concession, sports recreation, sports bar, transportation and military segments. The questions focused on national accounts value added services and account call performance by all the major beer, wine and spirits suppliers. The scale ranges from 1 to 4: 1= Does not meet your expectations; 2= just short of meeting your expectations; 3.00 = Meets your expectations; and 4.00 = Exceeds your expectations.
WHO’S PERFORMING BEST? Now for the meaty stuff. The first question asked retailers to gauge their overall impression of suppliers in general. Three spirits suppliers achieved average ratings above 3.00 with Future Brands coming out on top. In fact, the spirits (averaging 2.90) and beer (2.82) categories outperformed wine (2.65), with spirits taking the lead. Gallo was the top wine supplier “by a wide margin,” and Boston Beer edged out Anheuser-Busch for the top position among beer suppliers.
WHERE ARE THEIR STRENGTHS? The second question asked retailers to rate and identify which supplier, by category, receives their highest rating and why. “Responsiveness/Listening/Communication” was fairly consistent across all three categories, with wine taking the lead at 60%. Beer ranked 49.1% and spirits ranked 45.5%.
However, retailers indicated that information and data analysis were not being adequately addressed by suppliers. The spirits category (20.5%) performed the best, however, followed by beer (9.4%) and then wine (8.6%).
CM Profit Group expressed “surprise” on “how little trust and objectivity there was between trading partners.” Beer (0%), wine (2.9%) and spirits (2.3%) all scored very low.
“Apparently, even among the best of trading partners, there is very little trust and demonstrated objectivity.”
WHO BEST UNDERSTANDS RETAILERS? In the third question, retailers were asked whether beer, wine or spirits best understand the beverage category’s goals, strategies and tactics and how it relates to the overall business. Beer and wine suppliers were rated about the same as a group. Beer supplier’s average rating was 2.70 and wine averaged at 2.62. Spirits clearly outperformed with an average rating of 2.87.
In addition, said researchers, “the spirits category had the highest rated supplier across all 3 categories and its lowest rated supplier was significantly higher than the lowest rated beer and wine suppliers.”
THE PRINCIPLES OF CATEGORY MANAGEMENT. Only 50% of on-premise retailers said they practice category management. CM Profit Group said it believes that many answered affirmatively because they have “attempted to manage their beverage alcohol business...as independent sales and profit centers.” However, researchers also believe fewer retailers are using a formal partnering process, or Category Captain, to manage categories with suppliers.
“We believe this ratings performance indicates that many of you [retailers], as a group, don’t believe your suppliers have earned or have shown the objective expertise necessary to move on to higher levels of business partnering...the services that suppliers do provide are perceived as being too self-serving, non-objective and not focused on meeting your [retailers] specific needs.”
ABOVE AND BEYOND THE CALL OF DUTY. In the last question, retailers were asked to identify a specific example within the past year of a supplier going above and beyond expectations. Beer suppliers received more total mentions (17) than either wine suppliers (9) or spirits (10), but there was reportedly a “distinct difference” in the commentary.
Beer suppliers typically expended more resources or physical effort. Wine, however, focused more on training, menu selection and product segment development. Spirits focused on long term initiatives that impact the entire category or helped grow specific segments. Spirits suppliers were also commended for helping retailers by providing detailed solutions.
OVERALL HIGHLIGHTS. As we mentioned above, spirits outperformed beer and wine overall as the leading category for on-premise value and service. Across all questions, only Future Brands, Gallo and Anheuser-Busch achieved average ratings between 2.90 and 3.00.
Said researchers: “This means that no supplier is meeting retailer expectations across all of the performance areas addressed by this survey.”
Across 10 different criteria, Future Brands was the #1 ranked spirits supplier in seven. Gallo remains the top wine supplier and had a comfortable lead against #2 rated Trinchero.
On-premise Retailers said industry and consumer Information is their #1 need when it comes to support services. Among beer suppliers, this was their poorest performing area, while 4 out of 7 wine suppliers were rated higher. Among spirits suppliers, 2 out of 7 criteria were rated higher.
CALIFORNIA GRAPES SURVIVE DRASTIC WEATHER
So far so good for the 2008 California harvest, says local growers. For awhile things were looking iffy after a difficult year weather wise. Not only did grapegrowers have to deal with drought, pests, high winds, extreme frosts and intense heat, but California wildfires were ever-looming.
The season began with a dry spring, followed by unseasonal frosts. However, frost damage in April was minimal despite ominous warnings early on (“worst frost in 30 years”). In addition, a dry growing season isn’t always a bad thing because it focuses the vines’ energy on the grapes. Many think the smoke from wildfires may have actually shielded the vineyards from the hot summer days and agree the smoke did minimal damage.
In a press conference, the Napa Valley Grapegrowers said yields will be lower than average this year, but the quality “exceptional.” Several AVA’s are predicting that the harvest could be 10% to 20% below average.
A lighter harvest will result in higher grapes prices for most growers, who are generally seeing lower cluster counts with small berries. However, some say it’s still too early to tell.
HARDY’S VINEYARDS WAITING ON A BUYER
Constellation may have a hard time finding buyers for more than $200 million of winery and vineyard assets in Clare and Padthaway in South Australia, as well as Mount Barker in Western Australia, reports The Australian. Constellation will retain the wine brands and essentially offer the new vineyard owners contracts to buy the grapes they produce.
Possible buyers, including Foster’s, Lion Nathan, Australian Vintage (formerly known as McGuigan Simeon), and privately held companies such as McWilliams do not appear in the position to buy at the moment. Either they are low on money or lack initiative to make a major purchase. As a result, the Australian suggests Hardy (owned by Constellation) should come down on its price.
Only Brand New Vintage (with a market capitalisation of just $8 million) said it is actively looking for acquisitions. However, ceo Sam Atkins declined to comment to the newspaper on whether BNV would be interested in any of the Constellation assets.
WHOLE FOODS TO CUT 49 JOBS
In an unusual move, Whole Foods said this week it is cutting 49 jobs at its Austin headquarters, reports local paper American-Statesman. The announcement came after the high-end grocer reported financial results for one of its most disappointing quarters last week, which it blamed on the ailing economy.
"Due to the current economic environment and the impact it is having on our business, Whole Foods Market regrets to announce that we are eliminating 49 out of its 650 positions that report to our global headquarters in Austin," the company said in a statement.
It’s not currently clear which departments will be affected.
WSD BRIEFS:
CHALK HILL WINERY HAS NAMED PEGGY FURTH co-chairman and CEO of Chalk Hill Estate Vineyards & Winery, the Healdsburg estate founded by husband and noted anti-trust attorney Fred Furth. Interestingly, the couple is in the midst of a divorce, said the San Francisco Business Times. Longtime Chalk Hill CFO Ken Born will be the new president and COO.
DIAGEO SPENT $550,000 on lobbying in the U.S. in the second quarter, reports the AP. Diageo North America Inc. lobbied on provisions to reduce underage drinking and encourage responsible drinking habits, according to a form filed July 21 with the House clerk's office. In
April-June, Diageo also lobbied for regulations on alcohol labeling, dietary guidelines, lower taxes on spirits and regulations on flavored malt beverages.
BROWN-FORMAN has named Shannon Donnell to the new position of Grower Relations Representative/Luxury Brands, focusing on ultra-premium brands Sanctuary, Sonoma-Cutrer and Fetzer Coro Mendocino. Cindy Johnson has also been named to B-F’s Grower Relations Team as Grower Relations Representative for the Central Coast and Northern Interior growing regions.
WASHINGTON’S LIQUOR CONTROL BOARD is implementing a year long pilot program where thirty grocery stores statewide will offer wine and beer tastings beginning Oct. 1. The liquor board will submit a report in December 2009 that includes public complaints and comments.
Until Monday, Megan
“My own business always bores me to death; I prefer other people's.”
Oscar Wilde
--------- Sell Day Calendar ----------
Today’s Sell Day: 10
Sell days this month: 21
Sell days this month last year: 23
This month ends on a: Fri
This month last year ended on a: Fri.
YTD sell days Over/Under: +1
WINE & SPIRITS DAILY
Subscribe or check back issues at: www.winespiritsdaily.com
Send news and comments in confidence to: megan@winespiritsdaily.com
© 2008 Wine & Spirits Daily, all rights reserved. May quote with attribution.
posted at 1:29 PM
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