Diageo is set to end direct supply to wholesalers that are not meeting its minimum order criteria.
The beverage company is understood to have informed operators via a letter that it will not be offering direct supply from 1 April due to them not ordering £2m of stock per year, The Grocer reported.
In the letter, Diageo GB managing director Nuni Teles said: “As a valued customer, we are writing to inform you that following a review of Diageo Great Britain’s wholesale and independent free trade business, we are implementing a transformation of our route to market strategy.
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“In pursuit of continually improving the way we do business, we have reviewed our current ways of working and after careful consideration have decided to change the criteria which wholesalers must meet to be directly supplied by Diageo.”
The letter said that the spirits giant is looking to make the transaction “as seamless as possible,” adding “your Diageo account manager will be in touch to suggest suitable alternative options for the supply”.
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 changes.
A Diageo spokesperson told Grocery Gazette: “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.”
It comes as shares at the company plummeted to the lowest level since November 2020 in December.
The share price fell by 2%, a drop that follows Diaego’s profit struggles in recent months.
