Waitrose will use a new exclusive and expanded Duchy Originals range to balance its books, countering a potential margin loss through its Essential Waitrose range, according to sources close to retailer.
"With the success of Essential, you can see why Waitrose is so keen to put in a premium layer to protect its margins. It brings in a different customer," said a leading industry source.
Waitrose would guarantee £2m a year from the deal as a minimum through royalty payments, a source close to the deal added, kickstarting contributions to the Prince of Wales' charities, which have dried up since 2007 because of falling profits.
The move, in which the retailer will adopt a three-tier product strategy for the first time, will lead to the closure of the Prince of Wales' food brand's office in Richmond and halt supply of Duchy products to all other supermarkets, although wholesaler Petty Wood will continue to distribute products under the new name of Duchy Originals by Waitrose, to delis, farm shops and other independent outlets.
Duchy Originals chief executive Andrew Baker admitted accounts would show the company made a loss in the year to March 2009 when published in January, but denied the deal was a bail out.
Baker will be given an office in the Prince of Wales' official residence, Clarence House, while all other Duchy staff will be transferred to Waitrose's head office in Bracknell.
The Prince of Wales had ruled out selling the business, after receiving approaches, Baker said. "We decided not to pursue strategies that included offers for sale because we believe partnership with Waitrose is the best way to grow and to increase donations."
Waitrose MD Mark Price described the Duchy deal as "the last piece of the puzzle" in Waitrose's product strategy, following the introduction of the budget range Essential Waitrose earlier this year. The 1,400-strong range comprised 1,200 repackaged Waitrose lines and 200 new ones.
Meanwhile, exclusive research for The Grocer by Brand View has discovered a quarter of Essential products are actually more expensive than before the revamp. Some 686 of the 875 Essential products researchers found on sale at WaitroseDeliver were repackaged own-label products costing an average 1% more than in January.
"We've invested £9m net in pricing over the three months since the range launched," said Waitrose chief executive Mark Price. "Overall, inflation on our products since the start of the year is 2.1% to consumers, across 20,000 lines, versus 1% for Essential, so the inflation is below the average and as supply-side inflation is 4.5% to 5%, we are protecting our customers from inflation."
"With the success of Essential, you can see why Waitrose is so keen to put in a premium layer to protect its margins. It brings in a different customer," said a leading industry source.
Waitrose would guarantee £2m a year from the deal as a minimum through royalty payments, a source close to the deal added, kickstarting contributions to the Prince of Wales' charities, which have dried up since 2007 because of falling profits.
The move, in which the retailer will adopt a three-tier product strategy for the first time, will lead to the closure of the Prince of Wales' food brand's office in Richmond and halt supply of Duchy products to all other supermarkets, although wholesaler Petty Wood will continue to distribute products under the new name of Duchy Originals by Waitrose, to delis, farm shops and other independent outlets.
Duchy Originals chief executive Andrew Baker admitted accounts would show the company made a loss in the year to March 2009 when published in January, but denied the deal was a bail out.
Baker will be given an office in the Prince of Wales' official residence, Clarence House, while all other Duchy staff will be transferred to Waitrose's head office in Bracknell.
The Prince of Wales had ruled out selling the business, after receiving approaches, Baker said. "We decided not to pursue strategies that included offers for sale because we believe partnership with Waitrose is the best way to grow and to increase donations."
Waitrose MD Mark Price described the Duchy deal as "the last piece of the puzzle" in Waitrose's product strategy, following the introduction of the budget range Essential Waitrose earlier this year. The 1,400-strong range comprised 1,200 repackaged Waitrose lines and 200 new ones.
Meanwhile, exclusive research for The Grocer by Brand View has discovered a quarter of Essential products are actually more expensive than before the revamp. Some 686 of the 875 Essential products researchers found on sale at WaitroseDeliver were repackaged own-label products costing an average 1% more than in January.
"We've invested £9m net in pricing over the three months since the range launched," said Waitrose chief executive Mark Price. "Overall, inflation on our products since the start of the year is 2.1% to consumers, across 20,000 lines, versus 1% for Essential, so the inflation is below the average and as supply-side inflation is 4.5% to 5%, we are protecting our customers from inflation."
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