Upping minimum order quantities (MOQs) for wholesalers to £2m per annum for direct supply will enable Diageo to offer more comprehensive support to smaller operators, its UK boss has claimed.
Diageo GB managing director Nuno Teles said the move – which sparked anger from wholesalers likely to be cut off as a result – was necessary to provide “good activation of our products”.
He rejected suggestions the move would put wholesalers unable to meet the MOQs at a disadvantage.
“An independent operator can buy from 10 different sources on average,” he said. “They buy from Tesco, they buy from Amazon, they buy from other wholesalers. That was already happening.”
As wholesalers were “already finding product cheaper in a certain other wholesalers”, Diageo needed to rethink its direct supply model, Teles said.
“What we are doing is we are trying to move from that situation, which was already frustrating for everybody, to a new situation where we are truly helping others,” he said. “What we want is to be closer to those independent operators to support better the business to really provide a service that is fantastic across the board.”
Teles said Diageo wanted to be able to offer the level of support and insight it was currently only able to provide bigger retailers and grocers to medium and smaller-sized operators. Scaling back on direct supply would give the business the resources it needed to do so, he claimed.
“They need those insights,” he said. “They need people that are not just keen to sell and trade product, but people that can offer advice about things like the ready-to-drink category growing, and about how to sell non-alcoholic products.”
Teles’ comments came as Diageo GB reported organic net sales growth of 9% for the six months ended 31 December 2023.
The Diageo boss attributed the growth, which outpaced the 2.5% uplift seen by Diageo at a group level, to the strong performance of Guinness and tequila.
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