Sainsbury's slashes Diageo promos in 'huge rift'

Sainsbury’s has dramatically reduced the number of Diageo promotions in its stores following a “huge rift” between the two companies.

The spat is understood to have been sparked by Sainsbury’s decision to promote its own-label lines at the expense of brands, a move prompted partly by Diageo’s increasingly heavy promotional activity at other retailers.

A Sainsbury’s worker told a mystery shopper looking for Diageo’s Smirnoff Vodka and Cola on a recent Grocer 33 shop there had been a “falling out” with Diageo and he was “minimising the amount of shelf space given over to Smirnoff”.

A comparison of BrandView.com data for the first six months of this year versus the same period in 2012 reveals a massive decline in Diageo promotional activity at Sainsbury’s.

Sainsbury’s ran 18 deals on Smirnoff from January to June last year but only ran one Smirnoff deal in the same period this year. As a result, Sainsbury’s share of all Smirnoff promo activity at the big four has fallen from 29.4% to 1.6%.

The average price of a 70cl bottle of Smirnoff Red at Sainsbury’s this year has also been higher than elsewhere at £15.94 versus £13.65 at Asda, £13.80 at Morrisons and £14.30 at Tesco.

Similar declines in promotions were recorded on other key Diageo brands, with Sainsbury’s activity on Gordon’s dropping from a 22.4% share of all supermarket promotions to just 5.1% and Guinness deals falling from 40.2% to zero.

Sainsbury’s is currently promoting its own-label version of Diageo’s Pimm’s - Pitchers. The top two shelves of the fixture are given over to Pitchers, with Pimm’s relegated to the bottom two, and Sainsbury’s is not selling the newly launched Blackberry & Elderflower variant.

One senior drinks source said: “I have been aware since Christmas that something was wrong as Sainsbury’s promoted its own-label Irish Cream as opposed to Baileys.”

Another source said: “It’s a huge rift. It’s come down to the own-label and brand debate and how much and how long this promotional circus can go on for in alcohol … Sainsbury’s is preparing for the future very well … but it has to be careful it does not switch customers off by disengagement with the brands.”

In 2009, Sainsbury’s agreed to modify the label of Pitchers after Diageo alleged intellectual property right infringement.

Diageo said it did not comment on “commercial arrangements with individual companies”, but claimed: “Sainsbury’s is a highly valued partner of ours.”

Sainsbury’s said it did not comment on supplier relations.