I meant to do a blog post on the Pennsylvania Liquor Control Board, and how different the situation of selling wine here is than in the UK. But I found out from Twitter that one of the subjects of my last post, Tesco’s Head of Wine and Master of Wine Laura Jewell, is quitting Tesco! She is being hired by Wine Australia, which is a public company sort of Meat Marketing Board for wine in Australia.
What does this tell you? That Tesco was really smelling. From the little I know about the wine trade—and this is coming from a US, “control state” perspective, as an accountant—Pennsylvania is polar opposite to whatever is going on in the UK. In this state, you buy from the public, via our liquor control board. But if you don’t have the board’s approval, you don’t sell legally at all. From what I learned from the Twitter masters, 25% of all the wine sold in England is done through Tesco. So Tesco is, in effect, a “liquor control board” for UKers who want their wine. (I surmise that another large segment of sales are done through Tesco’s immediate competitors, so you can see how quickly what might be called antitrust is having an impact on the wine market in the UK.) If Tesco didn’t stock you, your sales were only to a fraction of the market.
Thus, Tesco is setting the prices for wine, and it becomes a situation like the farmers and the railroads in 19th century America: the middleman is going to tell you what price it will accept (or your cost to use them as the distributor), and if you don’t accept that price, your produce is going to sit on the loading docks and rot. Now, obviously, wine does not quickly rot. But the producers can’t pay their own vendors in bottles—they need the hard currency. So, in effect, they have to take the price offered or find another buyer.
I think that squeeze the producer into subsistence is an enervating game for anyone but a Gordon Gekko sociopath. We are seeing in America how the “Wal Mart-ization” of retail is leading to society where everyone except the Walton family is ending up as the losers. If your interest is wine as wine, and not whether you can screw over the makers of the wine—or, as Tescogate is shaping up, shareholders and the public trust, too—-a role as Tesco head of wine quickly becomes unappealing. Then, having to come up with promotions that move the stock off the shelves. In this holiday season, where the price must now reflect a true margin, and not whatever 2013 or 2012 allowed.
It makes sense that Laura Jewell would jump ship for something more rational.