Why is it that the same old lessons need to be learned time and time again? I received a phone call last week advising me that one of our suppliers had gone into administration. Launched at the peak of the popcorn revolution, Portlebay Popcorn, were different to many in that they made their own products. Very commendable and something we look for as a priority with our suppliers.
I remember the excitement with which the Sales Director, and also a shareholder, presented the brand to us. His excitement about being part of something new was palpable and infectious. He was keen that Cotswold Fayre should be their exclusive partner within the independent speciality food retail sector. We jumped at the chance and quickly took steps to work with Portlebay – both the branding and the flavours were good, and they were making their own products. Initial sales were very good and we soon gained listings in one of our key accounts who sold 14 pallets during their first promotion.
From that initial high, things soon were less exciting. I found Portlebay Popcorn in my local Tesco, despite being told the company wasn’t approaching the supermarkets in the early years! When challenging this decision, I was told by the Sales Director that it was simply a short-term and regional listing. When one of the Regional Accounts Managers also saw the brand in the North-west, we were told that there had been a computer glitch at Tesco, resulting in a national listing! No – I didn’t believe that either. The final straw was finding out that the national account mentioned above were being sold the same products by one of our competitors (I didn’t know who) at heavily discounted prices. Yet the sales director claimed he didn’t have a clue who this could be. I don’t believe a company can be that out of touch with their supply chain to not know the answer.
However, all this probably doesn’t explain why this nice brand went into administration last week. The reason stated in the Grocer was that it was due to a de-listing of several skus by Tesco. Not even a complete de-listing. There is a golden rule in business that no more than 25% of your sales should be with one customer. This rule is broken time and time again with suppliers to supermarkets, particularly Tesco, due to their enormous size. Don’t do it. It makes you too vulnerable and unable to walk away, which you always need to be able to do, as a small supplier.
Surely this problem will only get worse if the proposed merger between Booker and Tesco goes ahead. I and many others hope it doesn’t.