Wholesalers deserve support

Some twenty years ago I was part of an exciting and promising tech start up. Our proposition was ahead of its time, the business was building nicely and we were gearing up. Then without notice our major client pulled the plug leaving us with a few small customers who for various reasons never grew into larger ones and slowly disappeared. We were propelled into survival mode overnight. Faced with emergency cost-cutting measures (including lay offs), payment scheduling and managing cash on a daily basis we survived for nine months as the company shrunk rapidly around us and eventually had to liquidate. It was unpleasant and attritional. It is an experience I will never forget and lessons have been learnt. Downsizing, rightsizing, trimming, cost cutting call it what you like but it will only get you so far. Without reliable revenues you will go down – and it is a horrible experience. Through no fault of their own many catering/hospitality wholesalers are facing the same catastrophe and they need some government support.

The Federation of Wholesale Distributors (FWD) along with a group of wholesalers has worked tirelessly to put the case for support for the industry to the government through DEFRA and to individual MPs. They have coordinated a large scale and highly effective awareness campaign on TV, radio and social media. I recall a particularly eloquent & insightful TV interview by Coral Rose the FWD Chairperson. David Visik their Director of Communications recently stated that FWD tweets were seen over quarter of a million times in January making it the best month for social media engagement so far. 

FWD Chief Executive James Bielby puts the case for government support succinctly and forcibly: “The supermarkets have had billions in business rates relief, retail grants, extended opening hours, competition law wavers, and preferential treatment by brands – at a time of record sales and profits!” he said. “Not to mention how they were gifted the wholesale trade on school food parcels by the Department for Education u-turn as Boris Johnson chased good headlines after a Twitter storm. Government by press release, costing wholesale jobs.”

“What about Brexit? Supermarkets can now jump the queue at Dover and they can move food freely from GB to NI – unlike any wholesalers. And what have wholesalers had? No business rates relief, no grants, no compensation for stock losses created by the Government’s flip-flopping on Covid-19 measures. Nothing, no help while trading a loss to supply schools, hospitals, care homes. Hospitality closed. Sales down 80%. Thousands of jobs gone,”

So far the government appears to be unmoved and impervious to the arguments. As you would expect they are being lobbied by everyone for support - each with their own unique case. Resources are finite and tough decisions have to be made. So why support wholesale? Despite the best efforts of the industry neither the government nor the general public appears to properly the understand importance of wholesale and why it should not be allowed to fail. 

The “catering” wholesale sector comprises of a many of companies ranging in size from Bidfood, Booker Wholesale and Brakes at the ￡ billions turnover level through to family owned regional wholesalers at the millions level. It serves diverse business types from pubs, bars, coffee shops through to care homes, schools and hospitals. Some provide tailored offerings to unique outlet types such as Italian and Indian. Others specialise in product ranges such as catering butchers, alcohol or packaging/disposable wholesalers. They were all delivering to their customers long before the supermarkets did.  These wholesalers work on wafer thin margins. Take out the hospitality customers and it becomes difficult to balance deliveries and make the profit required to remain viable. 

The catering wholesalers have built up a significant service and range expertise over years. If the government took the time out to study the industry they would find a world of products designed and engineered especially for professional caterers: butchery cut to order, portion control packs, bulk ambient food packs sizes, frozen and fresh meal solutions, food packaging options for take-aways, professional cleaning and wash room ranges to mention a few. Supporting the catering wholesalers is an array of suppliers and brand owners who design and manufacture goods for the catering/hospitality industry. The vast majority of these ranges are not relevant to consumers and therefore not stocked in supermarkets. In many cases the wholesalers go a stage further by providing their customers with profit calculations based on the projected selling price and mix of ingredients in a finished & served meal. A short time spent on wholesalers’ websites clearly illustrates to the uninitiated that these business are not just box shifters but more essential solution providers to their customer base.  Notwithstanding the anti-competitive argument, remove this entire infrastructure and allowing it to fail, the catering & hospitality industry will lose an irreplaceable support. The supermarkets are great at what they do for consumers but they are not in a position to properly fill the gap for business customers left by the disappearance of catering wholesalers. 

The government has effectively created an unnecessary asteroid/dinosaur moment. The catering wholesalers missed out on most of their autumn and Christmas business. Now they face the loss of Valentine’s Day, Mother’s Day and probably Easter sales too. This will seriously imperil many and will likely result in permanent closures. They deserve government support and they need it now.