Annie Dawson, TMF tutor writes……
Well it’s the biggest new story in Grocery at the moment- so I guess it’s worth a few words…
Wholesale has suddenly got hot…Tesco wants a slice..
I understand that the Competition and Markets Authority are currently considering whether the proposed deal is worthy of an investigation. It’s a £3.9bn merger proposal – which the two incumbent bosses (Dave Lewis of Tesco and Charles Wilson of Booker) believe will be allowed to go through as they have been advised that the deal does not flout any competition rules.
Wholesale is an area of wafer thin margins and with the new rules & regulations that have or are about to come into force (National Living Wage, the Apprenticeship Levy, Brexit, inflation etc.) no wonder there are one or two concerned wholesalers who are a little more than apprehensive about the future.
On the supplier side, branded manufacturers have spent a lifetime developing and launching different packs sizes for wholesale and price marked packs in a bid to make it difficult to compare pricing – and this merger could mean pricing re-adjustment across the board.
Based on the assumption that the combined 7,300 Tesco, One Stop, Londis, Premier and Budgens stores could be viewed as one fascia – post merger, then presumably Tesco will be under pressure to sell off some stores (quite a few probably) …and how about the Booker food service arm…?
Booker currently supply 480,000 catering customers…which would be pretty attractive to Tesco…and bang on strategy (of supplying great food across multiple channels).
The merger would certainly ramp up competition in both delivered wholesale, cash and carry, foodservice and also in grocery….as other grocery competitors look to what they can do to compete with this new threat.
The jury is out for now!