About Wine from Oz, Lawn Mowers and Mac Nuts
During my trip to Australia in February, I toured a couple of wineries in the Hunter Valley, located two hours north of Sydney. The other day, in an article in the New York Times, comes a report that the Australian wine industry has fallen on tough times. As always, the reasons are varied and complicated, but one major factor is that a huge portion of the Aussie wines were being bought by a few large supermarket chains in Britain. After establishing themselves as 1000-pound gorillas, these supermarkets have repeatedly forced the wineries to keep lowering their prices. To maintain even a razor-thin profit margin, the wineries had to cut corners and reduce quality. Thus a vicious circle was begun.
That sad tale reminded me of a great story about the guy who runs the company that makes Snapper lawn equipment. Walmart wanted to carry his stuff, which would have meant the sale of hundreds of thousands of units. But, after a lot of soul-searching, he turned them down. Reason: He knew that Walmart would keep demanding lower and lower prices from him and, to keep making a profit, he would be forced to lower his quality standards. So he told Walmart to go fly a kite. And good for him!
And that reminds me of a former client of mine when I ran an advertising agency in Honolulu. They make and market a high-quality line of chocolate covered macadamia nuts. These nice folks approached Walmart about carrying their line of candy and nuts. The Walmart buyers agreed to put the goodies in several hundred of their stores and my client was so delighted, he told the Walmart people he would pop for some modest promotion in several of the larger markets where those stores were located. Instantly, the Walmart guy said, “Never mind the advertising. If you can afford to do that, then you can further reduce your price to us instead.” That’s hardball, Walmart-style.
At the moment here on Maui, there is a ordinance pending with the County government that would limit the size of any new retail stores wanting to do business here. Good! These guys – the Walmarts and the others of their ilk – squeeze their suppliers without mercy, and drive long-time Mom and Pop stores out of business. They are also notorious for low pay and working people half time so they don’t have to pay benefits.
For what it’s really like to work for Walmart, check out this terrific book. Then go pick up that new power drill you need at your local family-owned hardware store.