Ventersdorp liquor maker takes on big-booze ‘monopoly’
THE owner of a small liquor business in Ventersdorp has accused his bigger rivals of attempting to monopolise the trade.
Ernst Henning says big businesses are using bully tactics to put small operators like him out of the game.
Henning owns the liquor manufacturer and distributing company Totpak (Northside Distributors Pty Ltd).
He said his company had lost R1-million in dealings with what he called the Broederbond gespuis (riffraff).
“The guys that own all of this, Pick n Pay, Shoprite Checkers and Massmart . . . right at the top they belong to a concoction,” said Henning.
“They [Masscash] asked us to develop Simon Pepper peppermint liqueur as part of the deal for them . . . up to now they have not taken one case.”
He said that part of the agreement would include Masscash (owned by Massmart) taking R112 000 worth of products per branch with a discount of 10%. .
Massmart disputed this. The retailer said: “Masscash did not, at any time or place, confirm an order for peppermint liqueur with the supplier in question.
“All retailers receive new product proposals from suppliers. A key consideration before ordering the product is the retailers’ views of customer demand for the product.
“This is often assessed by requesting input from store managers regarding anticipated sales volumes in their stores.
“In the case in question, store input revealed insufficient demand for peppermint liqueur among Masscash customers. Specifically, the anticipated sales volumes were lower than the supplier’s break-even production volumes.”
Totpak’s deal with Shoprite also fell through, after an e-mail said that Totpack had a continuing problem of lack of deliveries to the distribution centre, which led to the closure of the account.
Henning said: “The lack of deliveries was because we refused to deliver to them because they don’t pay us. We can’t wait six months to be paid . . . it was already 120 days and then there was the administrative issues, we were already in the next 30-day cycle.”
He said Totpak employed 32 people and it had been difficult to pay his employees during this period.
In response to Henning’s claim, Shoprite said in a statement: “The Shoprite group does business with close to 10 000 supplier companies and do not comment in the media about matters arising in our business dealings.
“Mr Henning should be completely aware of the reasons why we stopped doing business with his company.”
In 2009 the liquor industry contributed 4.4% towards GDP and paid R19.4 billion in tax.
But the liquor industry is dominated by companies such as SABMiller, which Henning said also made it difficult for small suppliers to enter the market.
Henning said that in Makro stores, also owned by Massmart, he had noticed that his Wild Reeds Africa bottle had been removed and replaced with Distell Group-branded products.
“The liquor trade belongs to SAB, Distell and that’s it. The other people are like me . . . those guys own the trade and that’s where the problem lies,” he said.
Distell rejected Henning’s claims, saying that it “has no exclusive right to the supply of product to the market, nor a policy that seeks to exclude other suppliers”.
A spokesman at Distell added: “We believe that the product categories in which Distell compete are in fact highly competitive and the number of products available on shelves in liquor stores clearly illustrate this.
“Distell, like all other suppliers, competes for space to market its products in line with store requirements. Shelf space in stores is managed by retailers.”
Henning has an annual turnover of about R6-million, largely from his bourbon exports to the US through a Miami-based distributor. But, he said, doing business in South Africa had been difficult.
“The liquor trade is the biggest monopoly in South Africa and, because it is a licensed commodity, we are forced to deal with them [retailers] without success, or just on their terms,” said Henning.
“SAB is not in a position to give feedback on this issue at this point,” the brewer said.
The liquor trade belongs to SAB, Distell and that’s it. The other people are like me
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