Pound gains as euro slides
Exchange rates have finally brought some good news for drinks importers as the pound hit a 19-month high against the euro.
Sterling hit a peak of E1.24 as the single currency continued a slide which has seen it lose 8% of its value against the pound so far this year.
Although the pound’s change in fortunes has eased some of the financial pressure on suppliers, it will not necessarily translate into lower prices on shelves.
Nish Kotecha, director of Myliko Wines, said: “It hasn’t had an immediate impact. It will take a bit of time to filter through. Obviously wholesalers have three or four months-worth of stock.
“But when you’re supplying the multiples there’s a quicker impact. We tend to sell in the country of origin’s currency so we may see price changes on-shelf, but they may have bought eight to 10 weeks-worth of stock and that has to clear through the system.
“The currency improvement is great and may help us do something with the price. But we’re trying to do promotional support and marketing rather than have price fluctuations,” he said.
Jon Campbell, owner of Define in Sandiwell, Cheshire, said independents were seeing faster benefits. “It does impact straight away, really,” he said.
“We ship a few Champagnes and there’s a premier cru we do well with. We haven’t reduced the price but we can do chunkier case deals. We’ve just done a weekend special and that has had a few bites.
“When we did the original costings we were working at E1.15 but when we paid for the order we ended up working at E1.20.”?Some analysts are predicting that sterling will continue to make gains against the euro, which is under pressure due to fears about debt levels among member countries.
The pound has also benefited from what some investors believe is a prudent approach to the budget deficit from the coalition government.