Asda cut out the (hic!) middle man in wine supply chain

The Drinks Business* reports that Asda, Wal-Mart's UK subsidiary, have set up their own wine supply chain operation.

Asda is to implement a direct sourcing model into its wine category, creating new jobs and the supermarket’s own UK bottling facility.

The move is the result of the supermarket acquiring IPL last year, a procurement business which to date has only been used for Asda’s food sourcing, but will now extend its remit to include wine through the newly-created division, IPL-Wine.
Asda has said that IPL will stretch its current direct sourcing approach and build an independent procurement model which aims to source the majority of Asda’s wine direct from producers.

IPL is owned by Asda and has previously focused mainly on fresh produce, where the firm has reduced dependence on agents and middle-men, dealing more directly with growers in many parts of the world.  Asda believe this move, which includes setting up a UK bottling operation, will similarly reduce costs, increase quality and enable them to keep a close eye on issues such as sustainability.

Getting historical and philosophical, the fragmentation of supply chains ('vertical dis-integration' if you like) is one of the major business trends of the last 50 years.  Henry Ford famously owned his own coal-mines, sawmills and ships for instance.  But the mantra for some time has been 'focus on your core business', with a consequent growth in outsourcing, and more specialist firms.  So while it would be wrong to extrapolate too much from this, it is interesting to see a firm moving in the other direction to bring control of a major part of their supply chain in-house.  And at a time when supply-chain risks seem to be inexorably increasing, that might not be a bad idea....

Oh, and by the way IPL, if you need any more quality control people, I've got a bit of time free...

* now there's a website I need to 'partner' with....

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