Purchasing Direction and Oversight Board

Purchasing Direction and Oversight Board

Progress and Plans

2013-14 Progress

• Purchasing Trends• Programmes• Ethical Supply Chain• Constructive Engagement

Purchasing Trends

• Total Purchasing value = £55.9m down 4.2% • In addition external trade fell by £3.2m• Retail = £30m or 53.7% of total purchases• Licensed = £20m or 35.9% of total purchases• Catering = £5.8m or 10.5% of total purchases• Top 20 volume unions = 53% of total purchasing

value

Programme Performance

Retail Plus and Meal Deal –• Slight increase in marketing revenues• Payments to members = £798k an increase of £39k • Sandwich and snack products values up by over 11%

Licensed Trade Plus –• Marketing revenues down by 45%• Payments to members down by 33% to £170k

Ethical Supply Chain

• 8 step process to evaluate supplier E&E credentials• Sound Sourcing Guide – all suppliers commit to

meet these standards• Ethical Screening• Ethical and Environmental Accreditation• E&E Commitments in Supply Contracts• Supplier Audits• Ethical Plus Retail Programme

Constructive Engagement

• Constructive engagement with contracted suppliers and NUS Extra partners

• Recent examples are Starbucks, Pepsico and Amazon

2014-15 Progress

Purchasing Contracts Effective 1st July 2015

Draught and Packaged Beers and Ciders

Beer levy change from £3 per barrel to 2% of invoice value – aligns with all other licensed contracts

Draught 4 year term starting July 2015 Packaged 2 year term starting July 2015Carlsberg – no price increases. RPI excluding duty price increase from July 2016Heineken – some price reductions and some prices held at existing levels. Tender prices held until July 2017Coors – 2% price increase. £4.67 per barrel annual increase from July 2016

Draught and Packaged Beers and Ciders

Inbev – 3.5% price increase. Annual price increase of 4% duty exclusive from July 2016Kopparberg between 1&3% price increase. Price increase in July 2016 of 3% duty exclusiveDiageo – no price increaseGaymers draught – no price increasesTennents – 3% increase Rekorderlig – 2% increaseBrothers Cider – withdrew their tender submissionBudvar – declined to tenderGaymers packaged – no tender submission

Draught and Packaged Beers and Ciders

Overall price increase based on current volumes 0.2%

All products may stock apart from Carlsberg draught lager – must stock in all unions but not in all bars

Draught and Packaged Beers and Ciders

Carling replaced by Fosters

Fosters v Carling

Fosters price July 2015 £63.20 Carling price July 2015 £64.93

Fosters price July 2016 £63.20 Carling price July 2016 £66.36

Soft Drinks Pricing Summary

• Water prices remain level.• Natural stills has some increases of less than 3%, Oasis

increase of 6%• Carbonates overall 3% increase • Energy prices have some increases but overall prices

have decreased, some by as much as 10%.

Soft Drinks New Brands

Carbonates

Pepsi• Added to Licensed Trade in addition to Coca-cola• Available from Carlsberg• Benefits outlets wishing to consolidate deliveries and

unable to meet the minimum drop quantity required by CCE.

Soft Drinks New Brands

Energy Drinks

Monster• Added to Carlsberg range for Licensed Trade in addition to

CCE• Assists outlets wishing to consolidate deliveries and

unable to meet the min drop quantity required by CCE.

Boost• Lower priced alternative in retail

Soft Drinks New Brands

WaterHarrogate Spring Water• Alternative UK water in Licensed Trade to Strathmore Highland Spring Water• Alternative UK water in Retail to Brecon who have

longstanding supply issues

Abbeywell• Water addition to range available via CCE delivery, will

assist in meeting CCE minimum drops

Soft Drinks New Brands

Natural stills

Bottlegreen• More interest in premium soft drinks

Innocent• Alternative to naked smoothies

Stationery Contracts

Stationery 3 year contract starting 1st July

Accepted suppliers• Mitsubishi – 2% price increase• Nuco – no price increases• Pilot Pens – 2% price increase• Pukka Pads – no price increases• Sinclairs – 2.5% price increase • Staedtler – 2.8% price increase• Tiger Stationery – no price increases• UKOS – 2.8% price increase from• Hamelin Brands - new

Stationery

Discontinued suppliersExaclair – unacceptable price increasesHelix Trading Ltd – unacceptable price increasesSnopake – declining sales and expensive productsStabilo – unacceptable price increases and poor sales

Stationery Summary

Additional Information• 1.5% average price increase across all existing stationery

suppliers• Providing a good, better and best product offering across

all suppliers• Number of suppliers reduced whilst still ensuring product

alternatives in all categories

2015-16 Plans

• Being easy to do business with• Engaging with strategic partners• Improving member relationships• Ethical development • Purchasing contracts effective 1st July

2016

Being easy to do business with

• Retail threat from symbol groups• Strong support package• Integrated EPOS sytem• Dedicated online ordering system• Central warehouse• Promotional allocations

Being Easy to do Business With

• Cloaked pricing creates confusion over Union buying prices

• Manual EPOS file changes needed at Union level • Inadequate ordering processes• We need to change to make it easy for Unions to

do business with us

Ordering Processes

Currently orders are placed via:

• Supplier online ordering processes• Supplier telesales facilities• Control rests with suppliers• Systems are inefficient

National Online Ordering System

• We will offer unions a national online ordering system supported by Itrade Network

• Catering suppliers live during March 2015• Licensed suppliers following by July 2015• Retail suppliers phased later in the year

Range and price file maintenance

• Currently manual input at union level • We will move towards offering automatic

integration of file changes into union epos files• We intend to have some trial sites in place

before the end of 2015 working with Fidelity

Engaging with strategic partners

• Retail category trends highlight decline in traditional areas such as stationery and greeting cards

• Growth has come from Grab & Go and Convenience

• Co-operative supply contributed to convenience growth but not to Grab & Go

• Opportunity to develop an improved Grab & Go concept with the Co-operative

Engaging with strategic partners

• Additional opportunity exists to develop ordering systems and joint branding

• NUS Extra relationship already exists• We are looking to identify further areas where

we can develop our strategic partnership with the Co-operative

Improving Member Relationships

• We need to consider ways to increase Licensed Trade purchasing• Interlink licensed trade and catering • Insight development into catering and menu development• Develop a national customer marketing strategy for

licensed trade• Collaboration with union commercial staff via webinars• Network session with suppliers• Catering focus group

Ethical Development

Ethical Clothing• Working with Epona to deliver a living wage product

Ethical Supplier Event• March 2015 event at House of Commons• Explore how suppliers work with young people regarding

employment

Ethical and Environmental Accreditation• Developing a new feedback tool to help suppliers

understand areas where improvement is needed

Purchasing Contracts effective 1st July 2016

• Spirits and premium packaged spirits• Wines• Sandwiches • Catering Ambient• Catering Frozen• Catering Chilled• Catering Light Consumables• Cellar Gases• International Foods• Crisps and Snacks• Sweeter Snacking• Greeting Cards