Isn’t that a bit like saying “they do a lot of work for charity, but they don’t like to talk about it”?
It is, but if you want to be seen as a good business it’s not necessarily showing off, it just makes a lot of sense. We’re also not just talking about raising money for good causes here, but the economic impact your company is having on the local community around you, and if you’re big enough, regionally and nationally too. If you’re changing things for the better then don’t keep it to yourself.
But why are we talking about this now?
Well, it’s a particularly relevant message for the drinks industry and wine sector to take seriously. Not a week goes by without some sort of negative medical report coming out claiming how dangerous it is to drink alcohol on a regular basis. Yes, you might have the odd study that extols the positives of the occasional drink, but the overriding message is booze is bad and, by association, so are the companies that make and sell it. If that means adding more taxes, duty and hurdles that make life difficult for all those companies, then who cares? If it means paying more for a pint or a bottle of wine, that’s the penance you have to pay for indulging in such an unhealthy activity.
“Tesco now claims that out of every £1 spent by customers, 73p goes back to farmers and suppliers across the UK, 11p is paid to Tesco colleagues in wages and 3p is paid to the government in tax to pay for public services like the NHS.”
This has gone down hill all of a sudden.
Bear with me. It’s why we have seen our trade bodies, particularly the Wine & Spirit Trade Association, make the business and economic case to the government as to why another duty raise does not make financial sense, rather than try to make any sort of health arguments. It’s a strategy that has worked. Particularly since it has employed third party consultants, Ernst & Young, to make the business case for it.
What are those headline WSTA figures again?
Yes, they’re worth bookmarking and using at any given opportunity. The UK’s wine and spirits industry supports 554,000 jobs, contributes £50bn per annum in economic activity, including £17.5bn to the public purse, split £9.5bn from the wine industry and £8.2bn for the spirits sector. If you look at the wine industry on its own then it employs 172,000 people directly and 105,000 in the connecting supply chain. All of whom help contribute £19.9bn in economic activity, including sales worth £6.7bn in shops and supermarkets and £4.2bn through pubs, bars and restaurants.
The WSTA’s campaign to convince the Treasury to freeze alcohol duty finally paid off when the Chancellor did exactly that in last November’s Budget. It was then able to prove its long held claim that a freeze on duty would actually raise the amount going into the Treasury when in April the HMRC announced that in the four months between December 2017 to April 2018 revenues from wine and spirit duties were up £67m, or 2%, at £3.291bn and the yearly impact would be a £140m rise. See how powerful it is when the figures do the talking for you?
What else have you noticed?
Let’s look at how individual businesses are using economic impact reports to present themselves in a better light. Probably the best current example is Tesco. It was not so long ago that at its height of popularity it came out with the fateful statement that £1 in £8 was being spent in one of its stores. It was meant to show how successful and popular the chain was with the Great British public. But it soon backfired and was used to demonstrate, by competitors and critics alike, how dominant and powerful it had become. Traits the average British shopper saw as the business equivalent of scratching fingernails down a blackboard. The new Tesco, under chief executive Dave Lewis, is a very different beast and it is now using its size, scale and influence not to show off, but make the economic argument of how effective and important it is both nationally, but particularly to local struggling communities.
Sounds like you’ve been drinking too much Tesco cola.
No, I’ve just been studying its recent Value in Your Town report. It again uses the £1 analogy, but crucially it does so in a very different way. It now claims that out of every £1 spent by Tesco customers, 73p goes back to farmers and suppliers from across the UK, 11p is paid to Tesco colleagues in wages and 3p is paid to the government in tax to pay for public services like the NHS. Every £1 of direct economic activity at Tesco was also claimed to generate an additional £5.46 in value to the UK economy as a whole. It has noticeably divided the country by parliamentary constituency therefore allowing every MP and resident in those postcodes to see what impact Tesco has had there. Now admittedly these are Tesco’s own figures and they might have small businesses, suppliers and local c-stores throwing their cornflakes at the wall, but if you look at the bigger picture it's a very astute move from a retailer that is still trying to regain the confidence of the general shopper and its investors. It is also painting the rest of the FMCG, grocery sector in a good light so it probably won’t be long before we see similar reports from other retailers.
What does it mean for us lesser mortals?
These are all good examples to take lessons from. We might not be able to produce an all singing, dancing economic analysis study - just ask David Davis how hard they are to come by. But we all know our customers, and what benefits and services we are providing them. So rather than fill your website and social media feed with all the medals you have won, and pats on the back you have got, concentrate on what impact your business is having, be it in the local community or with your customers and their consumers. Tell the world about those and that’s where you’ll make the biggest impact.