specialist retailers

Running stores could be the next big thing for wine suppliers and producers

Come again? Wouldn’t that be robbing Peter to pay Paul?

Well, that depends on who the Peter and Paul are in the equation. If you mean are we going to be seeing a Matthew Clark or Gallo-themed wine shop on the high street any time soon then probably not. At least not for now. But behind the scenes careful thought is being given as to how wine distributors and producers can get closer to the market by being part of either their own retail operations or working alongside partners in the industry.

How do you mean?

A lot of this activity is taking place already, but under the guise of wine vans and pop-up bars at food and drink festivals, and sporting events around the country. Not a week goes by without news of another wine business running their own pop-up. Be it a wine generic like Vins de Bordeaux running its recent Bordeaux Butterfly Bar at London’s Broadgate Circus. We've even seen big high street names like Aldi and Tesco run their own wine-themed retail pop-up shops. Get it right and you can become a consumer and tourist attraction in your own right. Take Campo Viejo’s well established annual Spanish fiesta and its recent five-day wine and food experience, ‘Fiesta de Color’ near London Waterloo. 

What about wine distributors?

Going direct to the consumer is already big business for some major wine distributors. Conviviality even has its own division, Conviviality Trading, that looks after its own events and sampling campaigns. Its Peppermint businesses, for example, is a dedicated outdoor bar event operator managing over 40 events a year. The Wondering Wine Company, which started life at Bibendum, its also now covering 40 plus consumer and sporting events a year selling Conviviality drinks through its fleet of vintage vans and has had a go at running its own pop-up retail store.

What else?

As traditional wine importers become brand developers and owners in their own right then running their own retail - or event - concept is a great way to first trial, develop and then seed those brands with consumers. Copestick Murray, which usually has to rely on its retail partners to sell its wines, is currently promoting its iHeart wine range with a summer tour of festivals and events in its new branded camper van. Buckingham Schenk is running a pop up bar for the Viñalba Argentine wine brand in London this October. Look hard enough and there are plenty of other examples of wine importers doing the same.

So where’s the high street retail angle?

Ah, good question. Yes, the vast majority of this activity has currently been targeted campaigns, mainly at outdoor events, for short periods of time. Restaurants might have evolved out of pop-ups, but wine merchants or retails stores haven’t. But that could well change as distributors look to take more control of their destiny. They might be in charge of sourcing their own wine, but they have no control over how their wines are sold.

OK, sounds interesting.

Major drinks distributors are already providing lots of commercial support to help bars and restaurant groups build their wines sales and manage their drinks lists. It would not be a big leap of faith to turn that support into funding a restaurant, bar or wine merchant to open a retail site (or two, or three) where they would have a lion share of the wines being sold there.

Are you just making this up?

Heaven forbid! But you only have to do a bit of lateral thinking to look at the amount of time being spent by traditional wine distributors on setting up these pop-up bars and events to make you question what the ultimate objective is here. Particularly when you could argue such initiatives are a big distraction from the day job of servicing their customers and getting the right wines to them on time.

So what is going on?

All of this pop-up and events activity is doing one thing. Bringing wine businesses and producers in direct contact with consumers. It is cutting out the middle man. It is allowing them for the first time to get their hands on real, raw consumer data it can use to better understand the business they are in. They don’t have to rely purely on Nielsen, CGA or IRI sales data. They can see and hear with their own eyes and ears how consumers behave when buying not just any wine, but their wine. That’s worth trudging around muddy fields in the summer for. Or better still having a retail store you have a stake in and let the sales data do the work for you.

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Why businesses need to be ready to change or risk being left behind

That sounds very philosophical. Have you been raiding the Chinese fortune crackers again?

Oh very funny. Excuse me whilst I churn out one of the most repeated business mantras of modern times and good old Jack Welch's line that if the rate of change going on outside your business is faster than the rate of change inside your business, then chances you’ll soon be going out of business. Or words to that effect. It might sound like classic US management speak, but how many businesses really are able to adapt and cope with changing times?  It is one thing saying you have a flexible business model it is another proving it. But there has arguably never been a more important time for companies to look and change what they are doing.

How do you mean? 

We are living in such disruptive times. Be it politically, economically or socially. The wine trade, for example, is still coming to terms with last summer's collapse in the pound which continues to wreak havoc across the sector, not just here in the UK but around the world. What's more we've not seen anything yet. The UK has not even triggered the infamous Article 50 and we are already seeing the impact the forthcoming Brexit is having on the economy. 

OK I’m all ears... 

What is particularly crippling for business is uncertainty and we are up to our neck in it. Talk to any UK business chief, big or small, good or bad and they all say the same thing. The current trading conditions make normal business planning impossible. Particularly for an industry that is 99% reliant on importing the goods it sells from around the world. Goods that are bought not just on how good they are but how much they cost due to the relevant strengths of the currencies where they come from. Drop the equivalent of a bomb on the value of those key currencies and you have the nightmare scenario we all find ourselves in. Yes, currencies move up and down all the time, but not to this degree and over such a length of time.

So what's all this about the need to change? 

Well, it stands for reason that if the trading conditions you are operating in have changed completely then it does not make sense to carry on doing business in the same way. It is striking how polarised the wine industry has become in the short period of time since the referendum vote. Split between those companies that have carried on as normal and those businesses that are dramatically changing the way they work. This is not just a post Brexit trend, but it has helped intensify and shine the spotlight even more on how companies are choosing to operate. 

 

In what way? 

It is all about taking more control, to coin a phrase, of your own supply chain. In particular taking steps to do all you can to manage the costs at each stage of your own trading circle and where possible put in measures that make them most efficient. That might mean going out and working with producers to make and blend your own wine. It could be bottling more wine in the UK and creating more exclusive labels. Or it might mean looking outside your current markets and opening up new areas, moving in to exports, or shipping wine direct from producers to other customers around the world. It could even mean moving exclusively out of wine and start sourcing, shipping and selling spirits, beers or soft drinks. Standing still and being tossed one way or another based on the whim of the currency markets does not seem the best place to be. 

But are you not just advocating change for change’s sake? 

Absolutely not. There is no point changing your business model if you are not sure a switch in direction is going to work. It might mean just re-evaluating what you are already doing and making sure every part of the business is operating as efficiently as possible. Tweaking 5% to 10% of what you do could have a much bigger impact on the overall business. But spreading your risk, working in different channels, selling different types of wine or alternative drink categories, gives you flexibility and protects you far more from being over reliant on one channel or a limited number of customers. It might even mean we are not all fixated by any movement in the rate of sterling, the euro or dollar. And there is more change going on there than even Jack Welch could handle. 

* This article was first published by Grapevine the fortnightly insights, news and views publication I produce for the London Wine Fair.