Friday, August 24, 2012

Independents - the clue is in the name...

The news that Britain's independent merchants have not rushed to join a "Specialist Drinks Retailers" buying group has apparently come as a disappointment to Anthony Borges, the retailer who has been trying to establish it for around a decade.

Other members of the UK wine trade may be similarly disappointed over the next years or so to discover that these same independents are not going to solve quite as many of their problems as they seem to suppose. Stated simply, they are not going to be the US Cavalry riding to the rescue of a fort besieged by discount-obsessed supermarkets.

The problem is firstly that they are really not that numerous. According to most estimates, there are around 700. This number needs to be set against the mass of Wine Racks, Threshers, Oddbins, Bottoms Ups, Gough Bros, Fullers, Unwins and Davisons that have all disappeared. By my estimate, a maximum of some 400 new players are expected to replace the 4000 or so that have disappeared.

Secondly, there's their firepower. The average turnover for these retailers is around £500,000 which will come from the sale of 200-400 different wines, plus a few spirits and beers. You don't need to be a mathematical genius to work out that a store that is one of the many turning over £300,000 - £1000 or so per day - is not going to get through large numbers of £15-30 bottles of wine. And, as my previous post illustrates, these are the kinds of retail prices required by any producer wanting to sell wine at anything over €6 or $8. The recent Off Licence News Wine Report UK wine trade poll reveals that 62.5% of the suppliers see "small minimum delivery drops" being a barrier to trading with independents. A larger number, 68% see this sector as a "small" part or "less than half" of their business.

But lastly, there's that word "independent". Most of these retailers see their role as offering wines that not only differ from the ones on the big chains' shelves, but also from their independent neighbours. This may be good news for dynamic distributors like Bibendum, Liberty and Enotria which have extensive ranges, but of little help to premium producers hoping to sell substantial amounts of their wine here. The independents collectively swallow plenty of pallets but not many containers. They'll try to buy widely and - in some cases - do a little of their own shipping, but their limited resources will restrict their ambitions. Many, like their on-trade counterparts, will happily rely on a couple of handfuls of suppliers. Or fewer.

The rumours, as I write this, are that two more well-known UK importers are about to close their doors - or be swallowed by stronger competitors. This is a trend that I cannot see going into reverse anytime soon.

My instincts are that, despite my own - and others' - respect and affection for Britain's plucky independent wine retailers, when we look back on this decade, a far greater role in any revival of the premium wine sector will probably have been played by supermarket on-line efforts, and by online specialists like Laithwaites and Slurp.


  1. This comment has been removed by the author.

  2. Jonathan Hesford wrote (via Facebook) I see many truths in your report Robert. Probably 90% of independent wine retailers in the UK that I have talked to will only buy wine from importers. So the key for producers is to be listed with an appropriate importer. Then you have the problem that nearly every importer wants exclusivity for the whole UK market, even if they only really cover a little bit of it and can only sell a couple of pallets of one winery in a year.

    This guy's idea was a good one. I've seen a similar thing with the ASDW. The reason it failed was the £300 subscription fee. He should have had a lower cost of entry and then charged for extra services.

    But while every wine columnist recommends supermarket wines 75% of the time and while the vast majority of consumers don't have the confidence to buy cases or any wine to lay down, this situation is not going to change.

    1. Jonathan, as a former wine columnist, I have to say that if every wine writer in the UK stopped even mentioning supermarkets, the picture would not change very radically. Most of the people who bemoan the strength of supermarket wine departments happily buy books and music - and much else - from Amazon. We shop in supermarkets because they are convenient. We don't seek out interesting wines in independent merchants because we don't care enough about them (see previous conversations ad nauseam). Independent wine merchants are a rarity for the same reason that independent butchers, greengrocers, fishmongers, pharmacies and bookshops have become rarities...
      Fact of life. Sorry!

    2. PS, Jonathan, why should most people want to "lay down" wine? They don't necessarily like the flavour of old wine (most have never tasted it) and certainly may not prefer it to younger fare. And why should they tie up their money in this way? If wine is so worth cellaring, why don't producers and merchants do it? They used to, 20 or so years ago, after all.

  3. Angela Mount said (via Facebook) well said Robert!

  4. Catherine Monahan wrote (via Facebook) I really don't think it's the £300 fee. If you get added value from being part of something that truly helps u then you will pay that - it's nothing in the grand scheme of things over a year. It's a bigger picture than that and these guys need to stop being so Independent and start collaborating instead of wanting an entire range different from the guys down the road. It's near impossible offering every Indie and exclusive wine range for the small vols that they take.

  5. Jonathan Hesford wrote (via Facebook) You can't compare Amazon selling books to Supermarkets selling wine. Supermarkets only represent 1% of the wines made in the world but Amazon tries to sell every book that people want to buy.

    People should be encouraged and educated about laying down some wine because otherwise they will never discover the enjoyment of drinking wines that have developed in the bottle. It shouldn't be just the tiny percentage of geeks and connoisseurs who do that. In other countries, especially those with a stronger wine culture, consumers buy both wines for immediate consumption and wines to keep for a few years.

    I just see more polarisation of the wine market in the UK and it's sad because it isn't really what the consumer wants. 15 years ago fewer people drank wine but those who did were more diverse in their selection and bought from different sources. I suppose if I lay the blame, it's with the Thresher group, who bought up lots of interesting independents and homogenized them into offering a dismal selection of wines at high prices.

    There exists a large group of people in the UK who would like to learn and experience more about wine but who are trapped by the way it is marketed.

    1. Jonathan, as I say, the best way to encourage consumers to lay down wine is for retailers and producers to prove the concept by offering mature wines. Why should all
      the onus be on the consumer?

      How do you - or anybody else - know what the UK consumer wants. US consumers seem to be very polarised - with no Threshers.

      I see no evidence of the "large group" of which you write. It it exists, some clever retailers will supply it's needs. With all due respect to the 700 much vaunted specialists, I haven't seen it happening yet.


    2. Hi Robert,

      Brilliant article & as someone who lives on both sides of the retail counter, I utterly agree that if anyone bothers, there's a progressive way forward in selling mature wines. As you say, apart from 'bought the t shirt' anorak comments like " was like a Sherry..." (no, does n't inform or appeal to me either) almost nobody knows what they taste like.

      Tyrone (Twitter: @winesonlyadrink)

  6. Caspar Bowes wrote (via Facebook) I intend to, single-handedly...

  7. Caspar Bowes wrote (via Facebook) I always think that a part of the problem is the bombastic nature of the writing of "critics", telling people what to like, reminding them how little they know. Instead, we should be rejoicing in the unknowability of wine: the fact that there are myths. legends and the stuff no one can explain. Scoring is part of this: a pseudo-scientific, exclusive judgement that allows no difference of opinion. I know so many wine collectors who avoid burgundy because they feel they don't know enough about it to buy cases of the stuff. And there's me trying to explain that a lack of knowledge should be a turn-on, rather than the opposite. Modern wine writing has alienated the consumer, not the other way 'round. Knowledge - or the perception of such - has limited the pleasure of the consumer. Fact.

    1. Caspar, you, like Jonathan, like to imagine that the magic of wine is something that touches far more people than it does - and that significant numbers of people take the slightest bit of notice of wine critics.

      Have you heard of Chandler Burr, perfume critic of the New York Times? or Alastair Macaulay, that paper's ballet critic? Or Peter Gammons, top US writer on baseball?

      All of these names are familiar to huge numbers of people who have never heard of Robert Parker, Jancis Robinson or Tim Atkin...

  8. I don't think it was the £300 - I think it was that no merchant who looked at it could actually see what they were getting for their money.

    So I can buy and ship if I join? But I'm already in a buying group with 15 other largish independents who are geographically distinct from me and the website that is being sold for its links and advertising may sound great but it worthless. I can put up a page advertising all sorts of wine merchants tomorrow. In short it's an idea that might appeal to smaller independents - particularly of the sort who were oddbins or thresher until recently but the established merchants are already in arrangements that they are happy with.

    It's also true that independents aren't going to be the cavalry as game changers. We represent a small section of the market, albeit the part of the market that is potentially the most sustainable from a cost to sale price point of view - our average selling price means that wine can be made sustainably for this market. But we are small, and the market is small. It's the old triangular diagram you learn about in school. Indies are the tip of the triangle. Highest price but smallest margin. The volume is at the bottom, where the supermarkets reside.

    People understand that, and then they suggest that the answer to all our problems is to get everyone in the bottom layer into the top layer.
    But that too isn't workable - the volumes of wine available at those prices isn't enough. The consumers in the bottom layer are happy there and don't really want to move.

    And no journalist or indie merchant is going to get the majority of them to move. What might happen is that Majestic or Oddbins might encourage them to visit a specialist retailer and if they have a good time, repeat that visit. From there its the easy specialists that will pick up people - and I think you're right - the marketing, size and scale of the Slurps, Naked and Laithwaites are where the most potential for growth - at this time - lies. If those sorts of places grow massively then the best independents stand to gain customers from them, but few will go directly from Tesco.

    When we asked customers how they came to us, most already shopped with one of Direct wines or Majestic OR had a long historic association with the company. Others were introduced by friends (which is where people like Naked have been really smart). Others still came because of a wedding, or because they wanted to support and independent, or because they wanted to buy good wine very few normally bought wine in Tesco and thought theyd pop in when they were passing for a bottle.

    TO answer Jonathan's comment about listing in agents - there are plenty of agencies with nationwide coverage, but there are even more wineries from every region wanting UK distribution. As a retailer there are so many choices to make, shipping isn't possible for all wines for an independent - cash flow means it has to been higher volume wines that are chosen, or wines where there is no commercially viable option from UK stock. But by and large merchants have unbelievable choice of wines so making it easy is really important.
    Each appellation in France has more wines than independents in the UK, so many wineries will either miss out totally or only get limited take up. Essentially more wine is available to independents than they will sell.

  9. Thank you Tim for a - typically - thoughtful and level-headed response. It was especially welcome from an independent.

    I have no real opinion on the potential value or otherwise of Mr Borges's proposed business, or whether it might have fared better at a lower price, or with a different model. That wasn't the launch point for my post. I was more interested in trying to break the fruitless 4-legs-good-2-legs-bad tone I so often seem to hear that aims to set the (good) little indies against the (evil) big supermarkets.

  10. Interesting article and debate.

    As a person who lives with an independent wine retailer - I understand the arguements put forward but should we shut up shop and give up and let there be less choice? Would customers even be bothered?

    As a nation many of us are fickle consumers - in search of a groupon deal a voucher 5% off here or there money back especially in the bottom end of the market where supermarkets really excel.

    As an independent I think that we have to carve our niche within the local environment and also use as much marketing as possible to gain access to a bigger audience.

    Buying is always a tricky one and in many cases I don't believe that it is lack of ambition but a play between minimum orders and cashflow, which goes across the board with many retailers not just wine merchants.

    I think as always when there are big boys playing in the market place you just have to stand up and fight back in whatever ways you can to be heard.

    In 10 years looking back will depend on how all the various generations out there consume their wine.

    I am no expert - like you guys but I am a very observant consumer