Conviviality goes under: the industry reacts with fear, sadness and anger

29 March, 2018

Bargain Booze is trending on Twitter after parent company Conviviality announced it will slip into administration following a calamitous fortnight.

The group, which also owns Wine Rack, Bibendum and Matthew Clark, failed to secure emergency funding to shore up its ailing finances.

Thousands of jobs are at risk, investors have suffered crippling losses and the drinks industry’s supply chain has been plunged into chaos.                                              

Conviviality said in a statement: “The board has resolved to file notice of intention to appoint administrators to the company. Unless circumstances change, and in accordance with statutory requirements, the board intend to appoint administrators within 10 business days. The secured creditors can, however, appoint administrators without the requirement for notice.

“The directors intend to allow the business to continue to trade and the company continues to work alongside advisers in order to preserve as much value as possible for all stakeholders as it explores a number of inbound enquiries regarding a potential sale of all or parts of the business.”

Fear and uncertainty have gripped many in the industry and some are mourning the group’s demise, following five years of rampant consolidation that saw it swallow up established businesses like PLB and Rhythm & Booze.

Others are railing at poor management decisions in central office.

Liam Steevenson MW said: “The implications for the UK wine trade of this week are huge. Blame has to fall on the management. Whole industry needs to rethink reasonable margins and credit control. Producers should demand complete transparency going forward.”

Supplier Daniel Lambert added: “The fact of the matter with Conviviality is that in a market as tough as the UK if you take your eye off the ball bad things will happen. The implications are so far reaching it will take the trade as whole quite a while to adjust. But I am not surprised at this outcome.”

Under Diana Hunter’s leadership, Conviviality grew from having a turnover of £360 million in 2013 to more than £1.4 billion in 2017. Shares were trading at 426p in November and now they are worth, in the words of the company, “little to nil”.

Wine writer and producer Robert Joseph said: “Conviviality, with shares worth £185 million, paid £200 million for Matthew Clark and £60 million for Bibendum and has more than 700 Bargain Booze and Wine Rack shops. This week it couldn’t raise £123m it needed to survive. A very sad day for franchisees, employees, suppliers and the UK wine scene.”

Hunter has already stepped down following a disastrous two weeks of profit warnings, errors and chaos.

David Round MW said: “The speed with which the Conviviality news gets worse is breath-taking. So many livelihoods at stake. I hope some brilliant people are working on saving all or as much of the business as possible.”

It all started with the announcement of an “arithmetic error”, causing the first profit warning, but probably the most shocking news was that it missed a £30 million HMRC bill due at the end of this month. “How is it that the finance director was not aware of a £30 million tax bill? Beggars belief,” said Michael James Levett.

Red Squirrel founder Nick Darlington said: “Presumption is for foreseeable future Conviviality’s various arms cannot trade. So restaurants, hotels, shops without wine. Thousands of staff in limbo. Many great wine producers lose route to an important market. What a monumentally sad mess.”

Doug McQueen, who had 20 Bargain Booze stores and sold them at the end of 2017, told DRN: “If Bargain Booze is not saved, there are 700 shops with an average of six to seven staff, part-time and full-time, so there are around 4,000 jobs at risk in Bargain Booze alone. I would hope that if the company is carved up that Bargain Booze gets a sympathetic owner who realises that the success of its franchisees will feed back into the success at the centre. So few have realised that in the last 10 years. It has always felt like the franchisees were being milked.

“I never had great faith when somebody wanted to turn 700 specialist off-licences into convenience stores. It had been tried so often, in several formats, Thresher had tried it, and it had always failed. What gave people the arrogance to make people think they could do it now? Goodness only knows.”

Franchisees have told DRN they feel let down by suits in head office, who were pandering to the City and never truly grasped the nature of the northern discount off-licence chain.

The Bargain Booze collapse follows the demise of household names like Toys R Us, Carpetright, Maplin and Prezzo. “This is one heck of a High Street trend, got to be the biggest set of collapses since 2008,” said Martin Baker.

WSTA chairman Dan Jago called it a tragedy, while Jancis Robinson MW was wished staff the best of luck.

Charlie Stein said: “Very sad times for staff and friends of mine from Matthew Clark. The race to the bottom is never a race worth running.”

Helen Chesshire added: “Sad to hear Conviviality have announced their plans to file for administration – a shock for the drinks industry.”

Richard MacDonald said: “I’m hoping Matthew Clark and Conviviality don’t go under, some long serving decent people there all with families to support. Less competition means higher prices.”

The Wine Prophet said: “Conviviality spent the last two years depletting margins of every drink wholesalers in the UK and buying customers with cash and they didn't see this coming? Sad loss of jobs, shame on you Conviviality.”

Sorcha Holloway said: “Feeling really bad for all the Conviviality employees and investors right now, sad times.”

Karen Lee, a Bargain Booze store manager, struck a more upbeat note. “As an employee of a Bargain Booze franchisee I can say that I think there will be very few closing down sales,” she said. “The current Bargain Booze stores that are franchised will just rebrand.”

Others have urged workers facing potential job losses to join a union as quickly as possible.

Even those working for the Post Office are worried. Royal Mail worker Stuart Vallantine said: “This isn’t only bad news for its employees, it is also bad news for our Post Office network. Some Bargain Booze branches also have sub-Post Office counters.”

Stores are struggling to get hold of drinks, and franchisees have been calling local producers in a desperate bid for supply.

Others are sensing opportunity amid the chaos, as stores rally to stock their shelves.

James Reina said: “I find it odd that people are blaming retail and hospitality pressures. There are plenty of decent business doing very well out there, this is more to do with driving profit through selling volume which as you said is working in dangerous circles. We’re open for business.”

Tim Carlisle, new business manager at Vindependents, said: “I’m open to talking to any suppliers who now need a route to UK market. We are small so may not do the volumes many are looking for but we will help where we can.”

The Sparkling Wine Company said: “A shame on the risk to employees at Conviviality - get in touch if you are based in the Swindon area, we could have an opportunity for any ambitious individuals.”




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Bestway could take Bargain Booze back to its roots

Sir Anwar Pervez didn’t earn a place on The Sunday Times Rich List without spotting a good bargain – and in the fallout from the monumental collapse of Conviviality he’s got one in both name and spirit with the acquisition of Bargain Booze.

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