LWF 2021: Wine Trading 2021 - Are we there yet?
“Make sure you don't put your eggs into just one basket” is the message for the wine industry for 2021 and beyond.
Miles Beale, chief executive, Wine & Spirit Trade Association, chaired a panel debate at the London Wine Fair 2021, called Wine Trading 2021: “Are we there yet?”, discussing how businesses navigated the pandemic months and what the ‘new normal’ and beyond might look like for the wine trade.
The panel, which represented importers, independent retailers and on-trade specialist suppliers, talked about which of the many challenges faced in the past 12months have hit their businesses the hardest.
Rachelle Rush, head of supply chain projects, Treasury Wine Estates (TWE), said: “We watched some channels completely shut down across the on-trade and global travel retail, while others like the off-trade, exploded. We saw significant challenges for the team across inventory, demand, shipping delays from all major countries, port strikes, lockdowns, containers sitting sideways in the Suez Canal. It required problem solving and constant vigilance.
“Brexit has introduced additional complexity. We set up a European warehousing facility to minimise delays European partners.
“And Covid and Brexit are only just the start of the challenges. Climate change is a concern and we were hit by the US and Australian bush fires, and severe frosts in France, which caused problems for our wineries and international bulk wineries as a whole.
“It has brought into sharp relief the fact we have to be agile to make decisions quickly, while focus on delivering quality products.”
David Hogg, sales director at London City Bond (LCB) also highlighted a number of factors effecting the supply of wine.
“If we take shipping, there were delays at Felixstowe and other ports. We had containers being unavailable or at the wrong place at the wrong time, which had a knock-on effect.
“There were delays at the ports themselves and lorries turning up with the wrong paperwork or incomplete paperwork. And if you are a lorry driver with your paperwork correct but you are stuck at the back, it is equally frustrating just have to sit, and this adds to the delay to get to our warehouse.
“We have noticed the huge shift in home delivery for wine, a lot of our customers have been able to adapt and that has led to a great increase in mixed cases via online sales, so we have had to adapt all of our sites across country to accommodate that and we have done so successfully, and we think it is here to stay. We have set up a fulfilment centre in Cambridge and a manager to handle this with home deliveries and tailor-made offers, gift packaging, lots of things.”
Nicholas Pegna, global sales director, Berry Bros & Rudd also saw a substantial rise in the company’s online business, which now accounts for 16% of its sales and is expected to continue. This was balanced against an 80% reduction in its on-trade business.
“It has had a substantial effect on our business, and luckily the rise in some channels broadly covered off the drops elsewhere.”
Hal Wilson, chief executive at Cambridge Wine Merchants, said the independent sector has had a roller coaster 12 months, and he agreed that for smaller businesses some of the changes have had a greater impact.
“Not putting all our eggs into one basked has worked well for us over the past year.
“We have many types of customers and we have always been in a number of channels and that helped us pick up extra business where the wholesale and college business disappeared.
“It left us with opportunities but also challenges, such as getting people in the right place. But we have an amazing team, and many changed their roles to keep us going.”
Miles MacInness, managing partner, Jascots Wine Merchants, said the company is a clear example of a business that had all its eggs in one basket – the hospitality sector – and how this eventually led to the company being put into administration, and later snapped up by Freixenet Copestick.
He said: “All your eggs in one basket - that’s where we were. We knew we were unusual, being a specialist in the on-trade. We turned over in excess of £9 million and I didn’t know of a single wine business only deriving its business from the on-trade to that scale. Colleagues’ jaws dropped when they realised 99% of our business came from the on-trade and this was all lost when Covid hit.
“We realised at the end of February 2020 what the impact might be, and we had 85% of our normal sales until 13th March and then 16th March we would all be advised to stay at home and 17th March we had £90,000 of sales cancelled in one day.
“We had to very quickly find the best source of revenue. We had no private customers and no ecommerce. The team pulled together quickly. It was a terrifying time but sort of exciting, adrenaline was running hot.
“We decided get some mixed cases together and we started to sell those. In March we sold to 372 private customers who spent £64,000 with us. Every person in the business was working around the clock it was all over phone and email. But we were burning through cash and we knew we had to be more efficient so we launched our ecommerce website in the second week of April. This enabled us to reduce staff numbers and tap into the furlough system.
“Our main objective had to be to sell the stock we had on hand and one difference is that direct-to-consumer sales were different from what our on-trade customers used to buy. Sparkling was very slow, for example, where before it was strong because we had a big specialism in businesses with large events in London and city centres. So, it was really tough for us. It was a tricky balancing act.
“By September, October, we had 35% volume already and that was enough for us to break-even but then the news worsened and we went into lockdown again with restrictions for Christmas and that proved to be too much for Jascots, which was absolutely crushing.
“But I am pleased to say that following administration Freinet Copestick saw the value in us and picked us up and now we are in the enviable situation that we are part of diverse business and extremely robust and fit for the future.
“The ‘All the eggs in one basket’ problem has been mitigated.”
Looking ahead, all of those on the panel agreed they would be ensuring their businesses worked across numerous channels. There has also been more of an opportunity to re-evaluate the businesses for the future.
Wilson said Cambridge Wine Merchant has now had time to invest in its online and ecommerce operations and the business also now has the demand that will enable it to find more sustainable and cost-effective options.
“We want to express ourselves in an online environment to get across our passions, our ranges and our producers. We will be balancing our in store and online offers carefully.”
Sustainability is also a focus for other businesses in the industry.
Hobbs said the rise in home shopping has encouraged the company to look at how things are packaged and LCB is looking at reusable materials and how to reassess its sustainable objectives. It is also looking at electric vehicles.
At TWE, Rush said sustainability will continue to be a focus and it is looking closely at the introduction of the DRS scheme in Scotland, and consultations on this topic in England, Northern Ireland and Wales.
On the supply side TWE expects to continue to see short and medium-term delays and this will impact the speed of NPD, but the company is now able to build that into its planning.
“We are adapting by changing our stock holding”, she said.
Red tape and Brexit was also a topic covered by the panel.
MacInness said: “I am an enormous wine enthusiast and I think anything that threatens the diversity of wine in this country should be avoided.”
MacInness said Jascots can now focus on indies and wine bars whilst knowing the other part of the group covers the other sectors of the industry.
“Freixenet now has a specialist in a channel they didn’t have before and the benefit for us being part of a bigger group is that we can safely focus where we were unsafely focusing before.”