'Every business gets to a point where the step up is big' - Interview - Sukhinder Singh, The Whisky Exchange
In late September, Pernod Ricard agreed to buy The Whisky Exchange. Lucy Britner talks to co-founder of the specialist spirits retailer Sukhinder Singh to get the details behind the deal
“It wasn’t planned,” Singh says of the sale, which includes on-trade wholesale arm Speciality Drinks, The Whisky Exchange shops, website and events, the online marketplace Whisky.Auction and the events company ABV Global.
Singh and his brother, co-founder Rajbir, have been courted by many companies over the years – mainly private equity – but he says they have ignored the advances, because selling up wasn’t on the cards until now.
“We were doing some consultancy with KPMG and they asked about our long-term goal. We talked about ambitions to grow in our own way – slowly, simply. And they asked about the exit strategy. I told them we had been approached.”
Singh says that when you’re approached by a company of Pernod’s “calibre, size, magnitude, one of your biggest suppliers, second biggest drinks company in the world, you take notice”.
He describes the conversation with Pernod as a “long, slow burn”, over one or two years.
“Every business gets to a point when the step up is big,” he says. “You need to really over-invest. And the whole dynamic changes – you go from a small-medium sized company to a big company. It takes a few years to catch up. KPMG said you can take your time and do it slowly or look at a partner to help you take the business to the next level.
“Initially, it did look like a partnership, but the way the conversations went, it made more sense that they took it over fully. They have got the resources and expertise. They are ahead on digital compared to some of the big boys. They know the challenges and possibilities.”
Retaining the team
With this kind of takeover, there are always questions around impartiality and maintaining company spirit.
“Yes, the industry will be nervous but it’s really for us to prove,” says Singh. “We are going to be a standalone business under the Pernod Ricard group, which is a good start. Rajbir and I are staying on as MDs for a minimum of two years. All the team is in place, there are no changes.
“If we’re still supplying the best establishments in London and around the country and still curating lists and doing training, then logically you could argue the brands need us. Our team is in the business because of the love of product. Nothing can change unless we sign it off.”
And there should also be some benefits to the drinker, not least the opportunity to reconnect with European consumers who were losing out because of Brexit, through Pernod’s reach. Beyond the EU, Singh reminds us that Pernod has distilleries and distribution networks all over the world. And closer to home, there’s also Pernod’s strong position in Scotch. “We can help them with some of their smaller brands, we can look at creating exclusives and special bottlings for TWE,” he says. “We’ve got great ideas – they’ve got great liquid. It’s putting those synergies together.”
Looking at the wider pattern of drinks companies snapping up ecommerce specialists, Singh says that, although companies have tried direct-to-consumer before, we’re seeing a “new trend”, one that he believes works well with premium, high-end or limited-edition products. He highlights other recent deals in the drinks industry, including Campari Group and Moët Hennessy’s ecommerce joint venture, Tannico.
“Everyone is doing it. It’s something we looked at and thought ‘would it affect us in the long term?’ I would say absolutely yes. So, it gives us a little bit of an advantage.”
Of course, we asked about money, but Singh maintains the terms of the deal are confidential. He did tell us, though, that he would invest the money to grow his other businesses, including Elixir Drinks and the distillery on Islay.
Naturally, he also hinted at some new projects.