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Looking Back, Forging Ahead Q&A: Archie McDiarmid, Luvians

How has business been for you in the first half of 2023 and how do things compare to where you were last year? 

We have been pleased with our performance through the first half of 2023 which was up on pre-Covid sales values, but not quite back to pre-Covid customer numbers. Directly compared to 2022, that puts us up in both total sales and customer numbers through the first 6 months. Obviously, we don’t have the 150th Open golf rolling into town in Q3 so we have to build up a cushion while we can to try and stay ahead of the impact of a once-every-generation event coming to Fife last year.  

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How has the cost of living crisis played out across the year and what – if anything – have you been able to do to mitigate that? 

Average sales values are down compared to last year, but we expected that after the spike caused by post-lockdown spending from locals and tourists alike in 2022. We are generally content with our sales but appreciate that we are in a unique situation. What we are very conscious of at the moment is the stratification of spending. More cost-conscious customers are buying less and buying more carefully. When they do spend – our sub-£12 a bottle range has seen real volume growth. 

By contrast, the average spend at the top end of the market has continued to be largely unaffected, but we are more dependent on overseas customers for that section of the market. 

Meanwhile, while inflationary increases in product costs have boosted turnover, simultaneous increases in utility and staff costs have accelerated even faster, and so we have had to be very disciplined to keep any cost increases to customers to a minimum. That said, it is arguable, that the largest mitigation on the cost of living crisis we have provided hasn’t actually been to our customers, since price increases can only be offset so far, but to our suppliers. We have committed to continue and increase where we can, purchasing from our large group of small, local, independent suppliers even as they are disproportionately impacted by cost increases. That backing helps provide them security as they plan for the months ahead, with ongoing support from ourselves and other independents sometimes providing the confidence required to keep going for businesses working on a knife edge.    

What are you most proud of achieving this year? Have you managed to achieve any specific goals? 

2023 marks the 40th anniversary of our mothership Cupar shop. Having opened the doors in December 1983, most of the events we have planned are for later in the year, but having been part of the team selecting some of the special bottlings we have planned, I can confidently say that we are going to be celebrating in style. Given the business, cultural and political upheaval in the lifetime of Luvians, still going strong and being well set up for the next 40 years is probably the proudest achievement we could have.   

And what is the biggest cause for concern?  

The upcoming duty changes are not well understood by customers at all. Despite the government’s constant insistence that it is ‘simplifying’ duty, it is actually more complicated to administer than the current system and unless you are a big fan of lower alcohol sparkling wines, basically everything is going to go up in price, just as inflation is beginning to ease on the rest of people’s shopping baskets making the inevitable price rises look even more stark.   

What are the biggest drinking trends at the moment, and how do you expect that to change going into the autumn? 

The collapse of the gin bubble has been very dramatic and a number of producers who I know were counting on a summer rebound during the first ‘normal’ year post covid seem set to be disappointed. We have already seen some pretty major casualties have to close their doors and I would expect to see more as the year goes on. On the more positive side, the same spirit of experimentation and adventure that fuelled the craft beer and gin expansions in the last decade seems to be transferring over to the world of wine where customers are embracing less well-known varieties, countries and styles more enthusiastically than at any time I can remember. Lots of people will continue to talk about rum, agave-based spirits and the low and no category and they will continue to be niche markets making only marginal gains in the independent sector.   

Is Covid now a distant dream, or are you still seeing lingering effects? 

We are very fortunate that the main long-term impact of covid was positive. Covid meant we had to invest and focus more heavily on our website and online offerings so we have had a long tail of increased online sales and tastings organised via Zoom that has been successful for us.   

Any predictions for the second half of the year?  

On the downside, the financial stress caused by vast energy price increases, inflation, cost of goods increases due to the war in Ukraine, the uncertainty and investment required by the failed DRS in Scotland, the duty rises and the import/export challenges caused by Brexit mean that we will see more producers and products disappear. On the upside, as inflationary pressures ease on households and wage rises begin to filter through without being entirely mopped up by price rises, we will see a brighter Christmas as people look to splash out after a year of belt-tightening.  

Quick-fire questions… 

Old World or New? 

I’m too much of a German & Alsace Riesling fan to say anywhere but old. 

Cocktail or slow sippin’ spirit?  

I appreciate a good cocktail, but I love a good single malt 

Vermentino or Vermouth? 

Vermouth  

Low or No?  

No – go big or go home.

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