Analysis: The new Bibendum PLB supergroup

By Gemma McKenna

Published: 29 October, 2014

Bibendum's acquisition of UK drinks rival PLB and the merger of both businesses has created a supergroup, complete with five divisions, catering to the on and off-trades, independents, specialist beer and spirits and events sectors.

Bibendum PLB is formed Bibendum PLB is formedL to R: Simon Fredericks, Michael Saunders, Jeffrey Fredericks and John Osborne cement the BIbendum PLB merger with a handshake

Current Bibendum chief Michael Saunders will head up the new combined supergroup and plans to bring his firm's marketing 'razzamatazz' across the whole business.

Senior management from both companies will remain in place at the helm of the new divisions, and the group is now looking for a knock-out new headquarters in central London to house its operations.

Speaking to Harpers.co.uk ahead of the merger, Saunders said: "I always said consolidation would have to happen [in the wine trade supply base] my choice is to participate or sit on the sidelines."

When the opportunity came along to acquire PLB - the firms began talking in February this year - both Saunders and PLB managing director John Osborne described the businesses as having plenty of synergy and few overlaps.

"It's very tantalising. I've always passionately believed in growing organically, as I always felt concern about what you might lose compared to what you gain. But it became obvious that this deal should be done," said Saunders.

Under the parent firm Bibendum PLB, the five divisions will play to both companies' strengths, as illustrated below.

New structure Bibendum PLB: the new structure

The future

Saunders was quick to acknowledge that separately neither firm had been growing very strongly in the past year or two. "When you get to our respective levels it's hard to grow very quickly. It gets more complicated."

Although Saunders did not reveal targets, he said that the group had a "tiny" market share of around 6%, so significantly increasing that "shouldn't be too much of a stretch".

"There have been other opportunities over the years, but they've seemed quite reductive - but this is very positive," Saunders said.

Taking a closer look at how the businesses will run, Saunders said, "we will be balancing management throughout", although Bibendum is the acquirer.

Bibendum remains poised to cater for all things on-trade, with Saunders in charge, while Osborne will remain at the helm of PLB, handling exclusively off-trade business, and Bibendum's existing multiple business will fold in with that.

The group has also acquired Walker and Wodehouse Wines - this brand has a history stretching back to 1794 and has held a Royal Warrant since 1955, will focus on supplying independent merchants and regional wholesalers. It will be led by Bibendum's former communications chief Gareth Groves.

Instil, Bibendum's spirits division and agent for Crystal Head vodka and Plantation rum, will be merged with PLB's rapidly expanding beer arm - which handles Estrella Galicia, Saunders said. Mark Johnson, who set up the beer division at PLB, will continue to run this part of the business.

As for the Wondering Wine Company, which was set up three years ago by Bibendum's Simon Swift, it will continue as a separate business under the parent banner. It runs mobile bars at events and music festivals, offering a more upmarket offering than most outlets. It works with brands including Champagnes Lanson and Moet, and attends events including Ascot and Cheltenham Jazz Festival. "At Hyde Park in the summer people were buying Chateauneuf du Pape," Saunders said.

Saunders will be the new firm's chief executive, while Fredericks, who founded PLB, will retain a seat on the board.

The Vivas business, which Bibendum operates with foodservice provider 3663, will continue to run outside of the model specified above.

Commenting on the size of the new operation, Saunders said the group will be "one of the bigger ones", adding that it's not so much about scale as "expertise, efficiency and knowledge".

"We will look at the way the groups will work and the best way to support them," Saunders said. Adding that it was "inevitable" it would have to look at redundancies, he said they would be on a "case by case" basis.

"We can bring our marketing razzamatazz," Saunders said, adding that the new group would be celebrating with a big party at Prowein in March 2015.

John Osborne only took charge at PLB 10 months ago, but says he and the rest of the PLB team have been assessing the market in that time to come up with a three to five year trading plan. "We said we were looking at opportunities and if the right one came along we would progress.

"We're not aligned to a producer, and we can act very clearly and strongly on behalf of our customers," he added.

Michael Saunders and Jeffrey Fredericks shake hands on the formation of Bibendum PLB Michael Saunders and Jeffrey Fredericks shake hands on the formation of Bibendum PLBSaunders will be the new firm's chief executive, while Fredericks, who founded PLB, will retain a seat on the board.

Brave new world

"One of the great benefits of buying a privately owned company is that you don't have to go back to the City or have a venture capital company breathing down your neck. We have the luxury of an ownership that understands some of the idiosyncrasies of what we're doing. We will have many more opportunities for expansion," said Saunders.

Osborne and Saunders agreed that PLB's strength in the bulk wine market would be a strategic strength for the business, especially as on-trade pub operators in particular, look to develop own and exclusive brands.

Saunders highlighted a number of lesser-known wine-producing areas it will be looking to focus on in the coming months. Eastern Europe is one, alongside growing South America - which historically has been strong for both firms. Now Saunders is keen to look at adding Peruvian and Bolivian wines to its portfolio. "I want people to expect Bibendum PLB to have everything going on in terms of wine, beer and niche spirits," he said.

"We have the courage to go out there into the brave new world."

While Bibendum was a pioneer of the Chinese market, it did not enjoy success first time around. But Saunders said it would now have the "confidence of its convictions" to make a return, as well as looking at other Asian markets, in particular Thailand.

Another interesting project Bibendum has been running is its Plonk app - which describes itself as the consumer's "secret weapon" to helping find the wines they love when out and about. Saunders hints that it is considering offering the app in another language, as well as boosting the number of varietals already listed.

Separately both firms have focused on offering strong market insight, and Bibendum has been collating extra data on on-trade trends, which helps commercially.

"People will have to become more professional, efficient and responsive to what the statistics are telling us - otherwise something's got to give," said Saunders of the wine supply market as a whole.

Bibendum PLB