Trade reacts to the Bibendum PLB merger

By Gemma McKenna

Published: 30 October, 2014

Rival suppliers and potential customers of the new Bibendum PLB group have been unsurprised by the news of the merger, given tough market conditions, with most saying further consolidation in the supply chain is on the cards.

Distributors say there is increasingly less space for suppliers, adding that smaller margins have brought about discussions about how to generate greater economies of scale. But independents are adopting a 'wait-and-see' attitude to news of the firm's new independents' division.

Bibendum PLB Bibendum PLB

Julian Dyer, general manager UK/Europe at Australian Vintage, told Harpers.co.uk: "The distributor/agency model is under pressure, and only the best will thrive. There are quality people in these businesses, and I wish them every success. We need a diverse and thriving wine industry. The future of the UK wine supply industry is a combination of direct to market branded companies like ourselves, specialist distributor businesses that can offer category solutions to multi channel, and bespoke businesses, either online or specialist on/off trade. Anything else is in an uncomfortable place."

Bernard Fontannaz, founder of Origin Wine, told Harpers.co.uk: "The market is becoming more competitive and ranges are reducing. There is less space around the table for suppliers. They need to be specialised in their field and be in the top team to survive. I don't think you can be top of the league on both sides (both the on and off-trades).

"We will see more consolidation. There has been a lot of talk up to now, but no action. It shows how the market is tough. It really emphasises the reality of the dire conditions of the market."

Robin Copestick, managing director of Copestick Murray, said: "There had been so many rumours about both PLB and Bibendum that it was clear that something was going to have to change. I believe that this acquisition of PLB will be good for the UK wine business and is certainly better than one of the companies disappearing. I just hope there are not too many redundancies attached to this.

"On a wider scale perhaps the UK wine business will start to look like the USA with a few monster distributors dominating the landscape. However what this then provides is a real opportunity for mid-sized, innovative and entrepreneurial businesses who provide the personal service that the very large companies cannot fulfil. Personally I know where I want Copestick Murray to sit and we are extremely well placed to take on this challenge."

Tim Wilson, managing director of the Wilson Drinks Report , said: "There are some pretty obvious synergies between Bibendum - mostly on-trade, and PLB, mostly off. In the current wine market where margins are very tight, if companies can generate economies of scale by bringing complementary companies together then it's worth talking about.

In relation to independents retailers, he said they are currently trying to "reduce supply chain costs and work together, it makes sense that at a distributor level too".

He said he "wouldn't rule out" further consolidation in the supply base.

While market conditions are tough, Wilson said he thought such moves were being driven "more proactively than reactively", by companies looking at three to five year plans and how to produce better returns.

Michael Saunders, chief executive of Bibendum PLB, said the new company was looking to buy a new premises, and was considering London Bridge.Giles Cooke, wine development director at Alliance Wine , whose firm has also recently opened an office in that locale, jokingly tweeted:

Interesting to note that the new bibendum/plb group looking for offices in London Bridge- a case of if you can't beat em .... ;)
? Giles Cooke MW (@gilescooke) October 30, 2014

Daniel Lambert, of wholesaler Daniel Lambert Wines, said: In terms of the synergies [across the on and off-trades] it makes perfect sense and is a very smart move."

"A lot of independents will be quite wary of such a big company. If they want a wine that no-one else has got will they really go to the country's biggest wholesaler?

"PLB has been desperate to get to the independents for years. But I don't think Bibendum realises this will upset some of its independent accounts."

The new company has also set up an independents' division, Walker & Wodehouse, to be run by Gareth Groves. Merchants welcomed the news, albeit cautiously. Hal Wilson, managing director of the seven-strong Cambridge Wine Merchants group, said: "It's interesting that they've put together a division for independents. I'm not sure either company originally had a particularly strong or sensible focus on independents, so it will be interesting to see how this big company settles down. They're taking independents seriously, but what that will mean in effect - we'll have to wait and see."

Bob McDonald, area manager and assistant buyer at Corks Out, which operated five stores, said he was "surprised" by the news. "It won't affect us in the foreseeable future, but it will be interesting to see the long-term effects. We've been working with PLB on regional exclusivity on wine, but we won't get that from Bibendum - their distribution is a lot wider. It will be interesting to see how that affects things."

Lee Isaacs of the Oxford Wine Company tweeted:

Interesting news about Bibendum and PLB. That makes for a pretty diverse portfolio!
? Lee At Oxford Wine. (@OxWineCoOxShop) October 29, 2014

Merchant Firth & Co welcomed the news:

Bibendum PLB! Firstly well done Michael Saunders, could be a very significant deal. Which brand wouldn`t want to be in that group? #plb
? Firth & Co Wine (@FirthandCoWines) October 29, 2014

While others were impressed by the scale of the move, including Natasha Hughes MW :

Wow! Biggest wine trade merge in a while... http://t.co/kpH35OTCEp
? Natasha Hughes MW (@londonvino) October 29, 2014

But Master of Wine David Round wasn't convinced the move was a positive one. He tweeted:

Wine trade mergers often destroy value. Will Bibendum PLB merger create a bigger not-v-profitable company? And openings for small indies?
? David Round (@davidroundmw) October 29, 2014

What's your view on the Bibendum PLB merger? Share with us by tweeting @HarpersWine, commenting below or emailing Gemma McKenna .

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