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Looking back on a decade - Part one

As we flip over into the first month of a new decade, it’s worth a look at just how momentous the change has been over the past 10 years. There has been consolidation, evolution, drinks innovation, and changing consumer mores and habits. We have seen the rise of the quality indie sector, the advance of the hybrid format, the ebb and flow of big names and the ongoing reshuffling of the on-trade. Big Retail has rationalised, and China and elsewhere have risen as thirsty wine markets. And, of course, there have been the big ticket concerns of Brexit (in the UK and Europe) and the climate crisis (globally).

As we look ahead, it’s worth a dip into the recent past to consider how and why we arrived where we are today, and perhaps where we are likely to go from here. Not least as factors such as the digital revolution and the wellness trend continue to shape the market, against a global backdrop of recognising the necessity to embrace sustainability and consider how all aspects of the drinks trade measure up for a viable future. Here, then, in no particular order, are some of those trends and themes that kept Harpers busy reporting and analysing over the past decade.

Big Retail

Range rationalisation and consolidating supply chains have been the name of the game for the multiples as the likes of Tesco, Sainsbury’s and Asda navigate a decade of economic uncertainty.

Before the 2008 financial crash, who could have foreseen the rise of the discounters, which came in and offered shoppers access to the products they love at discount prices? But here we are, with Lidl and Aldi now in the top six and knocking it out of the park with wine ranges that often can’t be beaten on bang-for-buck quaffability.

Big Retail has faced plenty of other curveballs along the way. Maybe the biggest and most shocking came in 2014, with the arrival of Tescogate, when the UK’s biggest supermarket was found guilty of cooking the books.

It bounced back with its Booker merger– a success Sainsbury’s and Asda are still trying to emulate, with the two juggernauts trying to get their deal past the competitions authority, which blocked it in April. We know what their New Year’s Resolution will be…

Conviviality

Conviviality’s fall from glory sent shockwaves through the industry back in March 2018 as the business, worth more than half a billion pounds at the time, fell apart in less than four weeks. A string of rapid acquisitions, including Bibendum and Matthew Clark, initially helped the company grow, but had inevitably left it vulnerable.

The death blow came when investors refused to pump £125m into the beleaguered business following three profit warnings in as many weeks, the first of which was blamed on an arithmetical error by a member of the finance team. A week later, Conviviality revealed it had also forgotten that it owed £30m to

HM Revenue & Customs.

The disintegration of the business, which at one point was valued at £1bn, will no doubt be remembered as one of the quickest corporate collapses ever seen in the UK, not just in the past decade.

Naked & Majestic

The Naked Wines and Majestic merger seemed like a win-win when it was finalised back in 2015. Though met with a mixed response at the time from the industry, the deal made strategic sense, with Majestic looking to leverage Naked’s online presence and army of investor Angels against its own 200-store network to boost growth, while also folding CEO Rowan Gormley’s expertise into the mix.

It seems both companies are now back in their own lanes, taking their very different consumer bases with them.

Majestic remains on the high street thanks to a buyout from US private equity group Fortress, while Naked continues life as a publicly owned company.

Where to next? There is talk that both companies are now looking to grow their multi-channel approach, with Naked rebranding a handful of stores under its own name, and Majestic looking to boost its presence online. Oh the irony.

Big supply

With tough market conditions continuing – or perhaps by now being the ‘new norm’ – in the UK, the last decade saw more than its fair share of consolidation, merger and outright failure. The big agent-importers fought it out for share of a market beleaguered by ever-rising costs, taxes and, to their horror, a more latter halt then decline in wine consumption (in 2010 light wine was the fastest growing alcoholic drinks category, having significantly expanded for most of the previous decade).

An ongoing trend to sourcing direct, cutting out the ‘middleman’, helped compound the situation, as did the somewhat cut-throat behemoth that was – for a while at least – Conviviality (see previous page).

Big companies that fell included the likes of Thierry’s and D&D, with Free Run Wines being snapped up by Copestick Murray, Great Western Wines by Enotria, Negociants by Fells and then Copestick merging with Freixenet. The composite wholesale scene was affected too, with examples of mergers and acquisitions including the south east-based HT White, which joined LWC’s national portfolio.

On the upside, those suppliers that have emerged to fight into 2020 and beyond are leaner, more efficient and more customer-focused than ever, with the offer of true value – not just predicated on price – an increasingly heard part of the boardroom mantra.

Oddbins

Having nurtured much talent across the trade, the Oddbins brand is still held in fond regard by many, but the company’s own fortunes continued to yo-yo as this high street favourite fell in and out of receivership and ownership.

2010 found the company bouncing back under Simon Baile, who had snapped up the failing merchant, but in a climate where indies were rising (Cambridge opened its seventh store) and the wine retail landscape evolving (Vinoteca launched the hybrid concept), this success proved short lived. By March 2011, Oddbins had closed 39 of its 129 branches as part of a restructuring process, relaunching with only 37 towards the end of that year.

Ayo Akintola had been drafted in as the new MD by owner EFB, but it was to take much of the decade, along with the buying nouse of Ana Sapungiu MW, to gradually reassert the values of affordable, fun, quality wines that Oddbins was known for. The company fell to new owners again, with Whittalls Wines picking up the pieces until it too ran into trouble in 2019. Oddbins continues to trade, though in a reduced form, but doubtless it will rise again – perhaps in some evolving shape.

Indies

The decade started with a huge high street shift for independent wine merchants as major player First Quench – the operator of several off-licence chains, including Threshers, Wine Rack, The Local, Bottoms Up and Victoria Wine – collapsed, leaving myriad opportunities in its dust for ‘quality indies’, which have, in the past 10 years, succeeded in capitalising on the failure of their mainstream rivals. The sector is going from strength to strength, not least as a result of this.

Furthermore, the rise in independent merchants looking at the hybrid model and offering a drink-in option to complement traditional off-trade sales has seen the landscape change in recent years. Urban wineries have emerged, too, enhancing this consumer-friendly scene.

With the majority of independent merchants who have embraced the model having seen a positive shift in revenue and customer numbers, the hybrid trend is poised to carry on well into the new decade as the sector fights to keep the momentum of the past decade going.

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