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Ian Cumming: Back to Business Q&A

Published:  03 August, 2020

As the trade measures up to extraordinary times and swings into the height of summer, leading businesses and operators take stock of trading conditions in the new normal.

Ian Cumming, commercial director at Inverarity Morton, kicks off our summer series with thoughts on evolved consumer behaviour, Brexit and unnecessary bureaucracy.

How is the business performing and what are sales like compared with pre-lockdown?

Our business was 92% down from March to July as the entire Scottish on-trade closed down. Since reopening we are trading at around 55% of same period last year.

What are the biggest changes and challenges in adjusting to the ‘new norm’?

How we can help to regain consumer confidence in the on-trade – consumer behaviours have changed and are much more comfortable with quality home dining and wine deliveries. The new on-trade experience has a way to go before being deemed ‘enjoyable’ again.

We as a wholesaler are also having issues getting wine in from overseas – many wineries are just reopening and shipping routes are fewer and more expensive.

The wholesaler ‘middleman’ position is in danger of getting squeezed from above and below – this could cause irreparable harm to low-margin business models.

Which government measures, if any, have had an impact on your business and have you been passing on or absorbing savings?

VAT has had little effect on us but furlough was a huge bonus to allow our business to come through the worst months whilst retaining key staff. Apart from furlough, the wholesale channel and its role of ‘oiling the wheels’ of the hospitality trade has been largely ignored with grant assistance denied.

Have you seen any significant shift in type and price of wines and spirits sold and, if so, what has that been?

Increased home delivery has created a surge in pre-batched cocktails and we are now experiencing more enquiries about natural and sustainable wine – our Sea Change range has been a huge success.

Many operators are talking about reopening with a more basic core range to start with and reduce the complexity of the drinks offering.

Covid-19 has ignited discussions around health, not least the government’s anti-obesity campaign which could see mandatory ‘hidden calorie’ content on alcohol labels and menus in the on-trade. In your view, what would be the impact of this?

Sadly I think this will come and be a huge logistical exercise in label changing and data maintenance.

And what of other government-backed schemes like the Eat Out to Help Out initiative, on the health of the trade?

[We’re] always keen to promote ideas that will stimulate consumers potentially returning to the on-trade – they may not work but the entire trade has to cooperate as a team on this one. We don’t have excessive expectations from day one, but be willing to try without unnecessary criticism and find new ways.

The end to the Brexit transition period is just around the corner on 1 January. How have you been preparing during and post-lockdown?

We’re still pretty much in the dark about the ongoing implications but it will potentially cause another round of disruptions. We then have to contend with the Deposit Return Scheme in Scotland – it seems like one logistical and bureaucratic challenge after another at the moment. We need time to re-establish a successful economy, boosting trade again.

Have the past few months led to any positive change that the trade can and should adopt going forward?

It’s hard to tell but hopefully we can evolve from a discount-hungry short-term mentality to a long-term quality and value led agenda. We have had to look at different revenue streams to keep the cash coming in and this may have long-term benefits.

Covid-19, recession, Brexit, climate crisis – we’re living though extraordinary times – what will the biggest challenges for the drinks trade going ahead?

Bureaucratic challenges and legislative crippling of an economically beneficial industry. Unnecessary demonisation caused by the actions of a minority will do more harm than good to the health and wealth of our nation.