Innovation Report: Building strength in numbers

By Jo Gilbert

Published: 25 May, 2021

Our Collaboration as a Force for Change webinar looked at how the rapid channel innovation of the past year has broken down barriers for trade. Jo Gilbert reports from the session.

The Panel:

↘ Erik Laan, MD, The Vineking

↘ Jon Carson, director, Carson & Carnevale Wines

↘ Jamie Wynne-Griffiths, founder, Propeller

↘ Ben Marriott, implementation consultant, Bevica

↘ Jo Gilbert, host and features editor, Harpers Wine & Spirit

Q. What are the main ways you’ve been working differently this year across channels and how has collaboration played a part in that?

Erik Laan: Last year was a big change. Fortunately, most of my businesses is retail orientated. But a lot of the wholesale business obviously got shelved; and I’ve got some dear friends in wine bars in the centre of London being badly hit.

We certainly have worked with people representing smaller, more niche agencies and I’m sure those conversations will continue. The other thing which has been very interesting is the magnifying glass on online business and the problems – mainly how you can be compared on price. Having a unique product is really critical.

Jon Carson: Like most importers, the immediate thought was, “Crikey, we’ve got a lot of stock.” We decided not to go direct to consumer and look at actually working more collaboratively with people such as Erik and identify where the opportunities are that work for both parties.

A number of online retailers now want to work within what they would deem a ‘ just-in-time model’. They’re using online purely as a hook, without really recognising the true value of the whole model. We feel it’s been the right decision and the relationships we forged over the whole Covid period have only strengthened as a result of that.

Ben Marriott: We’ve spent the last 18 months moving our offering to software as a service that’s hosted in the cloud, rather than being an on-premise solution. For smaller companies now that perhaps didn’t have the access to an IT function or IT manager, it’s made it much easier to access their data, particularly as on day one we had customers who were struggling to get laptops out to all their clients.

Q. What has been the main impact from Brexit?

JC: Covid acted as a kind of blanket. No one in the on-trade really understood the true impact of what Brexit is going to mean. I know [importer] Daniel Lambert has done a wonderful job waving the flag and letting people know exactly what’s going on – and credit to him. I think the word we’ve always wanted to see used within our business throughout this whole year is ‘communicate’. Just communicate with your customers, keep talking to people understand what it is you need to do.

Jamie Wynne-Griffiths: Before the Propeller launch, we were running a kind of incubator-light model for producers who saw the explosion in retail and wanted a piece of the action. It was already difficult to get into the UK because of the nature of the wholesale landscape and it’s often really just a matter of luck.

So, with Brexit, the bottleneck just became even more pronounced. As a result, we’ve been looking at quite a few different consolidation models for France, Italy and Spain. One of the potential ways around multiple documentation is for the nominal owner of the stock to be a single entity. For instance, the nominal owner would be one of the wineries that is taking part in that shipment. They will be in receipt of the invoice value when that’s paid and then distribute the balance locally.

Q. With all the obstacles in play, how can we maintain the UK market as an attractive proposition for exporters?

EL: It’s going to involve a shift for various businesses if you want to operate like groupage. I know a few guys in France who have a holding company where they represent, say, 15 different merchants with one central warehouse and it can be picked up from one place.

I think you’ll see a rise of that as a service being offered in regions of France and Italy. But, unfortunately, this also plays very much into the hands of the big guys who can ship in larger quantities and make it more affordable. The pressure is on for smaller independents.

JC: You deal with it with lots of headaches. The EX1 forms are obviously a cost and there are others as well. But Erik is 100% right. This plays into the hands of the larger companies which can amortise their costs across shipments.

Q. Do you think the past year has created greater conversation and greater communication between different parts of the supply chain, or have there been more breakdowns?

JWG: There has been lots of communication, but I’m not sure how much has been completely effective. There’s been a lot of “where the hell is my wine?”

BM: We’re definitely seeing more requests for things like sending structured data to a third party, whether it’s your bonded warehouse or freight forwarder. Whether this means just adding on additional charges so you know customs is going to cost £80, or knowing what the margin is, as long as it’s tracked in the system, you’re not having to do an offline calculation and then wondering why your cash flow isn’t looking as good as you expected it to.

This is going to be especially important going forward as the big question will be how are businesses going to re-engineer things back to how they were before? The more data you have in your system, the more you can forecast. Stock forecasting is difficult at the best of times, but if you had 12 months of really reduced sales because of Covid, how do you forecast what’s going to be happening in May, June, July, later this year? How would you forecast if cases surge again? It’s about applying the data to different scenarios.

Q. On the topic of collaboration, what would you like to see happen over the next year in terms of parts of the supply chain working more closely together?

EL: One thing is the concept of piggybacking. If you can organise 20 cases each between six of you, then bang, that’s two pallets. Suddenly, you’re reducing those costs and it means they get their wines at a better price, too. We also need to be more collaborative with retailers working together. We’ve been incredibly lucky in wine retail. Surrey has drunk its way through the pandemic, but a lot of other shops have really struggled.

JWG: Piggybacking is a lovely way of buying wine, and frankly it’s more necessary now than ever because consolidating the demands and consolidating the costs and the admin is super important because it’s a significant change. There is great pride in knowing that you have shipped the wine yourself. If businesses can ship with two or three other colleagues elsewhere in the UK, so there’s a feeling of regional exclusivity, that’s a perfect scenario.

From a government point of view, if collaboration is the right word, digital solutions need to be brought forward. There’s commercial vandalism happening in that we’re not making it easier for importers to interact with our friends in the EU.

Q. Do you think businesses should be expecting more information or communication from freight forwarders?

JC: Freight forwarders at the moment are under this blanket that we’ve all been living under. There’s going to be an additional 200 million orders to process this year, and we haven’t got the clerks to do it. There’s huge, huge pressure on the freight forwarder we work with. Even one kilo deviation from the paperwork means the product is held at port. They are going to have to pass on some cost because of the difficulty of getting containers back into Europe. The goalposts have changed. We won’t just be picking over pennies, we will be asking ‘can you do the job?’ So I think there’s the idea of Covid and growing tolerance and patience, and never more so do we need to be tolerant and patient with the freight forwarders.

BM: We’re at the point where we need someone to centralise import data where everybody can work within the same format. In other industries, that’s all been done. The government would have to lead some of that, because [wine is] quite a dispersed industry.

Q. Any silver linings from the past year you’d like to share?

EL: One positive I’m taking from Brexit is that all the guys in Europe who sell their wines the UK without tax won’t be able to any more. That’s a positive.

JWG: The number of meetings I’ve been able to do on Zoom is huge, getting deals get done which in normal times would have taken years. Usually it’s a case of “see you at ProWein or VinItaly”, which is great, but the pace would be glacial by comparison.

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