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Wine Society summer tasting: “We will swallow inflation and duty rises”

Published:  11 July, 2023

In April 2023, in what was described as an “industry first”, The Wine Society announced it would prevent price increases despite the effects of high inflation and rising duty costs.

Harpers sat down with Steve Finlan, CEO of The Wine Society, to discuss wine ranges and business strategies in the months and years ahead.

The Wine Society yesterday (10 July) welcomed 500 of its members to an AGM, plus a further 700 via Zoom at the Queen Elizabeth II Centre in the heart of Westminster. But before that, the online co-operative retailer welcomed members of the press to its summer tasting.

Finlan described the AGM as a “time honoured tradition”, where members ask questions ranging from sustainability to ‘where’s my wine?’”

“They are really good fun, but just a step in the process in terms of shaping our overall strategy,” said Finlan.

“I am a wine hobbyist, not an expert, my background is in retail so we trust in our buyers who are back on the road again and making discoveries.”

One of the many strengths of the Wine Society is that it is a sort of community, that creates a space where honest feedback is encouraged, which makes a positive wine verdict all the more valuable.

“Take white Rioja, for example, a real marmite wine, when you go on our website you might find that half the members love it and half the members hate it, but they will explain why,” said Finlan.

“I can’t speak on other retailers specifically, but generally, when you look up a wine online they all seem to be five stars,” he added.

It may seem like an odd business strategy, to promote a wine that has been rated three stars by its members. However, as a co-operative, The Wine Society is in a position to do things differently.

“We’ve swallowed inflation, we’ve swallowed the duty rise which is coming in August. We are already on a like-for-like basis with supermarkets and of course, we score really highly on our wines,” said Finlan.

“Generally speaking, I don’t know how wine consumers find trust in pricing – 75% of wines in the country are sold at a discount. For instance, we will likely see price rises at the end of June from other retailers in anticipation of the duty rises before they bring them back down in August, but they will be discounting off a higher price,” he added.

It’s a welcome change from the ‘games’ other retailers play around pricing in order to encourage consumers to make purchases. For several years, The Wine Society has promoted its ‘fair pricing’ strategy, meaning their prices don’t jump up and down, although, as a cut-through message, this has not been as successful as Finlan might have hoped.

“It’s amazing when you think about it, because we know we are the cheapest, but, people offering discounts are getting more cut-through, even though a lot of the discounts are fake.”

In what has been described as, “an industry first”, The Wine Society announced it would work with its members to prevent price increases. 

The news followed a wine tax hike of 54p per bottle courtesy of the last Budget, which is likely to trickle down to consumers at a retail level.

Finlan said: “The great thing about The Wine Society is that we can only sell to our members, and there’s plenty of those, which is good, but it means we don’t have to spend loads on marketing. To a certain extent we are not chasing growth, our focus is to create a great member experience. We don’t pay dividends, so there is a lot of money circulating around that actually stays within the business and that enables us to look at things.”

“Actually as chief executive, I am under no pressure to grow our profit. All I’ve got to do is make sure our business is sustainable from a cash perspective, and if we can hold prices, that gives our members a little more in their wallet,” he added.

With so much talk around price hikes in the trade, little has been made of the benefits of the new duty legislation.

“With this duty rise, there’s a small reduction in sparkling and lower abv wines, and we are passing that straight onto our members in August. It will be interesting to see what others do,” said Finlan, who has spent his entire career in retail. Now, he is being chased by the British Co-operative Society to help shape the future of British businesses.

“Over the weekend, I had an email from the British Co-operative Society, who were asking us to be a signatory, which we will be, to a letter to all political parties ahead of the next general election to say ‘how do we grow co-operatives and mutuals?’ because they are generally run in the best interests of customers.”

As for the tasting itself, the stalls were awash with esoteric options, including several natural wines, perhaps a nod to a future demographic shift.

“We saw a much younger demographic join during Covid, but our average age is still 59, which is something we would like to reduce slightly in order to remain sustainable,” said Finlan.

According to Finlan, the business is on track to generate north of £150m this year, but the future is more about tinkering rather than exponential growth, The Wine Society has no designs on being a ‘£500m business’.

“We like the model, we like the way it works, we grow membership, and we try and sustain our membership,” Finlan concluded.