Indies need a 50% sales increase to compensate for lost business

Independent wine shops are working flat out to fill the gaps left by the collapse in wholesale business and drink-in sales.

Although many merchants are reporting a boom in orders for collection or delivery, and an influx of new customers, the independent trade as a whole would need to achieve a retail sales increase of around 50% to compensate for the loss of other revenue streams.

The Wine Merchant’s 2020 reader survey shows that a record 40% of stores now offer wine for consumption on the premises, up from 37% in 2019.

On average, this channel accounts for 12.5% of turnover, with wholesaling standing at just under 16% and events at just under 4%.

Retail sales are typically just under 60% of turnover, averaged out across the entire independent trade, and online sales 5%.

Phil Innes, owner of Loki Wines in Birmingham, says: “We have seen a huge uplift in delivery sales, but it doesn’t go anywhere near to replacing the drinking-in and event sales that we have worked so hard to develop.

“It’s a complete nightmare, but at least we have that outlet to sell wine and keep us ticking over, even at low margins.”

Some merchants – especially those who rely on drink-in sales for the majority of their turnover – say their problems are being compounded by the inflexibility of their landlords.

Ted Sandbach of The Oxford Wine Company says the business has been “inundated” with delivery orders and is continuing to operate from two of the group’s sites.

But he adds that the Oxford University colleges which are landlords for three of the company’s premises will only agree to defer rent – “so in other words the debt just builds up, which is no bloody help at all”. He adds: “The Oxford colleges are behaving appallingly and arrogantly with no understanding of the situation we all find ourselves in. Some plead poverty – can you believe it?

“We have no help at all from the shops with rateable value above £51,000, which rules out two of the premises, so they expect us to pay with no trade and no government help.
“OK – we get free rates for a year, and a big Boris bonus and when these promised payments come through. It will be a help, but as yet there’s no indication of how we pay wages short term, especially with those furloughed.

“My situation is simple – I am paying everything, but only half the rent to my landlords and we can argue about the other half later. I rent out two small premises and have let off both tenants for three months.”

Matt Harris of Planet of the Grapes in London faces similar problems. Writing for The Wine Merchant’s website on April 6, he said: “All four of our bars have been shut for nearly three weeks now, so we have lost £150,000 of turnover.

“But – on the positive side – we have picked up lots of retail orders and most of those are from people we never sold to before. So going forwards we will have a bigger database and the customers and shareholders we do have are being amazing and very supportive.

“The help with rates has been brilliant, as has the furlough scheme – we have not let anyone go and are supporting every member of staff, full time and part time. We paid their full wages for March and the whole company has taken a pay cut from April 1 onwards.

“But landlords seem to think that having staff paid and rates reduced means we can afford to pay them the full rent. We are not trading!”