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!”

How our world has changed

On Thursday evening [March 26] The Wine Merchant hosted a video conference to discuss how the independent trade is coping with the coronavirus crisis.

The conversation involved David Gleave MW of Liberty Wines; Hal Wilson of Cambridge Wine Merchants; Kate Goodman of Reserve Wines in Greater Manchester; Julia Jenkins of Flagship Wines in St Albans; and Duncan Murray of Duncan Murray Wines in Market Harborough.

Our internet connection wasn’t great, so sound and video quality wasn’t good enough to upload to YouTube as planned. But we’ve captured as much of the conversation as we could, and we summarise it here.

Wine shops classed as essential service providers

The UK has entered its official shutdown, and the message from the government is that only shops selling essential goods can stay open. As of today (March 25), wine merchants and off-licences are included on that list.

The detail is spelled out here. Yesterday it seemed clear that any shop that principally selling alcohol should stay closed until restrictions are lifted, but today such shops find themselves classed as essential service providers.

Nobody will be allowed to sell drinks or food for consumption on the premises. But online sales and local deliveries are allowed and indeed “encouraged”.

Top 100 judging postponed

Sadly the Top 100 judging date that we’d set for April 1 is no longer possible, due to the COVID-19 pandemic.

We will be rescheduling for a date in June or July – at this stage it’s impossible to know how long restrictions on social gatherings will be necessary but as soon as the situation becomes clearer, we will announce it here and on social media, and contact all the companies who have entered the competition.

All wines that have already been sent to us are safely stored at Sensible’s warehouses, where they’ll be absolutely fine.

With the London Wine Fair now postponed, we’ll be planning to showcase the winning 100 wines at a new event in the autumn. Again, watch this space.

We appreciate it’s disappointing news but it will come as no surprise. Please get in touch if you have any queries or concerns. Many thanks.

Love in the time of COVID-19

Well what a changed world we find ourselves in. “Reasons to be cheerful in 2020” trumpeted the front page headline of our March edition, put to bed in the first couple of days of this month. By the time the presses had rolled, the ink had dried, the pages had been stitched and our mailing house had sealed the envelopes, we looked hopelessly flat-footed with our assessment.

COVID-19 has hit us all like a meteor strike, and some brilliant businesses and lovely people are hurting, badly. The future for them – for all of us – is uncertain. Day by day we are making sense of the situation, as wine people, as a nation, and as a species.

You won’t find the answers to some of the biggest questions in The Wine Merchant. But we’ll try to do our bit in other ways. We’ve been proud to represent the independent wine trade for eight years and a minuscule bug with a massive attitude problem is not going to stop us, or our readers, in our tracks.

As we write this – on Friday, March 20 at just after 11am – we are taking stock of all the good things that are happening and not dwelling entirely on the nasty stuff. Independent merchants are discovering just how much their communities love them. Businesses are finding that they are more resilient, and resourceful, than they realised as they find new ways of serving their customers, near and far.

It’s also bringing out the best in suppliers. As our reader survey has shown, the relationship between them and their retail customers has been rather good lately and as we venture into the unknown together, there’s a sense that importers and agency businesses are standing shoulder to shoulder with their independent customers, in many cases protecting them from the worst of the hits they are enduring themselves.

Here at The Wine Merchant, we’re taking our share of the pain and, like everyone else, having to make some changes. Our business relies to a major extent on the buying trips, reader events and tastings that we get involved in and help to promote. With all those things off the agenda for a while, we have to cut our cloth accordingly. But in a funny way it means we’ll be doing more, not less.

We’ve already raised our game on social media (follow us @WineMerchantMag) and we’ll be publishing our e-newsletter, The Wine Merchant Bulletin, on a weekly basis for the foreseeable future. You can sign up by clicking here: it’s primarily aimed at retailers, so the content is geared towards that readership. But anyone is welcome to recieve it.

We’ll also be making some changes to the website, so that it’s easier to access the kind of content that we include in the mag itself. The PDF version of every issue will continue to be uploaded, but we know that some readers prefer a more web-based approach. This will also help us respond more quickly to events than we’re able to do in print.

Talking of print, the physical, lovely-smelling version of the magazine will be paused for a month or two, while we get revenues back on track. We know you prefer a printed copy, and we do too, but we’re having to adapt to extraordinary conditions, just like our readers. We’ll have the presses rolling again as soon as possible.

Thanks to everyone who’s been supportive and kind this week – especially the advertisers who keep everything ticking over here at The Wine Merchant. We’ve never taken your support for granted in the good times, and we never will in the bad ones either.

Good luck everyone. Let’s stay safe, let’s stay strong, let’s stay connected. And let’s keep the pictures of dogs coming, otherwise it really will be the end of days.

 

Graham Holter

Editor and publisher