Hybrid wine merchants are battling strong headwinds in the face of escalating costs and the squeeze on consumer spending.
High profile closures recently have seen Kwas in Huddersfield stop trading and Real Drinks close its store in Twickenham.
It was Real Drinks’ second branch to face the axe this year after its shop in Notting Hill, west London, closed in January.
A report for UK Hospitality, the British Institute of Innkeeping and the British Beer & Pub Association suggests that only 37% of hospitality businesses are currently making a profit.
The biggest reasons cited are rising energy costs (74%), stock price inflation (55%) and increased labour costs (54%).
Almost a quarter have reduced opening hours and one in six have no cash reserves.
Hybrid wine stores are trying to remain positive but admit the going is tough.
Richard Everton, at Bottles in Worcester, says on-trade sales are 20% up on 2021 so far this year on a like-for-like basis, but off-trade revenue is flat. Wholesale is up because of the general return of the on-trade.
“Some customers have gone to the market a little bit and we’ve picked up a lot of business from the national wholesalers as a consequence of the service we gave during the pandemic,” he adds.
“We’re bucking the trend in the on-trade,” he says. “We recently changed the concept so the shop and bar are more stand-alone [rather than a mixed hybrid space] and that’s helped.
“In the shop, customer count is up but individual transaction sizes are lower, and people are down-spending on the quality of wine.
“Online is up but nine times out of 10 they’re things that people have sought out because we’re cheap on them. We’ve experimented by putting a few prices down on claret and Burgundy and they very quickly got sniffed out.”
On rising costs, he adds: “We’ve not massively felt the pain on energy yet but we’re ready for it and we know we are going to.
“Wages, fuel, products, glassware, cardboard and shipping costs are all going up. It’s a case of making sure we’re not subsidising it and we’ve put prices up in both on-trade and off-trade.”
Xhulio Sina, at Bottle Bar & Shop in Catford, south London, says the diversity of its business is a plus, particularly the ready-to-drink cocktails that it sells online and supplies to other retailers.
“I’m optimistic,” he says, “but if our business was depending only on Catford – the bar and the shop – we wouldn’t have survived. We are not in profit but we’re not about to close the business.
“Everything’s gone up: our wines, the liquid for the cocktails and beer prices have gone up. But customers’ bills have gone up too. Some people are not spending money the way they used to, that’s for sure.”
Bottle Bar & Shop employs one full-timer and two part-timers.
“The part-timers would like full-time jobs but we can’t afford to give them that,” says Sina. “I’m sometimes giving them shifts when we don’t really need them, just to support them – but I wonder how long we can keep that going.”
Everton at Bottles says things could get worse before they get better.
“People don’t go around with their eyes closed and they accept that things are costing more – but unfortunately alcohol and socialising are things that could easily be put on the back burner.
“I don’t think we’ve experienced the worst of it yet. Profitability will be down ultimately and it’s a case of battening the hatches and hope you come through, or being a bit more bullish and trying to take a greater share of the business.”