Seven independent merchants were summoned to the Tower of London last month for a round table discussion on a variety of issues of importance to the UK wine trade.
Our coverage kicks off with a coversation surrounding the economic outlook and how indies are already being affected by the cost-of-living crisis. More reports from the debate will appear in our November edition.
The Tower Summit is organised in association with Hatch Mansfield.
Nish Patel, Shenfield Wine Co
January was very good. It was February and March that were concerning. We probably lost a bit of footfall. 
Although we are in an affluent town, there is definite concern and people are nervous. But when you look at the numbers, our average basket sale has actually gone up a bit. Footfall has dropped a little. I looked at it again this weekend and it’s pretty stable.
Prices have gone up because inflation has gone up, but we’ve tried to hold as much them as we can and we’ve worked hard with our suppliers to get good deals.
I think we are quite resilient to a certain degree. I’ve looked at our entry level and I’m making sure we have a wider selection. There is a percentage of our customers who are looking for more of a bargain.
Robin Eadon, Dulwich Vintners
There are certainly some customers who have been regulars for years and have changed their price point – there’s a certain product they’d always go for but they’ve dropped to the one below.
An example would be a crémant at £16. A few people who would ordinarily take that have gone down to the Cava at £11. That’s in Dulwich, which is historically quite recession-proof.
Like Nish, we’ve seen a slight reduction in footfall but the average spend has stayed pretty constant. For us, we’ve seen that you just cannot predict what’s going to happen. So you could have a poor Saturday for some reason and a very good Wednesday for no reason at all. It’s really unpredictable.
The problem we’ve faced with the rising costs is trying to replace things at the bottom end. Lots of people are quite accepting that prices will go up because we’ve seen it across the board in every single market.
Where we were able to get something in at £8 or £9, that’s suddenly £10 or £11. That’s our entry level. The difficulty of importing is that you can’t do small shipments at the bottom end any more.
Freddie Cobb, Vagabond Wines
We’re obviously a bit more hybrid than most but I would concur with what has been said about the unpredictability. You can have a quiet Saturday but an absolutely booming Tuesday for no reason whatsoever. So managing stock levels for that can be challenging at times.
Round about July we suddenly saw our guests starting to go for more entry-level wines than they ordinarily would have done.
At Vagabond we wanted to come up with a plan at the beginning of this year to minimise costs across the supply chain and be quite imaginative in doing so. As a result we’ve been able to keep our prices relatively stable. You can definitely see in July and August, customers are going for things that are a little bit friendlier on their wallets.
Graham Holter, The Wine Merchant
When the cost-of-living crisis does bite, is that going to play out even more?
Freddie Cobb, Vagabond Wines
Yes and no. People will always want to drink wine but a lot of our customers are aged 20 to 35 and they are probably feeling it a bit more than most. When they go out we think they will be looking for a meaningful experience. We think their spend on the evening will go up, but they will go out less.
Mitch Swift, The Bottleneck, Broadstairs
I am more at risk of losing those customers who shop at our lowest price points of £7.50 to £10 because, as I have to increase those prices, that customer will just go to the supermarket instead. 
Some customers have said to me that they only shop from me for special occasions now. You accept that you lose their custom, but at the same time you have that issue of getting the lower-end price point of wine in. Do you open yourself up to getting one or two pallets of something, knowing you are going to make a high margin, or do you swallow the margin and stock the wine?
I think we’ll probably hold less stock because my average spend stays the same, but I’m selling fewer units. People are looking to buy better or not buy at all. I feel that I’ve lost a lot of customers who buy at that lower price point, and I don’t do offers because I feel it devalues the product.
I think the people who buy at the middle price band are not so worried about the rising cost of living compared to the people who have upgraded from the supermarket to buy our entry-level wines. The customers buying £15 to £25 bottles or a case every week … I don’t think it’s going to affect their habits so much.
Sam Howard, HarperWells, Norwich
We start at £9.99 and there’s a couple around the edge at £8.99 that we use for our trade customers. We don’t sell to hotels and traditional trade – our trade customers are concessions or wedding venues.
In terms of retail, we have seen the Tuesday spike, and we’ve put that down to people working from home. We are 90 minutes from London and we have people who have changed their working patterns. The Saturday moving to a Tuesday is just because of that.
Our neighbouring shops are really struggling. They are opening more erratic hours and you can see their stock levels in their displays are way down. One of our little delis is in a small market town of about 9,000 people. If it becomes an unattractive place for people to wander around then that is a problem for us. Even though our sales are up 20% on last year and are really strong, I do worry if the town struggles.
The sourdough in the deli was £4, then £4.50; it will be £5 by Christmas, and at some point customers are going to say they’ll go to Waitrose. Those bread customers also buy a bottle of wine from us, so if they stop coming in that is a concern on a small scale for us.
Conor Nolan, The Secret Cellar, Kent
I’ve worked Saturdays and they can be really quiet – and then midweek can be mad. And then the Saturdays in August, when I thought everyone would be away, were bumper Saturdays. You just can’t predict it.
A £2.5k energy cap is still a large amount of money for anybody to pay and I think, come October 1, people are going to go, “woah, what’s going on?”. If you look at the fuel prices and everything else going on in the world, you can’t look at your crystal ball and say it’s going to be a good Christmas. We don’t know what it will look like. Will they buy in advance?
We bought Whispering Angel for the Jubilee but Waitrose were discounting the hell out of it. But the people who came in for it paid full price for it and didn’t care.
Our four shops have very different demographics. Tunbridge Wells has no parking and there are a lot of people working from home, so we do a lot of deliveries, and they want volume. Oxted is next to the station and we get a lot of Tuesday to Thursday trade; you don’t see so much on Monday and Friday. At Wadhurst we have parking, so people come in their cars and bulk buy. We get people who we’ve never seen before, who are just passing through, and they drop a grand on high-end wine. Then you get the regular people who come in. It’s a very mixed business.
Graham Holter, The Wine Merchant
As a supplier, how is Hatch Mansfield making sense of the current economic climate?
James Manson, Hatch Mansfield
Historically we’ve always done things fairly counter-intuitively. In the global financial crisis wine importers were letting people go and we employed more people because we saw it as an opportunity to go out and try to win some market share.
We are fully aware there are challenges coming for the indie sector and we want to work with our customers, listen to them and do things that will add value and help.
When lockdown hit we took the decision to reduce our minimum order to £250 from £500. Actually, in hindsight, we didn’t need to do it because everyone’s minimum orders went up because as we all know retail sales increased significantly.
We’ve kept it in place, though, because as Mitch says, managing cash flow is really important. Our view is if we’re not holding stock or helping with things like that, then what are we here to do? We need add value in the supply chain and we want you to work with us.
We tend to start at about £8; there are some wines that are a bit lower. We had a lot of people ask if our prices were going up in September. They didn’t. We aspire to have one price list once a year. It would have to be something catastrophic to change that.
We’re not just selling to indies. We are not small, so we can absorb certain things. We print a price list and send it out to all our customers. It’s expensive to reprint all your prices and then start having those difficult conversations. That’s time spent on doing things that ultimately aren’t that constructive.
Graham Holter, The Wine Merchant
The accepted wisdom is that specialist wine shops tend to do OK in an economic downturn, especially as people spend less on eating out but want nice wines to drink at home. Is that the way things are likely to pan out this time?
Sam Howard, HarperWells, Norwich
In the last recession I was dealing with private clients. I was young and it was an unnerving time for me but people swapped into buying ultra-premium wines, and high net worth individuals did lay cases down and did come out of it fine.
This time round I don’t see it being fundamentally any different with those kinds of customers. But if we look at our own energy costs, if they double and we can’t re-negotiate a better deal across two shops – and people with more shops and multiple fridges etc have done their own maths – that is a problem, because that’s just bottles going out of the shop for free.
Freddie Cobb, Vagabond Wines
We’ve got machines, fridges, lights, music … whatever it might be, in all our stores. The last thing we want to do is be in the position where we are having to decide whether to keep that fridge on or let that part-timer go, or vice versa.
We all know that the teams within each store are just as important as the wines themselves. We are just having to put pressure on the government wherever we possibly can and try to get help from elsewhere like VAT cuts, duty rates, things like that. We need help.
We’re not really concentrating too much on trimming down. We are more interested in trying to push the things that we’re good at: trying to get more people drinking wine and trying to up their average spend
Robin Eadon, Dulwich Vintners
We upped our stock levels a bit ahead of Brexit and were bringing in stuff from Europe because of the uncertainty and that stayed in place during Covid. We do always run at quite a high stock level, which does mean we can insulate ourselves slightly against those things. But the biggest cost for us is always rent and wages.
You have to make the decision whether to pack the store with part-time staff who possibly aren’t able to reflect your proposition perfectly, or do you trim your team down and run with really good people who represent you well? Then you have to look at all sorts of things like trimming down hours, or opening on different days just to try and manage it.
The rising cost of living also means that job seekers are looking for a higher wage.
Since the last economic downturn, I think the people who are drinking wine have changed. You do get that 20 to 30-year-old age bracket who never would have gone to their independent to buy something fun or different. We have people drinking fine wine out of plastic cups in the park. I don’t know whether those people are going to change the way they think about those costs or not.
We’re not really concentrating too much on trimming down. We are more interested in trying to push the things that we’re good at: trying to get more people drinking wine and trying to up their average spend.
Mitch Swift, The Bottleneck, Broadstairs
That younger category is so used to spending so much money on a night out, that one bottle of wine at £15 to £25 is less than a night out. They go to a pub and buy Pinot Grigio at £8 a glass.
I think this younger demographic is a really good group that has moved on to buying wine because they want to learn. They are open to talk to us and experiment and try things.
Nish Patel, Shenfield Wine Co
I agree with Robin. Covid has been an amazing two years for the independent wine industry. I opened a year before the financial crash and we grew throughout the whole 10 years. Our demographic is very different to what it was. Over the last two years we’ve seen a lot more younger people, 20 to 30-year-olds, coming in. They are not necessarily that well-educated but they are open to spending serious money on wine because they want a journey.
James Manson, Hatch Mansfield
Those younger people who are coming in spending the money haven’t yet gone through a financial crisis, so maybe come October I think there could be a bit of a wake-up call.
I think there’s a big unknown round how this cost-of-living crisis directly impacts wine production. So whether you are looking at the increasing costs from yields going down due to climate issues, or the cost of glass and packaging … up until February glass was still going up in price, then all of a sudden the crisis in Ukraine happens and the price of glass goes through the roof. Then fuel costs are directly impacting the drinks business as a whole.
Sam Howard, HarperWells, Norwich
That’s exactly my point. In the financial crisis you could take that philosophy and you could say, ‘I need 50 grand’s worth of sales’ and you could go out and practically do it, but this time you can’t do it because the supply chain is so broken.
We had a two-pallet order of Prosecco going in and out to a private school for its summer event and the price was negotiated, there was no backing out from it. The order was placed eight or 12 weeks in advance and confirmed, but they ran out of glass. The big supplier helped us out and shifted about and found UK stock for us, pulling it off other accounts. But we had to meet them in the middle, at 50p a bottle.
Conor Nolan, The Secret Cellar, Kent
We’re looking at Christmas now and asking are we going to buy direct from producers or UK suppliers, and the answer is all UK supply – the simple reason being that we don’t have to commit to pallets and pallets of something, and that keeps your cash flow going.
