Looking back on 2012 for the wine trade: part 2

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Published on Wednesday, 19 December 2012 11:55

Written by Gemma McKenna

Ready for the next instalment of what’s gone on in the wine trade in 2012?

So far we covered the fine wine rollercoaster, the neverending screwcap versus cork debate, what the major multiples are up to and the impact that global grape shortages will have on the UK market.

Next on the list we take a look at...

Online marketing, and how drinks brands are managing it, was (and indeed still is) very much at the forefront of engaging with consumers. Mary Portas’s business partner Peter Cross criticised how the luxury Champagne brands are doing it, dismissing their “clunky” brand websites as “archaic”.
Some retailers are marketing themselves online better than others - at Harpers inaugural Awards, hosted back in May, Majestic was singled out for having the Best Digital/Social Media strategy and it also picked up the Engaging the Consumer category.

At this year’s IGD conference, the chief executives of the major retailers outlined how you it’s vital to use enhanced digital communications to get as close as you can to understanding and then influencing - right down to the point of sale - individual shoppers needs. As one senior Asda executive said, it’s no longer about selling products, but understanding data.

Last month, to make matters more complicated (or simplify them, depending on your point of view) the Portman Group launched the fifth edition of its Code of Practice on the Responsible Naming, Packaging and Promotion of Alcoholic Drinks. This time around it will introduce tougher regulations on drinks marketing in social media. Working more closely with the Advertising Standard Authority, the Portman Group will cover any PR material and user generated content posted on producer sites. This can be a tough one for brands whose target market is 18-24 years-old, who are very active online, and post pictures of themselves enjoying products on brand websites, only to have them removed by the brands as they look under 25. It’s a conundrum, and makes it very difficult to engage with your consumers digitally.

August represented the industry’s great white hope: the Olympics. But it wasn’t meant to be. It seemed that the messages to avoid London as there would be transport chaos were heeded, and regulars fled the capital, leaving the on-trade struggling with empty venues and poor sales. The tourist pound failed to make up for the lack of locals. Fairtrade wines, and the official wine supplier Bibendum, had hoped the sporting triumph would contribute to their coffers, but it seemed to be lacklustre on all accounts and the trade was relieved to see September and October roll around and business pick up. We kept you up to speed with live blogs for the duration. Indeed, when Bibendum should have been popping corks, it was letting go three of its senior management team following a decision to streamline the business following a tricky year, with part of the problem being the Olympics failed to deliver.

This gives us a neat segue into the main big news of the year. And it wasn’t good. Collapses. Administration followed administration, countless creditors were left out of pocket, and decades-old firms bit the dust. The first major casualty of the year was D&D Wines International, back in April. Major creditors were listed as Spanish wine firm Bodegas Muriel, which was owed £4.05 million through its two major brands; £2.8 million through Muriel and £1.25 million through Bodegas Eguia. Advini was out £1.28 million and Champagne Martel was short of close to £800,000. Producers scrabbled around trying to confirm supply with retailers, and for Muriel, it wasn’t until October that it secured a new agent - Off-Piste Wines.

Stratfords came a cropper in September, citing financial struggles caused by increasingly small margins and growing cash demands. The 30-year-old firm had been trying to refocus the business away from its Australian stronghold to Old World wines, but it wasn’t enough. However, FE Barber, Kingsland Wine & Spirits bought the firm out of administration almost immediately and reassured everyone it would be “business as usual”. We’re still waiting to hear more about what Kingsland will do with the business, although earlier this week it announced it was closing Stratford’s Berkshire office and moving admin function to its Irlam, Manchester HQ.

The biggest collapse of the year was on-trade wholesaler WaverleyTBS, which collapsed owing the trade £40.5 million. Administrators Deloitte failed to find a buyer - the attitude among potential purchasers was that there was nothing of value to buy, other than customer lists and stock, and they could already target new custom anyway. Almost 700 people lost their jobs across the UK. A number of other national distributors picked up new business, but as one sage operator put it, it might be good in the short term, but would cause longer-term difficulties. Major creditors included DiageoGB at £6.1 million; Heineken at £4.3 million; AB-InBev at £3.5 million and Bacardi Brown-Forman Brands at £2.9 million - but many were, and possibly still are, involved in retention of title disputes over stock.

But before the year was up, there was one more casualty: Thierry’s Wine Services at the end of October. While it didn’t actually enter administration, it was bought by a recovery specialist who has implemented some big changes, including renaming the firm Watermill Wines. It seems there were cashflow problems after a major retailer changed its terms and conditions and that a number of suppliers have outstanding debts with the firm, which new chairman Richard Baizley is under no obligation to repay. However he has moved to reassure suppliers he will do the best he can to pay what they are owed. The new backers are private investors drawn from a wine and spirits background.

The final instalment of our 2012 review is tomorrow. Hopefully we can round out the year on a positive note?