Retail: IWBC – Strength through unity

01 September 2006 By db staff writer

d=”standfirst”>The Independent Wine Buyers Consortium has been helping smaller merchants compete with the big boys since 1968. Its current chairman, Patricia Terry, talks to Sally Easton MW about strength in numbers

Buying power is a strong economicx force in the UK wine industry. It’s invariably linked with the prospect or promise to the producer of a greater volume of sales in return for better prices and/or exclusivity of distribution as the carrot for the trader in the destination market.

The price/volume equation is one that the resurgent category of independent wine merchants can rarely key into. But the Independent Wine Buyers Consortium (IWBC) has been playing to this strength since 1968, when a group of merchants first got together to pool some of their buying. The consortium was formed as a way of retaining a competitive edge against supermarkets and national retailers when dealing with major spirits brands.

Today, the IWBC comprises 14 independent companies which pool the responsibilities of buying certain wines, with individual brand sponsors among their members. The consortium’s combined trade distribution covers much of England, Scotland and Wales, but there is no significant geographical overlap in the commercial reach of any member company. Thus members are not competitors and, in addition to buying power, they can benefit from each other’s commercial experiences without fear of rivalry. Members are primarily wholesale businesses, covering a wide range of clients, from country-house hotels to wine bars, alongside private and corporate customer bases.

Patricia Terry, managing director of Waters Wine merchants in Coventry and the IWBC’s chairman since April, says, “The consortium consists of independent companies, acting independently of each other – and sometimes independently of the consortium. We define our consortium as a combination of companies acting together but each retaining its essential independence. As independent merchants we all sell many more wines in addition to our consortium brands.”

Keeping competitive
As the wine industry has evolved, so has the consortium. According to Terry, “Its primary aim has always been to maintain a competitive place in a market increasingly dominated by national and international players. As wine sales grew through the ’80s, the focus turned to wine, albeit largely European at that time. Since the ’90s, a major benefit of the consortium has been to enable us to ship from the southern hemisphere.”

So companies come together for economies of scale and the bulk-buying of some lines. The advantages are not rocket science: exclusivity, consistency of packaging and presentation, better prices and improved transport costs, especially for deep-sea movements. Though perhaps more relevant at the “fighting” end of the price spectrum, consortium brands are available to members at prices from just over £2 to £20.

Terry says, “We source wines, blends and labels, and the more you buy, the better price you get. This is especially an advantage for smaller companies to put quality on the table that might otherwise have cost a couple of pounds more.”

As with any large retailer, the IWBC creates exclusive labels from some of the bigger suppliers. The usual suspects play in this arena – producers such as Kingston Estate in Australia and Casa Girelli in Italy. Dealing in either exclusive labels or exclusive agency/distribution agreements can give an edge. Direct sourcing has become a strong part of the consortium’s offer, with control over blending their own cuvées and designing bottles and labels to ensure exclusivity and ownership. Terry explains that the barrel logo, which stands for the “vintner consortium” was thought to be more labelfriendly than “IWBC”. The ability to source wine while keeping the continuity of the brand is a clear strength.

As well as sourcing its own brands, the consortium also acts as agent and/or distributor for individual producers, such as Whitehaven from New Zealand, Azabache from Spain and Grangehurst Winery in South Africa.

Brand handling
Brands are handled by nominated members, with Terry being “brand handler” for New Zealand. “We started shipping one container of Whitehaven about eight years ago, and now it is up to six containers,“ says Terry, which gives an indication of the level of success of the organisation.

She explains the process: “If we are reviewing a brand or considering a new one, a brand handler would be the person to organise this. This would depend on volunteers and often involves a member who has a particular expertise and interest in the area. All brand handlers would look after a tasting of their own product in a comparative tasting. We constantly blind-taste consortium brands against other products of similar value and style in the on- and off-trade market to ensure we have the edge.”

She emphasises that no member is coerced into taking any of the wines bought under the IWBC aegis, saying that, “The continued independence of each member is a necessity and desirable, and as such, members are not ‘compelled’ to always support group brands that they feel do not work within their wine portfolio.”

In terms of logistics, several members have their own bonded warehouses, so orders for individual members are quite often grouped together and delivered to one address for onward delivery to make additional savings on shipping.

Future growth
Terry admits that the consortium is “always looking to expand. We’re all independent merchants, from northern Scotland to Cornwall. We try to cover every geographical hole. Recruitment is rather by word of mouth, and we like to be as transparent as possible. Yorkshire is one area where we would look to recruit new membership. Other than that, we would target specific areas that do not overlap to a great degree with an existing member.”

There seem to be few joining criteria. “New members should be primarily wholesale,” says Terry. “We prefer new members to have a turnover of half a million plus; however, this is not set in stone, and a company that was interested in joining the consortium would be considered under its own merits. There is no set annual fee. The consortium is a limited company and new members are required to pay a joining fee. Our overheads are minimal, and there are no paid executives. Subscription charges are called for as and when required to cover central expenses.”

Members tend to leave the consortium as and when they might cease to be independent companies.

Cooperative spirit
With regular meetings, Terry says an additional benefit for members is having access “to a forum where current information can be exchanged. Each business within the consortium is very different, and I consider it invaluable to be able to plug into a frank and honest source for all things wine- and business-related; discussing new trends, customer demands, geographic patterns etc. The advantage is to be able to discuss these things with someone in the same trade who is not your competitor.”

© db September 2006

 IWBC MEMBERS

1. Wm Addison (Newport) Ltd, www.addisonwines.com Shropshire
2. Bruce Burlington & Co Ltd www.bruceburlington.co.uk Essex
3. Ellis of Richmond Ltd www.ellisofrichmond.co.uk Richmond
4. Evertons Wines Ltd www.evertonswines.co.uk Worcestershire
5. St Austell Brewery Co Ltd www.staustellbrewery.co.uk Cornwall
6. Irvine Robertson Wines Ltd www.irwines.co.uk Edinburgh
7. Peter Graham Wines www.petergrahamwines.com Norfolk
8. JW Lees & Co (Brewers) Ltd www.jwlees.co.uk Manchester
9. Wadworth & Co Ltd www.wadworth.co.uk Wiltshire
10. SA Brain & Co Ltd www.sabrain.com Cardiff
11. Whitesides of Clitheroe Ltd Lancashire
12. Waters of Coventry Ltd www.waterswinemerchant.co.uk Warwickshire
13. Shepherd Neame Brewery www.shepherd-neame.co.uk Kent
14. Whittalls Wines Ltd www.efb.co.uk, West Midlands