RETAIL ODDBINS – Odds-on Favourite

In a bid to recapture the glory days, Oddbins is turning away from price promotion to offer honesty and value instead, says Ben Grant

Oddbins might have been one of the darlings of the UK wine trade for many a year, but the last decade has been a torrid time. However, with a new managing director at the helm and a new pricing strategy that bravely goes against the grain of today’s discount-obsessed retail model, the company looks well set to reassert itself as a champion on the high street.

The two years that followed the demise of former owner Seagram were far from auspicious. A string of different owners, a total lack of coherent strategy, massive turnover of personnel (most of whom moved elsewhere in the trade) and a chronic lack of investment characterised a period that is perhaps best left forgotten. In 2002 French behemoth Castel stepped in and took over the organisation and gradually began to shore up a business that was in crisis, culminating in another major reshuffle last year that has finally got the organisation match fit.

Sales director, Andy Gadsby, is well positioned to comment on the gradual evolution. Having been part of the team for the last 14 years (surviving two restructures in the process), he has witnessed both the highs and the lows at close quarters. There has undoubtedly been “some pain involved” in the process, he confirms. “But this was necessary to turn around the business – when Castel took charge they needed to tighten up the ship.” He candidly admits that the company has been set back during the interim, losing valuable ground to Majestic in particular. However, he is confident that the organisation still enjoys an overwhelmingly positive perception among consumers. “The company has a great reputation, and now we’re bringing back the pride that has been lost,” he says.

Spearheading the company as it heads into a new era is Fabrice Bidault, a long-term Castel employee who was previously responsible for the company’s African beer division. He joined Oddbins as managing director in September, and has been instrumental in formulating a new pricing and promotional strategy that the company hopes will give it a clear distinction amid the retail landscape.

Point of difference
At the heart of the philosophy is a very intentional step away from price promotion. According to Gadsby the company is confident that consumers are increasingly savvy about the way that retailers manipulate prices, and Oddbins is thus emphasising a distinct point of difference from the rest of the market. “Rather than just focusing on price promotions we’re working hard to ensure that we deliver value for money at every price point. We think that it’s important to be honest with the consumer; we stand by the integrity of the product and the value that we charge.”

The Great Wine Rip-off
Rather pertinently, on the day that Gadsby visited the drinks business’ offices, The Guardian published a major feature by Victoria Moore under the headline “The Great Wine Rip-off”. The story delved into the murky world of supermarket discounting and laid bare the way retailers manipulate pricing in order to inflate the ‘value’ of a wine pre-discount. That the story received such substantial exposure in a national newspaper suggests that consumer awareness about the actual value of product is on the rise – which could represent good news for Oddbins with its renewed emphasis on honesty.

“Everybody in the UK likes a bargain and people can’t resist a half price offer, but ultimately you’re conning the customer,” says Gadsby. He shies away from excessive criticism of the discounters, pointing out that “they do a great job and have greatly improved the quality of wine on offer in the last decade.” But he stresses, “This is definitely not a road that we’ll go down.” He is also quite adamant that the chances of finding a 40%-off promotional viral email from Oddbins in your inbox are approximately zero. The strong rise in the independent sector is an inevitable backlash from cynical and disaffected shoppers, he says, adding “I’d like to see us as the ‘independent’ of the high-street retailers.”

When Oddbins was acquired by Castel it joined a retail portfolio that also includes the Nicolas chain. While some commentators questioned the viability of two high-street wine retailers operating under a single umbrella, thus far the relationship has been smooth, and in certain respects has been a major boost for both parties. Gadsby emphasises that there is little overlap between the two store concepts, arguing, “There is a neat fit between the two.” While the two operations are kept distinct and run separately, “the offices are close by, and we’re talking all the time”.

The partnership allows both parties to take advantage of economies of scale as well as sharing expertise. “We’re looking to use the Castel leverage of buying power to source a wider range of wine for Oddbins [in particular] to bolster the top end of the range,” says Gadsby. Oddbins buyers are also sourcing New World wines for more than 500 Nicolas stores across Europe.

Interestingly, having two different formats under the same parent company has enabled Castel to decide which of the two is more appropriate in a given location, and to switch where necessary. A major part of the latest overhaul of the company involved identifying a number of loss-making stores, and closing them down. In a number of instances the company has “changed to a Nicolas format, or they would have been closed otherwise”.

There is, of course, much work to be done before Oddbins can truly be considered to have reached the dizzying heights of its former glory, but it is clear that the chain is moving in the right direction. With its bold anti-discounting stance it has set itself aside from the pack, and there is every chance that increasingly cynical consumers will buy into a concept that is hinged on honest pricing. And if it manages this objective, pushing up value along the way, Oddbins will surely become the darling of the trade once again. 

Own-label goal
The launch of Oddbin’s first own-label range marked a major new direction last year – and the presentation made clear the confidence that the company has in its brand name. The red and white bottles bear a large and unmistakably bold label, and the selection was supported by significant point-of-sale merchandising under the strapline “If we didn’t love it, we wouldn’t put our name on it”. With over 750,000 bottles of the £3.99 wine sold so far, it appears that consumers “love it” too, and Gadsby reveals that Oddbins is in the process of taking the concept to the next level.

The Oddbins own-label range will be expanded this summer with the launch of six classic new wines: Chablis, Sancerre, Châteauneuf-du-Pape, Bordeaux, Burgundy and Pouilly-Fumé. “We know that consumers like and respect the Oddbins name so we can use this – in particular to drive footfall. The focus will be on classic wines; we will have the best value Chablis on the high street.” Depending on the success of the next stage of the roll-out, Gadsby says the company may consider extending the concept further with own-label Pinot Grigo, Chianti and Rioja wines. “We’re analysing the success that we’ve had with the red and white and seeing what else we can do with the concept.”

© db May 2007