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PROFILE: Networking opportunity
d=”standfirst”>When the logistical and distribution know-how of 3663 Foodservice joins forces with the quality wine offering at Bibendum, the result can only be good news for the industry. Ben Grant reports on the launch of Vivas
PICTURE A distribution network with 1,200 vehicles on the road, a logistical giant whose arteries reach to the furthest corners of the UK serving over 16,000 clients and 50,000 kitchens. Given the scale of its business, 3663 Foodservice has a surprisingly low profile, but since its formation in 1999 it has grown at a staggering rate: its fleet of vans can be seen unloading outside restaurants, pubs, hotels and canteens the length and breadth of the country, notching up sales of £1.5 billion along the way. We all recall the ad campaign about the lager that claimed to refresh the parts that other beers can’t reach; 3663 is the firm that can supply the bars and dining rooms that other distributors cannot manage (or afford) to reach.
Add a quality wine list to this network and the potential is frankly astounding. The UK on-trade wine supply has traditionally been dominated by two big hitters, but on 1 April that number increases to three with the launch of Vivas, a new set up that combines the logistical magnitude of 3663 with the vinous know how of Bibendum.
The food service giant has previously stocked a small range of wines that generated a modest volume of sales focused around the festive period. According to managing director Alex Fisher, wine has been identified as a key growth opportunity that “we want to become a significant part of our business going forward”. However, the company was insightful enough to recognise that the nuances of the segment meant that it was prudent to recruit the services of an expert. “We didn’t want to just be grocers trying to sell wine, we wanted a dedicated team of true wine experts.” It was an enlightened move and having canvassed the opinion of a host of contacts and customers, as well as conducting a detailed analysis of the market, he explains that Bibendum stood out as the ideal choice of partner. “We looked at the credentials and the culture of their business and it fitted our needs perfectly,” he explains. “Almost all of our key clients advised us that they are experts in developing the wine category.”
Last autumn Fisher made an approach and, as Bibendum managing director Michael Saunders puts it, “we were certainly grateful to receive the call”. He explains that very little thought was needed to know that it was a good move: “Their reach is quite unbelievable … and you can’t over-estimate how efficient their business is, it really is quite extraordinary and puts most wine distributors to shame.” Anecdotal evidence from customers also points to thefact that, compared to its competitors in the food services business, 3663 offers an impressively personalised service for an organisation of such scale.
So on the one hand you have a distributor with an unparalleled route to market and on the other a wine merchant with a proven pedigree for creativity and innovation: the synergy between the two partners makes it a truly compelling proposition. Crucially, says Saunders, 3663 recognises the need to heed the expertise of a wine expert; as he puts it, “Alex and his team have been remarkably interested in the smaller, niche way of doing things,” Taking a view from within the trade this may sound obvious, but it is by no means a given among such a massive organisation with limited experience of the sector.
Economies of scale
Given the growing popularity of wine, there is no doubt that many independent on-trade establishments are eager to offer a quality portfolio to their customers, but the harsh reality is that in many instances this simply does not make financial sense. “It’s amazing how much of the final cost of a product goes into the supply chain rather than on the product itself,” says Saunders. And, unfortunately for many retailers, this is an insurmountable obstacle: if you’re slowly turning over small volumes the delivery charges take up an unacceptably high percentage of the price. The result, in most cases, is a trip to the cash and carry, where the range isn’t exactly going to get your average oenophile hot under the collar.
“The challenge for an independent retailer is significant,” says Fisher. “Because the wine drop tends to be quite small it becomes impossible to make it cost effective.” But the chances are that a 3663 van is probably already going there. With an inventory that ranges from fresh fruit to kitchen accessories and butchered meat to boil in the bag meals, the company can probably make a delivery financially viable no matter how remote a customer or how minimal their requirement. “The advantage to our customers is that they are free to order as much or as little as they like,” he says. A remote restaurant in mid-Wales who only wanted to order a couple of cases of decent mid-priced wine would receive short shrift from most merchants, but with 3663’s network to rely on, not only can Vivas make the drop, it’ll now have a decent selection to choose from.
It’s worth noting that as well as the monetary gains, such efficiency is also environmentally sound, cutting down on needless journeys and taking unnecessary vehicles off the road. 3663 CEO Fred Barnes proudly states, “In terms of resources per kilo of product moved, we are about as efficient as it gets. We don’t move stuff unnecessarily. We’re very focused on that, because it saves us money, and so we are constantly improving.”
The partnership represents a pretty dramatic development for the on-trade wine sector in the UK – but for Saunders perhaps the most pleasurable aspect of the deal is its simplicity. “When you think it through, it’s absolutely obvious,” he says, scarcely able to contain his glee, “this partnership makes perfect sense … It might seem like a radical move, but it’s not rethinking the way that the industry works, it’s just getting decent quality wine out to a much wider market.”
Large organisations are frequently criticised because their magnitude puts a squeeze on smaller operators and results in a reduction in consumer choice. With such a significant share of the UK catering market 3663 has been subject to occasional murmurs of discontent from certain quarters – but when it comes to the new wine offer there can be no doubt that Vivas will increase choice rather than restrict it. “Many of our clients are struggling to get a quality wine supply,” says Fisher. “The existing wine distributors don’t want to target them because the drops are too small and the costs are too high, but we give them an opportunity to compete.” Saunders continues, “they are poorly served at the moment … but we are giving them access to a terrific range of wines.”
21st century offering
Fisher conservatively estimates that Vivas’ sales will generate at least £10m so it’s a significant project, but with a network already in place the personnel requirement has been pretty minimal. Bibendum has a team of just two working exclusively for Vivas, while seven wine specialists have been appointed to 3663’s team – all of whom were recruited internally but have since undertaken extensive wine training courtesy of their Bibendum colleagues. They will lead a team of 180 field sales reps and 300 telesales staff.
In terms of the wines available, the initial list is 150 strong, incorporating virtually all producer countries and a selection from entry level up to Chablis premier cru. The majority of the references are exclusively available through Vivas. “It has been a major exercise in terms of NPD,” says Saunders, with styles, blends and packaging developed specifically. Pointedly referring to the often under-par presentation that all too often dominates on-trade lists, he says, “it doesn’t look like a tired 1970s wine range, it’s an offering that belongs in the 21st century”. The initial range includes a number of branded wines because, says Fisher, “this is what some of our customers demand”. However, it will be updated on a six-monthly basis, and Saunders predicts that as customers begin to understand the quality that is on offer fewer brands will be required. As an added service, Vivas is also offering to help customers to design their wine lists in order to ensure that the presentation is befitting of the product itself.
Currently 3663 carries a small selection of bottled beer and spirits, which generate turnover of £2-3m per year. At this stage it is unclear how this element of the business will develop – it is, says Saunders, “a work in progress”. But it shouldn’t be forgotten that Bibendum set up its own spirits division last year, so it seems more than likely that after the wine business has bedded in this would represent a logical next step.
Winning match
In recent years food and wine matching has become increasingly popular, and this is an area where Vivas is surely uniquely qualified to push the envelope. Every three weeks the 3663 catalogue, Marketplace, is circulated to thousands of kitchens around the country, filled with new products, new meals and new ideas for chefs. The opportunity to complement these recipes and ready meals with appropriate wine recommendations represents an incredible opportunity to extend this trend to a much wider potential audience.
Much has been said in recent years about the democratisation of luxury. A better grade of produce is becoming increasingly available to a growing number of consumers. By accessing a hitherto ignored sector of the marketplace, this partnership will expose a whole raft of new consumers to the pleasure of decent wine – which is good news for consumers, good news for Vivas and good news for the trade.
© db March 2008