New owner sees no need to alter Wine Rack model

Wine Rack’s business model does not need to change in order to be a success, according to the man behind the purchase of 14 of the top-performing high street off-licences.

Venus Wine & Spirits Merchants’ chairman Laki Christoforou believes the fault for the collapse of First Quench Retail, which used to own the Wine Rack brand, lies with other brands in the FQR portfolio such as Thresher’s and Victoria Wine.

Christoforou also confirmed to the drinks business that LCL is expected to purchase 11 more Wine Rack stores in the next three weeks, all in the south east of England, which will begin trading in early 2010.

Christoforou said he is confident the newly stripped-down Wine Rack brand can begin to grow again under its new management.

“Wine Rack was not the problem,” he said. “The group as a whole was failing, but turnover in Wine Rack was high, so we don’t need to make major changes to the business model.”

Despite the failure of the First Quench business model, Christoforou says it’s impossible to challenge the supermarkets on price. “We can’t undercut supermarkets, and we don’t want to,” he said.

“The unique selling point of Wine Rack is that it is a destination store. You can’t ask someone in a supermarket the difference between two bottles of fine wine – they’ll just laugh and point you to the checkout.

“Our store managers are all trained in wine, and that is where we will get our market share – from people who want a personalised service.”

Christoforou also plans to stock a greater selection of fine wines. All stores are to be equipped with a temperature-controlled cabinet for the storage of a selection of high quality labels.

Furthermore, the intake will be altered from the current ratio of 60% branded wines to a greater emphasis on unbranded wines and smaller vineyards.  “Working with smaller growers will allow us to work more closely with suppliers, and give us a higher standard of product generally,” he told the drinks business.

The chairman confirmed Wine Rack will not go down the convenience route other drinks retailers have explored, selling goods such as snacks and confectionery in order to draw in more passing trade.

“It’s not what we’re about, and in the end it would be damaging to our image and the service we provide,” he said. “We want to keep the emphasis firmly on selling quality wines.”

Christoforou said the reason Venus was particularly attracted to the Wine Rack brand over the others formerly owned by First Quench, apart from the difference in profitability, was the range of wines stocked.

“Wine Rack sells nearly three times as many wine products as Threshers,” he said. “This provides us with a good chance to compete, as we have a niche that the supermarkets do not.

“Wine Rack and Threshers were both part of the same company, but essentially they were following two completely different business models. We estimate that every Wine Rack store is equal to four Threshers in terms of turnover.”

A new company, LCL Enterprises Ltd, has been set up to run the 14 Wine Rack stores , all of which are located in the south east on England. They are currently the only survivors from the Wine Rack chain which previously consisted of 370 stores nationally.

Christoforou – who also runs independent wine and spirits store in London, Gerry’s – will head LCL Enterprises and working with him as vice-chairman will be James Rackham, chairman of Emporia Brands.

Richard Fraser, 09.12.2009