Independents: Looks and personality

In their ongoing – and losing – battle with the supermarkets for market share, independent wine retailers need to work much harder to emphasise their unique charms. Gabriel Savage takes a look at how independents are fighting supermarkets on size, and each other on differentiation.

Remember when First Quench went under? It was mooted that all those abandoned shops on the UK high street might offer just the opportunity for budding entrepreneurs to create a new generation of independents for a consumer base apparently weary of the big-brand blandness of supermarkets.

While 14 of the top-performing Wine Rack stores in the South East were snapped up early on by LCL Enterprises, little has since been heard from that corner. Indeed, at the time new owner Laki Christoforou commented: “We don’t need to make major changes to the business model.”

A further 34 stores were picked up by northern chain Rhythm & Booze, but once again, these sites were selected for their ability to trade on high footfall locations and have simply been incorporated into their owners’ cheap and cheerful business proposition.

For those who look to the independent merchant to provide a more bespoke and charismatic wine-buying experience than the fiercely competitive but largely mainstream territory cornered so successfully by the supermarkets, neither of these developments suggests a renaissance for the sector.

By March this year, administrator KPMG was still struggling to find anyone else prepared to match the £10,000 per store bid it was seeking and it’s easy to sympathise with this reticence.

However sentimental we may remain about small, local services, the temptation of convenience offered by supermarkets has already swept in its wake thousands of butchers, bakers and newsagents.

When you factor in the healthier margins, friendlier taxation, and general absence of scaremongering about their product, not to mention the relative portability of sausages, cottage bloomers and stamps, the uphill struggle faced by wine merchants suddenly looms even steeper.

According to the most recent Nielsen data, the independent sector currently represents 9% of the UK’s total £14 billion annual off-trade sales. This figure sounds fairly impressive until you realise that it includes convenience grocery stores as well as the wine and spirits specialists.

It’s not that anyone’s suggesting UK independents are likely to steal a huge chunk of supermarket wine sales anytime soon, but there certainly ought to be room for them to carve out a big enough niche to make a stable living without threatening the big players.

Fingers crossed then for Tivoli Wines, a new independent merchant in an upmarket corner of Cheltenham, which has indeed risen from the ashes of a Wine Rack.

With a promised focus on smaller producers, particularly from France, New Zealand and South Africa (co-owner Kai Horstmann’s mother owns a vineyard in Stellenbosch), a £20,000 refurbishment to brighten up the interior and an emphasis on encouraging tasting, it will be interesting to see if this appeal is strong enough to tempt local shoppers away from the supermarket aisles.

Reward and recognition

In a bid to recognise and support the role performed by the independent sector, two years ago the International Wine & Spirit Competition established an award specifically for this category.

IWSC competition director, Frances Horder, outlines the motivation behind this initiative, saying: “The most powerful way of communicating about the world’s greatest wines and spirits is by word of mouth, and no-one is more effective at that than enthusiastic independents.”

While multiples have the marketing budget to communicate their own strengths, smaller players can struggle to make their voice heard, but Horder explains: “This award gives independents an opportunity to tell their local community how well they measure up even at a national level.”

In April the IWSC Independent Retailer of the Year 2010 was announced as WoodWinters, a Scottish merchant set up just four years ago with two outlets in Edinburgh and Bridge of Allan.

Owner Douglas Wood confirms that his customers really do respond to the type of wine which independents are, or should be, so well placed to offer. “I’m seeing more and more that customers are buying wines that are made properly,” he observes, explaining: “That could mean organic or biodynamic, or just sensible viticulture. They’re a little bit tired of industrialised wines and you can see their point because they’re just not exciting to drink.”

Of course, the challenge for independents is not just about getting these wines on the shelf, but persuading consumers to move out of their comfort zone and actually buy them. “I reckon we hand sell at least 80% of our wines,” says Wood, “The idea is that we talk about style first. People probably won’t come in looking for it, but they’re quite happy to  be pointed towards an old-vine Garnacha from Spain.”

This ability to introduce consumers to something exciting and new applies equally in the affluent corner of London where Roberson is located. “You’ll get a different range of products from us than you’ll find even in quality supermarkets,” promises shop manager Joe Gilmour, adding: “We offer the harder-to-find stuff, stuff people can’t find anywhere else and those are often wines that do need to be explained. We also have a focus on providing older vintages, that’s one thing Waitrose can’t do.”

On this basis, Roberson will by and large delist any wines which appear on the shelves of the multiples, although Gilmour notes that, thanks to the size of producer the company tends to work with, this situation rarely arises.

To read the feature in full, see the August issue of the drinks business.

Gabriel Savage, 23.08.2010