“It’s an example of the en primeur system breaking down completely”

As a wine lover and a trader, Slurp CEO Jeremy Howard breathes new life into online fine wine retailing

Slurp. It’s used to describe the sort of noisy drinking that might characterise a rowdy night out; a dinner that’s degenerated into a party, or an attempt to consume hot soup. However, it’s not a word one would normally associate with selling fine wine.

And yet the link between this term and the likes of Lafite has become commonplace as online drinks retailer Slurp has moved rapidly and craftily into this high-priced sector. In fact, 30% of the internet-only company’s total global revenue is from fine wine, while its Q1 sales grew 261% on the same period in 2010 due to a January sale on slurpfinewines.com and Chinese New Year-driven demand through its Slurp.Asia division.

But it was the company’s ability to shift substantial quantities of Rieussec 2010 over the summer which highlighted Slurp’s new-found significance in the fine wine sector.

CEO and former Deutsche Bank trader Jeremy Howard explains the background to the sale success. “In order to secure allocations of Lafite, négociants take large parcels of Rieussec [which is part of the DBR Lafite portfolio], which they then sell onto the UK merchants, who don’t have a use for Rieussec at the price they are supposed to sell it, so they dump it anonymously on the Liv-ex exchange.”

So, while Rieussec was released onto the market at the end of May for €48 (£42) per bottle, or over £500 per nine-litre case, by July it was selling for as little as £200 on liv-ex.com. Once Rieussec hit this low price point, “we bought very large numbers”, records Howard – which explains Rieussec’s position as most traded label by volume on the Liv-ex exchange during July.

With the iconic Sauternes snapped up, Slurp then offered Rieussec to its customers for £250, and although Howard is reluctant to give an exact figure, he does boast: “We sold hundreds of cases.”

Importantly, the deal, believes Howard, has widespread implications for Bordeaux pricing. “It’s an example of the en primeur system breaking down completely,” he says. “The château and négociants tried to control the price but failed in this case.”

In essence it’s increasingly the market, not the châteaux, that set the price, and, like 2009, he sees cru-classé Bordeaux continuing to trade at a discount to initial release prices, meaning, next year: “Customers will be saying why buy in July when by the end of the summer the wines will be trading at a lower price?”

Whatever happens, one can be sure that Howard will be quick to benefit. “We look at the market a lot and we look at it with a financial analyst’s eyes – we are always looking for anomalies and things our customers can profit from.”

Indeed, Slurp itself is an operation Howard plans to profit from having invested in the business in June 2006 and then again in January 2009, when he became full-time CEO.

Explaining his switch from banking to online wine retailing he says: “I’m a wine lover but I got frustrated by the options available to me… I, and most of my friends had an idea of what we wanted to buy – we wanted to buy the wines we read about or drank in restaurants – but there was no opportunity to buy a range of these premium wines on a good online platform.”

His decision to take the helm at Slurp, while simultaneously increasing his investment, was because “it became obvious that Slurp was a huge opportunity”. With the injection of cash the online retailer was able to expand the range to 6,500 products, and, adds Howard: “We are increasing all the time, although not as aggressively as we did – our range is already six times the size of Majestic’s.”

As for online competitor everywine.co.uk, which claims to be “the internet’s biggest wine warehouse with 36,000 wines to buy”, Howard is quick to point out a difference: while Everywine lists wines from a range of sources, Slurp holds over 1,500 lines in its own depot for next-day delivery, “and where we don’t we can get hold of it within a day or two through our integrated supply chain.

“We present ourselves as the largest stock holding internet retailer,” he explains. Then there’s the flexibility in order sizes. While most internet retailers, including Everywine, specify a minimum amount, Slurp allows customers to “buy in any quantity they like from one bottle upwards”.

Explaining this philosophy Howard says: “So many companies are arranged around what’s convenient for them, not the consumer, and it’s really a nonsense to buy in sixes or twelves – if you buy a book from Amazon you’re not told you have to put another five in your basket… we are trying to create the experience of a wine shop online.”

As for promoting the business, Howard says: “We’ve spent nothing on internet marketing, we are listed on Wine Searcher and that’s it… we haven’t had to because we have so many products and they are SEO [search engine optimised] very effectively. These attract a lot of customers without blowing money on effectively buying traffic.”

But to return to the subject of fine wine specifically, Slurp’s success is a sign of the suitability of highly priced vinous products to the online medium – a view echoed by Tesco’s head of BWS Dan Jago, who has expanded the supermarket’s fine wine web range, and records a growing number of high-value orders.

Certainly Howard is convinced of the prospects. “We are a very restless company; we are always looking for new opportunities and fine wine is a massive opportunity.” Continuing, he hints at Slurp’s fine wine future: “I was a trader and I love the idea of trading fine wine and allowing the customer to trade too, so we are building the internet tools to allow them to do this.”

Nevertheless, he forecasts, “more exciting is our international opportunity – we have spent so much building this online platform and now we feel we can take it across the world… what I have in mind is a family of brands that are all called Slurp but tailored to the local market.

“The UK is the most developed and competitive online wine market in the world, so building an online wine business in the UK is like doing all your training at base camp at Everest – if you can make it here you can make it anywhere,” he adds.

db has already reported extensively online about the march of this web-based business, be it the success of Slurp.Asia, the upcoming launch of Slurpvin for France, as well as the business’s expansion into beer, and plans to move into spirits too. In each case the online operations are characterised by an extremely broad range guided by what the opinion formers are promoting, with offers incorporating the critics’ views, scores, or the drinks media’s major awards.

“It’s about trying to get behind wines written about by the press, but which aren’t available everywhere,” he sums up. But what’s his experience of retailing in the Far East?

Interestingly this appears to fit the Slurp concept too. “We have noticed through Slurp.Asia a much more discerning trading pattern as the Asian market is getting much more sophisticated,” he says, adding: “It is becoming more focused on scores and years; it’s developing a more Western perspective on the wines.”

And hence, more sensationally, Howard states, “I think Lafite’s dominance is over.”