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‘Consolidation’ likely to come to the UK given current challenges
Armit Wines MD Brett Fleming warned that there may be consolidation to come in the UK wine industry, after describing the current environment “the most challenging time he can recall in more than 35 years in the wine industry.
Speaking to the drinks business at last week’s portfolio tasting, he said that he was “not quite sure what the future holds” in the current climate in the UK.
“I am an optimist, I always have been and I think the glass is always half full, but there’s no question where the headwinds that we’re facing are unprecedented. It is like nothing I’ve ever seen in my career,” he said. “It is unprecedented and I think there’s going to be consolidation as a consequence.”
“All of the challenges – operational costs and taxation and the politics and the EPR – how many more hits do we need to take? And I think, sadly, companies will fall under.”
Under these challenges, he said he was proud that Armit remained in profit, “but I’m not going to lie, we’ve had a challenging year, and my results this year won’t be as good as I had hoped – and 90% of that is down to the market realities.”
Peak taxation
We have, he argues, reached “peak taxation” with a government “that simply isn’t listening to our industry” and doesn’t want to hear what the reality is as the “ridiculous commentary” that the duty changes are creating a fairer, more simple system “is just not true”.
He points out, for example that he’s had to employ somebody specifically to adjust the operating systems to able to recognize the different duty rates, “and it’s going to change every year with every one of my wines if the wine itself changes by point five degrees.”
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However, as Fleming continues, “there’s no point moaning about it. It’s the reality, so we have to find ways to cope with it.”
“We’re doing what we can to adapt, particularly onboarding new customers, which has got to be one of our core focuses. And I’m thankful that we have a portfolio, and particularly from the support of the suppliers, that attracts a number of customers – the trick is what tare he bright lights in our portfolio that bring customers into it.? How do we then ensure that the entire portfolio of Armit is provided to all of those customers over the over the course of this?”
He also emphasised the need for collaborative partnerships with customers, stressing the importance of long-term planning.
“Fundamentally, I believe the way we as a company will cope is to build genuine collaborative partnerships with our customer base,” he said “I don’t want Armit to be a transactional business – we have to be one that really drives the relationships that our growers have with their vineyards, the relationship that that is then articulated through our representation of them. We have to find ways to really illustrate that with our customer base.”
The best way to do that is by having longer term collaborative plans and understanding what each customer was looking for, not just for tomorrow, but in two, three, five years’ time,” he added. “And then build strong commercial plans that are collaborative in their approach.”
“I believe that is one of the things as a distributor that we need to be doing. We need to be illustrating to our supplier that we add value to their production by our representation and the hence that word partnership. And in a true partnership.”