In the Magazine

Slurp’s Wine Online

21 June 2012 By Patrick Schmitt

There is a British revolution taking place on the internet as Slurp’s Jeremy Howard takes wine retailing to the web.

IN A MONTH when the global wine trade turns a little more attention to the UK than normal – you can blame the London International Wine Fair – it seemed important to pick out a British- based drinks retailer that’s bullish about its own market. And having considered a range of operations, it quickly became apparent that one business stood out for its upbeat outlook. This was confirmed by an interview with its CEO, who said that his office was a sea of smiles and, referring to the overriding sentiment about British retail, stated, “It doesn’t all have to be doom and gloom”.

The person commenting was Jeremy Howard, and the business is Slurp, an online retailer founded in 2004 which specialises in wine, but now has a beer and spirits offering too. It’s a venture thatdisplays a ceaseless urge for expansion and only last month added a further site for a new country, complementing its current portals for the UK and Asia.

Interestingly, this extension is not for an emerging market such as Brazil or fast- growing wine consumer like the US, but France, although we’ll consider the thinking behind this later. For now, let’s turn to the bedrock of the operation: slurp.co.uk. The British business was actually founded by Paul Mitchell and Nico Sunnucks eight years ago, although the Slurp of today really began in 2006 with an investment from Aspiration Capital Management.

Jeremy was CEO at this company, and its injection of cash catapulted him onto Slurp’s board, while the money was instrumental in building “the most sophisticated e-commerce platform for wine in the UK”.

Two years later this was complete, at which point, as 2009 began, Jeremy joined Slurp full time as CEO. Why did he leave behind his former career in finance? “It became obvious that Slurp was a huge opportunity,” he states.

Today, despite trading throughout the recession, and witnessing the contraction in high street drinks retailing in the UK, he’s still “extremely positive.” While speaking of the total market he admits, “the overall pie is not really increasing”, he stresses that, “online wine sales are growing between 25 to 30%”.

Such expansion he ascribes to a “generational shift” as the young wine consumer ventures online. As a result, the UK is experiencing a move away from thehigh street, and also, Jeremy says, a stalling in the momentum of the multiple grocers.

“Tesco and Sainsbury’s are not growing at the rate we are,” he says, pointing out, “The consumer online wants a focused experience, not a supermarket experience.” He then adds, “We don’t fear the supermarkets.”

So what does Slurp offer that neither the supermarket nor high street wine merchant can provide? There is the convenience of ordering from your desk and having a heavy, fragile product delivered straight to your door. Also, dedicated wine websites such as Slurp allow shoppers to find out more about the diverse world of wine than you might discover in a supermarket, but without having to enter the “intimidating” environment of a specialist store.

“For the vast majority, going into wine shops does not appeal: they might not always know how to pronounce wines and they don’t want to feel inferior,” records Jeremy.

Continuing, he says, “The UK wine trade mistakenly believe you need a physical person to explain everything, but the current generation doesn’t think like that, they want to go online to get the information themselves.”

But Jeremy is adamant the retailer should not act as a wine commentator. “We are wine retailers, we’re not trying to be critics… if a retailer sends you something with their own comments they are scarcely disinterested. And a lot of merchants have an exaggerated view of their own importance,” he explains.

Instead, Slurp follow the press reviews closely and tries to buy up large quantities of those labels recommended in newspapers and magazines, before promoting the wines alongside independent endorsements. He cites a particular English sparkling wine offer as a good example. “When the Nyetimber Classic Cuvee 2003 came out top at the world sparkling wine championships in Verona, it was written up in The Guardian. We got an early look at it so we bought all the Nyetimber we could find, which was quite a lot, and then went to our customer base and said ‘Nyetimber is going to be really exciting’, and people responded dramatically.”

EFFICIENT OPERATOR

Turning the discussion from the techniques involved in selling wine online to the operational realities of managing a web-based business, Jeremy stresses the significant efficiency savings compared to the cost of running a high street store. “We don’t have anything like the same level of overheads of Oddbins for example because we have no store network, while all our warehousing and offices are at the same base, and we negotiated a fantastic lease right at the bottom of the market. We also own all our software outright, so we can cut out the cost of maintenance fees… We are profitable.”

Furthermore, Jeremy believes that Slurp’s margins will increase as the operation expands and it purchases even more wine direct from producers. Already supplying over 25,000 customers, Jeremy ascribes Slurp’s success to the fact “we are unashamedly demand led: we sell what people want to buy.” Looking elsewhere, he adds, “This seems to be a strain in wine retailing, and people go out of their way to find obscure products and force them down people’s throats, which doesn’t happen in any other industry.”

Expanding, he says, “We don’t try to be too clever, we try to get behind wines written about in the press but which are not available everywhere. For example, although we do sell Cloudy Bay we have had a huge success with [former Cloudy Bay winemaker] Kevin Judd’s Greywacke – that’s the kind of wine that has done really well for us.”

Another aspect that’s crucial to the Slurp model is the flexibility in order sizes. Unlike the majority of online wine retailers, Slurp allows customers to buy in any quantity from one bottle upwards. “It’s 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,” he states.

Then there’s the range. Jeremy describes Slurp as “the largest stock holding internet retailer”, with 6,500 products available to buy through the site and 1,500 lines in its own depot available for next day delivery. Yes this is some way short of everywine.co.uk, which offers, it claims, 36,000 wines online (which come from a variety of sources), but as Jeremy points out, “Our range is six times the size of Majestic’s.”

As for the Slurp customer, Jeremy speaks of a target age group of 25 to 40, and an attempt to “capture the buyer as they begin their love affair with wine… we are trying to excite the younger end of the market.” Elaborating on this issue, he says that a typical slurp.co.uk user would be “a young professional based in southeast England with a reasonable knowledge about wine”.

He points out that the online retailer is developing a customer base for the future. “Slurp is about the wine market in five to 10 years time,” he states, explaining that the 25 year-old consumer who is attracted to Slurp today will be at their “spending peak” when they are 35.

But how big is the online wine market in the UK? Jeremy estimates that it accounts for 10 to 15% of the £12 billion total – or £1.2 to 1.4bn. This is shared among many operators, although he points out that “very few merchants are really focused online, and its amazing to me that even people like Majestic are still pursuing a store opening policy… there isn’t evidence to support the bricks and mortar model”. Indeed he adds, “In my view, it’s just us and Naked Wines who have really invested properly in a dedicated online focused operation like Amazon or eBay.”

But returning to the subject of moving into markets outside the UK, Jeremy explains, “We have spent so much building this online platform we now feel we can take it across the world and what I have in mind is a family of brands that are all called Slurp but tailored to the local market.” Interestingly, he compares building an online wine business in Britain to “doing all your training at base camp at Everest” – the UK online wine market is so competitive he says, “if you can make it here you can make it anywhere”.

He has already built up Slurp.asia – based in Hong Kong – over the course of last year following its launch in November 2010, and describes the response to the online retailer as “phenomenal”, and “more successful than I dared hope”. Then in April this year Jeremy announced the advent of Slurpvin for France, while he also told the drinks business that by the end of May he hopes to add a site for Belgium, followed by Holland in June and Germany in “Q3”.

Speaking about Slurpvin, which will focus on wines from outside Europe, he says that New World wines weren’t available in France before the emergence of this latest Slurp brand extension. “If you were to look for Greywacke online in France, you wouldn’t find it. It’s a globally renowned wine and yet not available. Discovering that was the moment I realised Slurpvin would work – it seemed absurd that a wine from an iconic producer such as Kevin Judd was not available at all. If you want domestically produced wine there is a lot to choose from, but step outside that, and the selection drops off a cliff, so we felt there was a genuine gap in the market.”

Furthermore, Jeremy is convinced that there is a latent demand for such wines in France. Not only does he note that slurp.co.uk is already selling cases of New World wines to French addresses – with 100s, if not 1000s of customers – but he says, “There’s now an internationally mobile population in France, travelling abroad and reading the international wine press, and the French consumer of tomorrow will not behave in the way their parents did.”

There’s also, he adds, “a big community of people in the wine industry in France and they don’t want to drink the wine they make every night, but want to see what a Pinot Noir from Oregon tastes like”. Summing up, Jeremy reveals there are three key customers to be targeted by his new French site selling New World wines: a younger consumer, an internationally mobile population and a winemaking community.

RESTLESS COMPANY

However, it should be added that not all Slurp’s attempts to expand have gone according to plan. “We are a restless company and always looking for new opportunities,” says Jeremy, but some of these, such as an attempt to launch separate site for fine wine, then beer and finally spirits appear to have stalled. Nevertheless, all three of these add-ons can be found within the slurp.co.uk offer. Then there are the flash sales – short-term offers which have proved popular in the US and were put into practice by Slurp earlier this year.

Jeremy records, “We didn’t find flash sales to be as effective as we had hoped.” Nevertheless, he hints at the fact he will unveil a new site for this type of fast- moving online stock shifting exercise in response to other retailers moving into this sphere – most notably Lot 18 and, he predicts, Naked Wines. Jeremy’s flash site won’t be Slurp branded however.

But whether it’s on- or off-line, if there’s one aspect to retailing in the UK which unites all operators, it’s the need to discount. “The problem we all have as wine retailers,” admits Jeremy, “is that the British consumer is addicted to deals… and sometimes I feel that if you haven’t got a deal, you haven’t got a chance.”

So although this retailer is refreshingly optimistic about selling wine in the UK, it is also well aware of the realities for success – you need a compelling promotional offer. But this too, Jeremy says, gives the online operator an advantage. Citing the success of Groupon, he stresses web-based retailers’ chance to benefit from a discount culture. Indeed, he forecasts a raft of “innovative” online propositions engineered to serve this desire for deals. In other words, don’t expect the price cutting – or online retail competition – to curtail.