Supermarket wine ranges ‘like baked beans’, Majestic boss says

Majestic boss Rowan Gormley has blasted the increasing commoditisation of wine ranges, saying they are becoming “more like baked beans and less like wine”.

Majestic CEO Rowan Gormley

Speaking to the drinks business after announcing a new three-year strategy, Gormley said Majestic would continue to sell an “exciting and adventurous” range of wines that differentiated it from other retailers in the market.

“The ranges are becoming more commoditized, and fundamentally exactly the same thing is for sale at the same price everywhere,” Gormley told db. “The market is polarizing. Aldi and Lidl are challenging it. Tesco has shrunk its range and they have all pretty much all got rid of personal service designed to help the customers.”

This gave Majestic an opportunity to occupy a sweet spot among the seismic changes happening in wine retail, he argued.

“Frankly, the more the supermarkets pile in to compete with Aldi and Lidl, the more they leave space available for us. Our focus is to do what we do best and do it better than anyone else, and that is having an exciting and innovation range, and having great people in store who can maximize and sell our wines.”

“We don’t need to reinvent wine retailing – there is not rocket science involved,” he said. “So the strategy today is very much the same as what I said six months ago. The two big differences are that we’ve got the team in place and we can actually see that it is beginning to deliver results – so I’m encouraged.”

The three-year plan announced on Monday is hoped to boost sales to £500 million by 2019, and will see the retailer scrap plans to open an additional 100 new stores this year, having revised its 330 store target to 230 (it’s UK estate currently stands at 211). Gormley said would save around £6m, which can be used to boost new customer recruitment through improving stores, investing in the range and applying techniques employed by sister company Naked Wines.

The new md of the UK wine business, John Colley, who joined Majestic in September after 20 years working for retailers including B&Q, Screwfix and Dutch DIY chain Praxis Netherlands, would be an asset in implementing “retail basics” for Majestic, Gormley added, with other planned changes including moving Majestic’s IT system to the same platform as Naked Wines and using the online wine retailer’s techniques to boost customer numbers.

“These are disciplines we know very well,” Gormley said.

Although he admitted there was still a lot more work to do, he insisted the transformation was well underway, and he was encouraged by the progress already made. The six bottle minimum was scrapped last month, and Majestic’s new own-label range, Definition, has become a £1m brand in less than three months.

“We are already underway so the bottom line is that I am excited,” he told db. “Trading in the first half has been good, sales are up, profits are up, cashflow is up. Naked Wine is profitable six months ahead of plan, and the Majestic core business – even in growth in mature stores.”

Another major area of focus will be to boost the B2B side of the business, Gormley said. “We are confident there is more growth in the market as there is a gap between the cash & carries and the Matthew Clarks,” he said, adding that Majestic plans to leverage its 200 delivery depots and staff knowledge to boost this area. “They’ll are dealing with people who know about wine and can help with the wine list – that is a great asset and we will be focused very heavily on that sector of the market as we believe there’s a lot more growth to come out of that.”

On Monday the wine retailer reported “encouraging” progress with sales up by 36%, but the knock-on effect of its £70 million acquisition of Naked Wines last year saw pre-tax profits slide by 50%. Total revenue, excluding Naked Wines, was up 6%, while Naked Wines saw strong growth with sales increasing by 35% year-on-year.