What went wrong at Orbital?

One of Britain’s most innovative wine agents, Orbital, has gone into administration. With novel brands such as Camden Park and Stormhoek, not forgetting a wealth of experienced industry figures at its helm, including ex Asda buyer Nick Dymoke-Marr and former Western Wines director Mike Paul, many in the trade are wondering, what went wrong?

It appears problems at Orbital began after a delisting of its flagship South African Stormhoek at both Waitrose and Sainsbury’s. Buyers in both supermarkets dropped the wine when they discovered that rival retailer, Tesco, was selling the brand’s Sauvignon Blanc and Pinotage at £1 cheaper – £4.99 compared to £5.99 elsewhere.
Reduced distribution and a resulting sales stagnation for Stormhoek, which accounted for the majority of Orbital’s business, meant unsold stock and cashflow problems for the company. An application to the Royal Bank of Scotland for an extended overdraft facility was rejected at the end of last year in light of the credit climate, and the agent was forced to call in Menzies Corporate Restructuring to take over the company’s affairs. Menzies has since appointed former Seagram and Oddbins boss John Ratcliffe to help with the disposal of assets, which include Orbital Wines, California Direct and Bulk Brokers International. The South African production business, part owned by Graham Knox in South Africa, is not affected.
A number of buyers are said to be interested in buying the Stormhoek brand, famed for its original viral marketing campaign instigated by cartoonist and blogger Hugh MacLeod. Another of Orbital’s wines, Australia’s Camden Park, distinguished by the bull on its label, is also attracting interest. Although yet to reach 15,000 cases, the brand was soon to source wine from Argentina as well as Australia, and high hopes were held for its future performance.
Overall, Orbital Wines was renown for achieving widespread media coverage for its brands despite a low marketing budget. However, it has been suggested that the company could have benefited from being leaner. Notable is the number of high-salaried directors at the top of the business, including the recent addition, Mike Paul.
Stormhoek’s “Cartoon Series”, which has been renamed “Sketch” will still feature on the shelves of UK supermarket Asda in time for Valentine’s Day.

Patrick Schmitt, 09/01/08