Are independents losing their shine?
Independents remain the sector with the biggest potential for wine suppliers – but they are no longer seen as the unmitigated success story they were a few years ago, according to OLN's exclusive Wine Report poll.
Agencies are even more focused on the top 500 or so outstanding wine specialists than they were last year – 71% are targeting them, up from 65% and more than double the next most popular target, convenience stores.
“I think their success is over-stated,” says MWH Wine Merchants owner Mike Hall.
“Independents are a qualified success,” agrees Richard Cochrane, managing director of Felíx Solís Avantis UK. “As a niche it is doing brilliantly well, but it is a niche.”
Less specialist off-licences in particular face a challenging future, with just 31% of suppliers seeing them as a target market, and some predict they will continue to decline.
“This category will have a hard job competing with the ever-growing presence of the convenience store,” says Pol Roger managing director Nick James.
Winestars World founder Catherine Monahan says: “The smaller ones will go out of business, the bigger ones need to watch the grocers opening next door. Some grocers will buy independent shops for their express offering, and independents need to offer non- wine as part of their offering.”
Matt Douglas, managing director of Sogrape UK, says: “There is still a lot of consolidation to happen in this area, however it does have a future and good operators will succeed.”
Some suppliers are finding it difficult to meet the demands of independents who want to compete on a level playing field with supermarkets in spite of all the extra logistical costs involved in working with them.
The biggest barrier to trading with indies remains small minimum drops, but distrust of big brands, logistical issues, slow payment and poor rate of sale all pose challenges for suppliers.
They also criticise retailers for their unwillingness to try new lines and for infrequent range reviews.
Sogrape’s Douglas says: “The biggest issue is that some independents demand trading terms similar to larger accounts, such as product exclusivity, small drops and longer payment, but also want the cheapest price. All aspects cannot be provided at the lowest cost for such relatively small volumes – the market just does not work that way. But of course the retailers need a price to compete. It is a difficult conundrum.”
Winestars’ Monahan says: “They need to figure out how to get new customers in their stores, and these are also grocery customers – they need to lose their egos about having grocery customers come in and need to offer entry-level wines as well.”
Nik Darlington, managing director of Red Squirrel Wine, says: “The biggest challenge trading with independents, and especially in diverse regions of the UK as we do, is hitting the required price points in the off-trade for genuinely interesting new wines. The largest distributors and brands still hold sway in this respect.”
Another supplier says: “The cost to service the independent sector is very high and the gatekeepers are all looking for something exclusive or unique to them, which can often be commercially unviable.”
Suppliers would like to see independents be more open minded about their ranges, and more willing to try new things.
“Most independents would be sensible in limiting their supply base to avoid unnecessary extra work, but this can mean they won’t necessarily be stocking the best quality or value wines possible,” says De Bortoli business development manager Mark Wilson.
Despite these quibbles, suppliers remain focused on doing the best for independent retailers.
“The top independent wine merchants bring an interesting offer differentiated from the mainstream,” says Les Grands Chais de France UK director Tim North. “They should focus on an interesting range of wines that is not available in supermarkets. For the less specialist outlets wine is just part of a convenience offering. Here mainstream brands give consumers a reassurance of quality.”
Pol Roger’s outgoing managing director Nick James says: “Independents can offer a more exciting range than, say, the supermarkets, but they have to work hard to achieve a sustainable level of profit. Enthusiasm and close working between supplier and customer is therefore vital.”
Retail buying groups and training are key to independents making the most of their businesses, and one supplier recommends a focus on English wines, where retailers can learn at vineyards without having to travel abroad.
“Wine specialists will continue to develop as the supermarket specialisation declines – with limited choice, consumers with any passion will move over,” says De Bortoli’s Wilson.
“The future is bright where these retailers offer a great range and knowledgeable advice,” agrees Toby Sigouin, wine buyer for Inverarity Morton and Forth Wines.