Borough Wines changes direction
Borough Wines owner Muriel Chatel was busy wholesaling French wine to the on-trade when Britain was plunged into an economic crisis in 2008. She had been running a stall in London’s Borough Market for six years by that point, but the wholesale arm of the business provided a crucial revenue stream. Suddenly lots of restaurants stopped paying their bills and she needed to change tack, so Chatel decided to embark on an expansion drive.
At the height of its empire, Borough Wines had 10 stores in London and a wine and book shop in Hastings, East Sussex, making it one of the largest independent drinks retailers in the country. It branched out into beer and spirits – producing both as well as retailing them – and it appeared to be the poster child for the potential of regional chains in a post-Thresher landscape.
However, the wheels eventually came off and Borough Wines was bought out of administration in a pre-pack sale worth £58,760 after widening losses caused it to collapse on May 31 this year. The retail estate began to suffer declining turnover and widening losses, and it was forced to close several sites. Borough Wines & Beers was being propped up by equity injections and shareholder loans, primarily from Chalus, Chegaray & Cie.
Trading losses placed Borough Wines & Beers at risk of a winding-up order, and these losses were expected to widen as the stores were no longer making a positive financial contribution to the group. In the end it decided to undergo a radical change of strategy. It is now handing over the final couple of stores to former employees and it will have just one retail outlet going forwards: the stall in Borough Market.
The focus is now firmly back on wholesale and it is aiming to become the UK’s leading supplier of wine on tap. The plan is to have 50% of sales in the on-trade and 50% in the off-trade, while continually bolstering its range.
“I feel like a survivor,” says Chatel as she welcomes DRN to the firm’s new wine-kegging facility, located a stone’s throw from the O2 Arena in Greenwich. “After 2008 lots of customers stopped paying their bills. This made it really difficult for me, and this is when I decided to open another shop.
“We opened Wilton Way and it was incredible. It was such a tiny shop and it became this big thing, because people loved the idea. Something really positive came out of something really negative [the recession]. I see what has happened to us now in the same vein, because in a way we have always been about sustainability and refill. The shops were important, because at the time the on-trade was not necessarily ready for wine on tap, and we loved this sense of being in communities.
“Retail is hard. Retail is going through a tough time. This is when we had to review the business. But it’s great to be able to do it.
“The shops were successful. The first few shops we opened were extremely successful. We could have made it work, but you have to choose what you are about. Retail is risky, because the market is really volatile. We had to look at our identity.
“We are really about wine on tap and sustainability and a sense of community. If we had completely decided to focus on the shops we would have lost that. I’m not sure that the market is right for it. The market has evolved in a way that you have to be really independent.
“We had 10 shops and became not so independent any more. It’s not like I could be in every shop. The future of retail is having the owner working in the shop.”
Chatel insists that she will always retain the Borough Market stall, but she feels she is no longer a competitor to the retailers she is trying to sell her wines-on-tap concept to.
The business is now positioned as a wine-on-tap specialist, supplying high-quality wine in kegs to restaurants, bars and venues, with an in–house cellar tech team providing expert installation services and ongoing support.
Chatel remains the managing director, working with director Arthur De Chalus of Le Havre-based Chalus, Chegaray & Cie, and she has hired Anson Read, former head of operations at Pret a Manger to manage the operations and the after-sales. Borough Wines also provides a unique consultation service for independent retailers, creating bespoke wine retail packages called Borough Wines Corners, targeting farm shops, delis and convenience outlets nationwide.
It sources wines from around the world, transports them to London in bulk and puts the wine into kegs at its facility before wholesaling to the trade.
“Other wine merchants shouldn’t see us as a competitor any more,” says Chatel. “Now we are more of a supplier. The zero-waste aspect of what we do appeals to both on-trade and off-trade. Because we are the only one doing refillable kegs, it becomes a very slick operation. There is no glass to dispose of, no packaging, no waste.”
The firm claims that each 24-litre keg saves 16kg of glass being produced and disposed of, while less packaging and transport means a smaller carbon footprint. It will visit anywhere in the country and refill the kegs.
“Technology and logistics have evolved so much that we can collect from anywhere,” says Chatel. “We are bringing something that has happened on a big scale on to a small scale. It’s hard to take a big-scale concept and make it work on a small scale. We want to work with independent winemakers that don’t normally do bulk, so we had to train them to work the way we wanted to. Now we are at a point where we are ready to go.
“Because of the refill model, shops are a lot more approachable than they were 15 years ago. People don’t feel intimidated. It puts wines into a convenience market, which was needed.”
It has 20 retail customers for its Borough Wines Corners offering so far. They take a range of 30 to 50 bottled wines along with a refill station. “We wanted to tackle the convenience market. People who like wine, but don’t go to a specialist merchant. You give them wines off the beaten track, the famous ones, the organic, and keep it interesting.
“For the delicatessens, the farm shops and so on, it talks to them. We bring expertise and they can rely on us. It has huge potential. We want to work with other wine merchants in partnerships.”
The staff working in Borough Wines stores have all moved on and a 16-strong team now focuses on the kegging and wholesale business. “We want to have a range of wines mainly from independent growers, with a focus on biodynamic, organic, natural wine,” says Chatel. “At the same time, we want wines where you can achieve some volume, and winemakers that can supply us in bulk.
“I started the refill system to be able to have a house wine at £5 that I was still proud of. If you sell wine in bottle at £5, you pay 50p for it, and that is not what I wanted to do.
“I asked winemakers if they had any wine they wanted to shift quickly – often it’s a space thing, a new vintage coming in – and I was offering them lower prices, and many agreed. We were not putting the name of the château on the wine – we called it Borough Wines. It meant that as a house wine [at £5] people can be wowed.
It keeps them loyal to Borough Wines, and then when they want to spend a bit more they think of us.
“We can supply the off-trade with refill and bottled wine, and we can ensure the on-trade that they can get their margins high. They need to be high. A high margin on wine is so important to keep restaurants afloat. By doing wine on tap, you save up to 25%. That’s a big difference. You have sustainability, but it’s also a numbers game, and the savings are real.”
Borough Wines hopes retailers and on-trade outlets are interested in its kegged wine because it is better for the planet and offers stronger margins. You can also ensure high quality by preserving freshness, and Borough Wines says it has the expertise and the operational strength to make it work.
“People in a few years will be saying that this is better quality [than bottles],” says Chatel. “You can control the quality and the temperature. It’s not about getting rid of the bottle, but it offers something different. We have a St Emilion coming for Christmas. People are now trading up when it comes to wine on tap.”
Yet there are challenges that come with supplying wine on tap. It has a strong and ever increasing range, dominated by France, Italy and Spain but also featuring wines from Argentina and Chile, and regions such as Vinho Verde. Yet there are some famous appellations that simply will not lend their names to wine sold on tap. Rioja would have to be called a Spanish red or a Tempranillo, while Prosecco has to be called Frizzante, Spumante, Italian sparkling or perhaps Glera.
“Gavi is the same,” says Chatel. “I was so pleased that we had a Gavi, but then I found out you can’t call it Gavi. They are shooting themselves in the foot. They are seeing that being in an appellation is about being less sustainable.
“People love this style of buying wine, especially the young people. It’s making wine more accessible to everybody, so people will forget about appellation for more approachable wines. They will have to accept it at some point, or they are cutting themselves off from a growing part of the market.”