Joint branding exercise proves a masterstroke
Wine Cellar's owners have spent three years licking the business into shape after buying it from receivers following its collapse under previous management.
In August, managing director Paul Gaskell told OLN that the privately-owned company was getting to the end of the patching-up process and would focus on growth.
And what growth that will be. Following trials, 220 Martin McColl shops are to be spruced up with Booze Buster sections and joint branding over the next year - so Wine Cellar will more than double its outlets without the burden of further property commitments. In return, Martin McColl shops get a larger alcohol range (or a drinks section for the first time) and an increase in total sales, judging from the boost of 12 per cent the 14 trial shops enjoyed last year. The number of joint-branded stores could grow past that initial figure of 220 if Martin McColl gives the go-ahead.
The move will take the company's business out of its traditional territories in the West Midlands and north west into Scotland for the first time. Wine Cellar appears at the forefront of a general trend towards drinks retailing/convenience link-ups. Last year, Yorkshire retailer Rhythm & Booze announced a partnership with frozen food specialist Fulton's, while Bargain Booze started trials with Select & Save.
Wine Cellar also plans to add to the stand-alone shops under its three brands - Booze Busters , Simply Drinks and Simply Food & Drinks - albeit at a gentler pace. Gaskell sa ys it does not have specific targets for growth but is looking for suitable sites which could include a strengthened presence down south.
Gaskell says: "We're not specifically targeting inside the M25, really we're targeting the areas we're already in. If we were to get an opportunity in a region outside that, we'd go for it."
Trialling innovative ideas remains central to Wine Cellar's business. Last year, it kitted out 40 shops with snack displays that sit on shelves between drinks following a trial that boosted confectionery sales by more than 20 per cent. It has just listed Coke's Relentless variant. Gaskell says: "We're looking to the suppliers to drive innovation, and we'll pick up on any innovation they come up with."
Offering new products will certainly be an important part of Wine Cellar's arsenal as it seeks to fight back against beer discounting activity in the supermarkets. Gaskell blames below-cost selling by the multiple grocers for a slip in beer sales against a general sales increase of 7.5 per cent over the past year. Government intervention is the only way it can be stopped, he says.
Staff selling skills should also improve as Wine Cellar has just taken all branch managers through a customer service course and they, in turn, will teach branch workers what they've learned.
Ownership structures at Wine Cellar are hard to penetrate. When the company was first bought out of receivership in 2003, there were media reports that property company Maryland Securities w as the new owner .
In fact, the majority stake is held by Rathbone Trustees Jersey as trustees of the Esdaj Trust, with Wine Cellar director Ebrahim Jebreel a beneficiary. The other shareholder is not listed in Companies House documents. Other members of the Jebreel family are listed as directors of Wine Cellar, and they are also listed as directors of Maryland Securities. As they have many business interests and are somewhat publicity-shy, it's not easy to gauge what the long-term plans for the business are, but the current investment and expansion is encouraging.
The Heath Business & Technical Park,
The Heath, Runcorn, Cheshire
0845 458 6100
Current size of estate: 185 shops
Key personnel: managing director, Paul Gaskell; general trading manager, Steve Parker; general operations manager, Warren Leathe; financial controller, Dave Allen; head of property, Paul Richards; general IT/supply chain manager, David Walker
Year founded: 2003
Number of employees: 1,100
Shop formats: Booze Buster (130), Simply Drinks (34), Simply Food & Drinks (21)
Turnover: £73 million to Jan 30 2005 (figures to Jan 06 not available)
Profit/loss: £2 million operating loss to Jan 30 2005
Developments in 2006
Roll-out of jointly-branded Booze Buster shops with Martin McColl
Embarked on a store refitting programme, emphasising chilled offering
Expansion of Simply Drinks and Simply Food & Drinks formats.
Challenges for 2007
Making a success of Booze Buster/Martin McColl partnership
Finding suitable sites for expansion of wholly-owned shops
Maintaining beer sales amid supermarket pressure
Competing against multiple grocers and rival multiple retailers.