Big Interview: Vindependents' new business manager
Collaboration is a hot topic among independent wine merchants as they bid to increase margins, overcome barriers to trade and fend off the multiples. We caught up with Tim Carlisle, new business manager at Vindependents – an agency owned by and solely catering to indies – to explore the pros and cons of working collegiately.
For any readers unaware of Vindependents, could you outline the agency’s history and mission?
It started in 2012 with 12 independent wine merchants who decided they wanted to work together to find and import some wines themselves. They were fed up with some of the channel management decisions being made by some of the bigger agencies. They were often buying wines and building up the reputation of those wines here then discovering they were being sold to one of the multiples, to Majestic or Waitrose. The reason is to manage channels and, in doing so, enable member wine merchants to generate a higher gross profit. Any collaboration really needs to be about making more money.
In 2015 that loose group became a much more solid thing. Our managing director, Jessica Hutchinson, was at the same time running an agency specialising in high-end Burgundy and a few other bits and pieces, and those two businesses merged. Vindependents became much more solid rather just a loose collection. We started with 12 members and we are now up to 35, spread throughout the country. We have 85 agencies from around the world. We focus on bringing over wines of high quality.
What are the benefits of independents working in collaboration?
The economies of scale are important. Shipping wine yourself can be difficult. We have a producer in Morey-Saint-Denis making fantastic wines, but there’s only so much Premier Cru and Grand Cru Morey-Saint-Denis that any independent merchant’s going to sell. By shipping together, the members can keep their cost base down, and so keep the total cost of wine less than it would normally be. They don’t have to have the same stockholding, and they can generate more profit. It all comes down to keeping their cost price down, having a degree of exclusivity and being able to stretch margins. There is a small handling charge, but Vindependents is all about giving members the highest margin they can possibly make.
How does working together help to remove barriers to trading with the independent sector for suppliers?
Most of our producers are small and they won’t be able to do the volumes that big agencies are looking for. They don’t want to increase their output, because that will hit their quality, but by coming on board with a group which is collaborating, they can achieve much wider distribution. Merchants are working together and that means the wine ends up at a price that is favourable compared to traditional merchants.
What reasons are given for not wanting to join the group?
It’s not for everybody. Some people want to ensure they have wine that is in this country. We don’t hold any stock, so it’s all shipped together. For some people, not having stock here can be a barrier. Some wouldn’t necessarily want to take out of a bonded warehouse. The biggest thing is that there are merchants out there who don’t necessarily focus on selling better quality wines – their business is more focused on the on-trade and they are interested in getting hold of cheap wines at the very cheapest price and that’s not what we are about. We are about the quality.
One founding member, the Oxford Wine Company, has just decided not to renew its membership, and owner Ted Sandbach claimed the agency works better for small independents rather than businesses such as his. Do you think that is a fair assessment?
No. The biggest member of Vindependents has always been Hennings Wine Merchants. Matt Hennings is one of our board members. We also work with Cambridge Wine Merchants and Woodwinters, which are big wine companies. If you talk to Matt Hennings he will tell you that the reason he is a member of Vindependents is that his bottom line is directly affected, his business is more profitable because he is a member of Vindependents, and that’s all you can really ask.
The same is true for these guys running these big businesses – they are not going to join and stay as members if it doesn’t work for them. Ted has his own particular type of company and it just doesn’t happen to work for him.
Another founder, Corks Out, has also
left, saying it will instead place its trust in UK suppliers. What can you offer that they can’t?
We offer a degree of exclusivity. We can offer complete channel management. No UK supplier only supplies independent wine merchants who have bricks and mortar retail outlets, which is what we do. If you have a shop, it makes a big difference to you. It makes a big difference to your bottom line, it makes a big difference to your cost base as you have to pay high street rents. Most UK sourced wines in this country are sold online at between 15% and 25% margins. Most UK-sourced off-trade wines are sold between 30% and 35% margin, whereas the wines that our members buy from us are sold at more than 40% and often closer to 45%.
Do you manage it geographically, so that there are not competing indies in the same area?
Historically, when it was a looser group, there were members in the same area, so we have Butler’s and Quaff in Brighton, we have Noel Young and Cambridge Wine Merchants in Cambridge, but we are all grown-ups and we talk to each other, and the retailers use alternative labels so they are not actually competing on the same wine.
Now I wouldn’t take on another merchant close to Cambridge or Brighton. We are much more interested in looking outside of the south east to make sure we can get wider country coverage and regional speciality.
Besides increased buying power, how important is it to share best practice among independents in non-competing areas?
The members meet for four tastings a year and there are two other meetings, but there are frequent emails flying around too. When somebody wants to know what’s the best way to do this, what’s the best way to do that, they do ask. We have a new website launching in a couple of months that will facilitate that through forums, and so that the members can share knowledge.
We have people who are new to drinks retailing and people who have been doing it for years and years. Experience will help some, while a fresh look will help others, so it’s really important and it’s a key part of the group.