Lot18 closes UK operation

New York-based online wine merchant Lot18 has closed its UK operation just four months after launching.

Lot18 founder Philip James with the UK team: Will Armitage, Rodolphe Boulanger and Gus Danowski at the Lot18 UK launch in March

The members-only website will shut its London office on Friday and will suspend all UK operations at the end of July.

In a statement issued by the company, the closure was blamed on the dominance of supermarkets in the UK.

“Lot 18 has decided to close its operations in the UK at the end of this week.

“Unfortunately, the supermarkets’ stranglehold on the UK market proved too powerful for us to compete with and we have not experienced the anticipated growth rate,” it said.

Supermarkets account for 80% of the UK wine market and have recently expanded online.

“Lot18 has just under one million members and just sold its millionth bottle,” the statement added.

Six full-time employees will lose their jobs as a result of the London closure.

Lot18’s New York office made 10 employees redundant in early June. The company also recently closed its food division, Lot18 Gourmet, and its food and wine-themed excursion business, Lot18 Experiences.

The London branch opened on 2 March, with general manager for Europe, Will Armitage, saying the firm hoped to recruit a million members in the UK alone.

Founded in November 2010 by Philip James, founder of wine ratings and reviews site Snooth.com, the company raised US$45m in venture capital funding last year.

Lot18 reportedly generated US$25m in sales in 2011 and was expecting that figure to double in 2012. The company will remain active elsewhere in Europe, South America and Australia.

Lot18 sources fine and rare wines worldwide for limited-time offers, which typically last only 48 hours. The company specialises in sourcing difficult-to-find parcels and rare single bottles.

7 Responses to “Lot18 closes UK operation”

  1. Matt says:

    How strange – I recieved an email inviting me to join this ‘exclusive wine club’ this morning and on checking it out thought it was a well-presented, good idea. It just goes to show how the dominant mind-set of average UK wine shoppers are steeped in the obsession with faux-discount supermarket wines. It worries me that unless you have 50%+ discounts to offer on a regular basis that volume sales are not there for the taking. What ever happened to getting what you pay for?

  2. Dom says:

    I had never heard of these guys!

  3. Tony says:

    considering their target audience were hardly supermarket buyers, I suspect the issue was slightly different. It’s a shame about UK Lot 18 – a nice idea but maybe a bit ambitious

  4. Big shame to hear about this. Lot 18 probably had the wrong business model for the challenging UK wine market. In addition, let’s face it we’re still in a global recession too and when the supermarkets have an 80% stranglehold on wine consumers you’re always going to end up losing.

  5. Paco says:

    Their raison d’être was not to compete with supermarkets and to ‘invite’ high net worth individuals to join. Completely and totally arrogant and clueless. One million members? Highly unlikely. It beggars belief that they could have raised such VC sums, but then again when you look at the incompetents in the the financial world, then it’s no wonder.

  6. Judy B says:

    Am I the only one left to wonder …. didn’t they thoroughly research the UK market before spending huge amounts of their investors’ money on penetrating it ?? If they had, they would surely have segmented their market and had a fairly clear understanding of what would, and wouldn’t, scale in the UK, as compared to their NYC operation.work It’s all a bit baffling, frankly …

  7. Don Jaime says:

    No big surprise here. These people are really good at talking investors out of their money. What will really surprise me is if they will be in business this time next year. The wine biz is a real grind, and the only fast money is when schemers sweet talk dreamers.

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