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Top 10 independent wine retailers pt 1

You could be forgiven for thinking that the UK’s independent wine retail sector was in the middle of an exciting revival.

Wine-Bottle-350x350From the ashes of fallen giants such as Wine Rack, Oddbins and Threshers have arisen small clusters of eager new enterprises. Meanwhile the rise of online shopping has spawned a host of internet-based wine operations, using their low overheads to undercut traditional high street merchants. Wine lovers have never had so much choice, although whether that’s a good thing is a whole different area of debate.

Despite the feel-good mantra that these smaller players offer a compelling alternative to the supermarkets, it’s difficult to dispel a sneaking feeling that many are simply in competition with each other. That said, the recent expansion of several wine retailers in London indicates that the biggest UK metropoleis are capable of supporting a colourful array of specialists alongside the bigger players.

In order to build a picture of what’s really going on in the UK independent sector, the challenges, changes and opportunities that are shaping its modern landscape, we shone a spotlight on 10 merchants from every corner of the country. Some have been around for centuries, others sprung up in the middle of the recent downturn; a few have built their business around a single location, several are in the process of opening new outlets. However, for all their diversity of size, site and specialism, what unites these operations is evidence of a dynamic outlook that balances a deep love and knowledge of wine with a pragmatic understanding of what it takes to stay afloat in their chosen sector today. It’s also worth noting that not a single one relies entirely on pure off-trade retail sales: a strong wholesale customer base or a hybrid wine bar offering stand out as two particularly crucial sources of revenue.

Above all however, these snapshots manage to combine a hard hitting dose of realism for anyone entertaining the idea of setting up their own wine business with an inspiring vista of a thriving independent retail landscape. For those consumers – and indeed producers – who value this type of environment, each of the merchants featured here reinforces the UK’s long-held reputation as one of the most attractive wine markets on the planet.

Scroll through to find out which independent retailers are currently making waves in the UK wine scene…

Loki Wine

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Founded: June 2012
Location: one site in Birmingham, but currently looking at expansion
Size of range: Around 700 lines
Specialities: “Nothing specific, however we do have quite an eclectic range, and areas such as Croatia are starting to get quite a bit of traction.”
2013 turnover: Just under £1 million

If you want to see a prime example of how the UK independent sector has evolved to address the issues that sent so many established high street retail groups tumbling into administration, then look no further than one of the newest additions to the scene. Loki Wine founder Phil Innes has been grabbing the attention of the trade, not to mention a clutch of awards, for his understanding of what makes today’s wine consumer tick. “I had seen first hand when I worked for Oddbins and Wine Rack why these businesses had failed, along with how a lot of independents fall short as well,” he explains. “I realised that the modern wine customer is very different to the customer of 20 years ago, and I wanted to provide something that was substantially different, and offer people an experience rather than just making a traditional wine transaction.” In practice, this means that Loki entices customers through the door through a combination of its Enomatic machines – nick-named Jancis, Robert and Oz – as well as a regular events schedule and a short selection of food platters that give people an excuse to linger without requiring the additional overheads of a kitchen. It’s all designed to create an atmosphere that is a world away from the traditional image of a wine merchant, making Loki particularly accessible to a new generation of wine drinkers. As Innes observes: “The younger generation are looking to learn about wine, and don’t have the same prejudice that I find with a lot of older consumers, this makes it easier to get people to explore things out of the norm. They want a comfortable environment and one that they can relax and enjoy wine in a non-stuffy way. This is exactly how we have appealed to younger consumers.”

In line with this target audience, Loki backs up its bricks and mortar presence with an active online agenda. This isn’t – for the moment at least – about e-commerce, but rather a place to check which wines are currently available for tasting, share experiences via Twitter and sign up for a dizzy programme of events with visiting producers.

Outlining the shape of his current business, Innes remarks: “We do a lot of corporate events and private parties, but they account for about 10% of turnover with tasting events accounting for 5%. The rest is split pretty evenly between on-sales and off-sales.” As for the future, he confirms that expansion will be a “key change” in line with his upbeat outlook on the current health of the UK independent sector. “I think the future is bright,” he asserts. “I think we will see a continuation of the trend away from multiple specialists, but I think currently there is a lot of interest in wine, and there are plenty of innovative independent businesses in the UK that are primed to harness this developing interest and enthusiasm.”

Lea & Sandeman

L&S-Chiswick-2

Founded: 1988
Location: Four London shops (Chelsea, Kensington, Barnes and Chiswick), and online.
Size of range: 1,300 lines on current website list, but almost 2,000 in stock.
Specialities: France and Italy, especially Burgundy, Bordeaux, Tuscany and Piedmont, but also “significant ranges” from Spain, Austria, New Zealand, South Africa and California.
2013 turnover: Around £8 million

This much-loved feature of London’s winescape may often be regarded as a member of the “old school” merchant brigade, but director Charles Lea is quick to dispel any notion that his business is set in its ways. In his view, “Lea & Sandeman – and other ‘traditional’ merchants – are in truth not really ‘traditional’ at all, but are quick to react and very often the leaders in terms of developing trends and pioneering new quality producers.” He contrasts this with the “behemoth supermarkets” who “are more inclined to promote the areas where they are strongest – precisely where the huge volumes can be negotiated down to the lowest possible price, and the quality to the lowest common denominator.” As a result, Lea describes his business as “the natural route to market for those small-scale and quality-conscious growers who prefer to spend their time making a product which brings buyers like us beating a path to their door, rather than those which have more people in marketing than in the vineyards.”

As this last comment suggests, a key tenet of Lea & Sandeman’s business model is direct imports and, ideally, exclusivity. “We avoid agents and buy only a few wines from importers,” outlines Lea. “This is a big difference between us and many of our competitors, results in our having bigger stockholdings, but being able to be competitive as there is only one margin involved, and having a more original offering.”

While the four shops account for around 35-40% of the company’s total turnover, with online sales “not quite as much as any of the shops”, another 30% derives from wholesale, of which the on-trade represents by far the most important sector. Add to that what Lea describes as “private customer wholesaling” in the form of fine wine offers or en primeur sales and you have a highly original, knowledgeable specialist whose commercial reach extends well beyond its west London stronghold.

Hanging Ditch

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Founded: 2008
Location: One shop in Manchester but on the hunt for a second site
Range: About 400 still and sparkling wines at any one time from a rotating database of about 4,000 products; 100 spirit and liqueur lines.
Specialities: “We tend to be quite big on Spain and Portugal and have a fairly deep Italian section. Malbec is very much en vogue so we tend to carry a bigger selection.”
2013 Turnover: £800,000

Shaking up several notions of how to run an independent wine shop is this vinoteca-style operation in Manchester city centre. While many of its peers stress the importance of sourcing wines direct from the producer, Hanging Ditch director Ben Stephenson takes a more nuanced view. “We only like to do it with things we’re going to turn over within a month or two,” he remarks. “For a small independent business the most important thing is cash flow. It’s much more important to have a vibrant selection of wines so we work with quite a few UK importers. Some people have this thing about exclusivity but I think you can get diversity in different ways by knowing people’s portfolios very well and tasting a lot of wine. Direct imports can hinder you because you’re then only working with one producer when there are millions of wines available in the UK.”

Another aspect that sets Hanging Ditch apart from the vast majority of wine retailers large and small is the decision to merchandise its range by style rather than region. For Stephenson, this approach is an important tool in making his offer user friendly for customers. “We’re laying it out to answer the most commonly asked questions, like ‘Where is your Sauvignon Blanc?’”, he explains. “In a traditional shop it will be all over the place but it’s great to take customers to a shelf full of wines that will go with the meal they’re cooking that evening. It’s a great selling tool.” A further small but meaningful departure from tradition retail wisdom sees Hanging Ditch avoid the .99p price approach, sticking instead to whole pounds or .50p increments. “We think our customers are disillusioned with that approach and it means they can add prices up much more easily,” observes Stephenson.
While its location close to Harvey Nichols and Selfridges helps the merchant to bring in “the right kind of clientele” and Stephenson drew on the expertise of his architect father to create an aesthetically appealing interior, he stresses the hybrid wine bar and shop model as a vital element for the business. “That bar side is a very important part of the sales mix,” he comments. “You get a higher margin than you can achieve with retail and it keeps people hanging around for three hours so you get to know them and it’s a much more personal thing.” Although these two elements generate similar turnover, seasonal variation means they provide a valuable consistency of revenue. “We have more bar sales in the summer months because of our outside space and a big increase at Christmas in our retail sales,” outlines Stephenson.

The other 50% of Hanging Ditch’s business derives from its wholesale customers. However, Stephenson reveals that he is keen to redirect efforts towards the bar and shop. “We’ve re-evaluated our wholesale and decided that although it’s important we’ve been spending a disproportionate amount of time on it so far at a lower margin,” he explains. “We’re putting more attention on retail – if everyone at the bar left with a retail sale too then that would help.”

Amid tweaks such as this, as well as “building a solid, trained team” and a successful foray into late night weekend openings, Stephenson’s next big step is to find the right site for a second outlet.

Positioning himself in between the major multiple retailers and the traditional fine wine merchants, he sums up his target market: “We’re aiming for new wine drinkers who are disillusioned with the dire selection in supermarkets and no service. With duty going up and supermarket prices remaining static the only thing that can happen is that quality goes down.”

Stone, Vine & Sun

Simon Taylor of Stone, Vine and Sun
Simon Taylor of Stone, Vine and Sun

Founded: 2002
Location: Twyford, Hampshire
Outlets: 1 shop and website
Range: Around 500 wines.
Turnover £1.3 million

Anyone looking for a bracing dose of realism about the current state of the UK independent sector should have a chat with Simon Taylor, who left his post as a director of Sotheby’s just over a decade ago to embrace his wine obsession full time. In his view, “the independent sector is getting far too cluttered. Everybody thinks it’s growing because you have all these new businesses opening, but actually they’re just cannibalising off other businesses. There are far too many people scrabbling along trying to make a living.” What’s more, Taylor notes, the rise of e-commerce has only served to exacerbate this problem. “You’ve got all these hole in the wall internet businesses that think they can take a margin – it’s frustrating,” he vents.
Against such a gloomy backdrop, what is it that enables his own operation in rural Hampshire to keep going? “The only thing that enables us to survive is that we like to take the whole margin by shipping ourselves”, explains Taylor. “We do carry a lot of stock but it means we can do a good wholesale business. Wholesale is probably 30-40% of our business now from less than 10% four years ago.” Although its location means that rent is far lower than for London operators, Taylor notes that “the shop is really only busy on Saturdays.” Instead, he outlines, “most of our business is local bars and restaurants. You can do £600-900 ex-VAT every week with a good gastropub, and it isn’t all house wine.”

It is this wholesale avenue that Taylor believes offers the strongest commercial outlet for Stone Vine & Sun’s core strength: a talent for uncovering exciting wines. “We are very, very open to doing more on-trade business in London,” he confirms. “We don’t have a London sales rep but they seem to seek us out. I think we have a lot of interesting wines that fit the bill – it’s all in the sourcing and long term relationships.”

That sourcing expertise has been nudged into rather different corners of the world to those Taylor championed when he first set up the company. “It’s changed a lot,” he concedes. “We started with a big focus on the Rhône, Languedoc-Roussillon and Burgundy. Now Burgundy is too expensive for our clients. We also used to be rather philosophically not disposed to Bordeaux but paradoxically we’re buying more and more. It’s what our customers want and there is some great value from the 09/10 vintages between £8 and £25.” While Italy is also “offering some cracking deals if you’re prepared to put in the work”, South America has also proved a surprisingly successful hunting ground. “I’m really excited about their Chardonnay and Pinot Noir,” reports Taylor. “Those wines are so good pound for pound. I’d take a Chilean Chardonnay and put it up against anybody.”

Direct Wine Shipments

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Founded: 1954
Location: Belfast and online
Range: Nearly 1000 lines, mostly wine but also speciality beers and spirits.
Specialities: Spain, France and Italy
Turnover £2.5-£5 million

Across the water in Northern Ireland, Direct Wine Shipments has expanded from a cornershop 60 years ago to its current “Aladdin’s Cave of Wine” in an old three-storey warehouse in Belfast docks.
Not content with a busy tasting and events programme, in 2003 Direct Wine Shipments’ owners the McAlindon family branched out beyond the scope of most wine merchants by purchasing their own wine estate in Priorat. Their Creu Celta wines are now exported to countries including the US, Poland and the Republic of Ireland.

While high standards of customer service are a given, DWS has made sure it moves with the times. “In each generation there are always wine consumers who want to learn about wine and the younger generation is no exception,” comments DWS wine development director Susan Rees. “What has changed is the way we reach out them, it is now important to have a website, regular email newsletters and a social media presence on sites such as Facebook and Twitter, enabling an additional means of communication.”

As with so many other merchants, wholesale represents a significant proportion of the company’s business at around 30%. However, Rees highlights the value of in-store events as “an important way of introducing new customers to the shop and encouraging old customers to return.” A natural extension of this focus is wine education, with DWS opening a second tasting room this year to support the launch of its WSET-affiliated Wine Academy. Explaining the value of this service, Rees remarks: “By encouraging our customers to become wine educated we are enabling them to be more adventurous in their choice of wine.”

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