Bibendum PLB stengthens play for UK

The UK drinks trade needs to consolidate if it is to keep pace with where the industry is heading, according to Bibendum PLB Group’s CEO – who last year oversaw one of the largest ever mergers in the UK drinks trade.

Office exterior

Bibendum’s newly branded Bibendum PLB offices in Primrose Hill, London.

Bibendum and PLB Group announced in October its plan to merge, bringing together five trading companies; existing Bibendum trading arms The Wondering Wine Company and Instil Drinks Company, PLB, including its beer division, and Walker and Wodehouse Wines. As far the UK market goes, it was the biggest consolidation of the market in recent memory creating a unique distribution company catering to the on-trade, off-trade and independents across beer, spirits and wine.

With its fingers in so many pies, a period of readjustment would seem inevitable as responsibilities shift. However Michael Saunders, CEO of Bibendum PLB, said the merger had in fact led to “greater clarity” in terms of what the company wanted to do. While Saunders has spoken in the past of his preference for doing things “organically”, he admitted that the UK industry “does need to consolidate”.

“I have been quoted many times saying I’m never going to do a merger and here we are – we have done it and I think we are in a very good nick. We can offer our clients a route to market in a way that is pretty unique. I think we are well positioned and we are predominantly a wine business but the other alcoholic categories are growing fast and many of our skills can be transferred to other alcoholic categories. Having a specialist team is making a real difference. We can really hone our specific service for either independents or the on- or off-trade.”

Asked about the benefits of consolidation Saunders said it was not “just about profitability”, but a strategy that would result in reducing the number of gateways into the UK market making for a “slightly tighter” industry, adding that he did not see it as a “threat” but an opportunity.

“I think there is the consideration of where the industry is going”, he said. “Multiple retailers are contracting their supplier base. We have to be relevant. From our perspective we wanted to make sure we were absolutely brilliant. We have spent years building our skill set. Having a wider range of skills to put that across is really interesting. We are more significant and we are offering our suppliers an unbelievable route to market.”

When questioned on the possibility that others in the UK trade might follow suit and announce similar mergers, Saunders said it was “inevitable” that the industry was going to change shape.

“I love being first and being followed. We are not scared of being first out the gate. If you make a couple mistakes so be it, but the market is going to have to change. There is an inherent lack of profitability and there are too many people chasing a pot. How they will respond I will be very interested to see.”

Michael Saunders

Bibendum PLB’s CEO Michael Saunders

Confirming that the company had no plans to expand abroad, Saunders said there were plenty of opportunities for growth in the UK.

“The market is not growing significantly so it is going to remain as competitive as ever”, he said. “I have to play the game of chess against my peers, who I have respect for. We have to think not the next move but the one after that. Hopefully I have done something that keeps us on the board. What I am clear on at this stage is that it’s a play for this [the UK] market.”

Saunders confirmed that just “a handful” of staff had left the company since the merger, either on a voluntary or mandatory basis.

“We have pretty much finished with that now and there have been a couple of people that have decided for themselves that it’s not for them. I like to think that we are looking after them incredibly well because I’m a great believer in doing the right thing for the team.”

22009Pointing toward emerging trends in the UK market, Saunders said understanding the preferences of “twenty-somethings” was key as they will be the next generation of high-spending drinkers.

“We try to understand and give them something that they really want to drink. For example, we just put into All Bar One a low alcohol Sauvignon Blanc of 9.5% called Easy Tiger and it tastes bloody fantastic. I’m also very excited by what I am seeing in the southern hemisphere. I was bowled over by the quality, not quantity.”

Simon Swift, managing director of the Bibendum PLB’s Wondering Wine Company, agrees noting that interest in wine is growing among the millennial generation.

“They come to our bars, and don’t immediately look for the cheapest wine on the list – they look at the full offering and ask questions of our staff.  It’s incredibly rewarding to watch this shift in wine interest gradually taking hold.”

While it was expected that the merger would prompt Bibendum to up-sticks from its plush Primrose Hill pad in favour of a bigger location, Saunders confirmed that was no longer the plan.

“We looked at a lot of great buildings but the cost of them was astronomical, even though we have a very valuable asset here. What struck me is that we have a great building here and the disruption would be substantial.”

With consolidation a key concern within the UK drinks trade, we pressed the heads of each of Bibendum PLB’s trading companies for their thoughts asking: “Is further consolidation of distributors inevitable, and how will this impact the UK drinks trade?” 

Click through for their responses.

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