Pre-Covid business like ‘halcyon days’ says leading Spanish wine player
In an exclusive interview with db, Richard Cochrane, MD of Félix Solís UK, recorded the impact of the coronavirus lockdowns on his Spanish wine business, while describing last year’s pre-pandemic trading as “halcyon days”.
How has lockdown in the UK affected the sales of the Felix Solis portfolio?
“At the start of 2020 I never imagined we were embarking on a year that would make 2019 seem like halcyon days. Our UK customer base has faced the biggest and fastest changes I have ever seen. The on-trade channel switched off over night leaving 5,000 of our customers in this channel in a very difficult position. By contrast the our key off-trade customers have seen a short term sales spike as people stocked up for lockdown and spending patterns started to change.
I have been surprised by some of these changes, such as the 18% growth in sub 0.5% ABV wine range and the 43% growth in our sparkling brand Prospero, at a time when sparkling sales are feel the squeeze. Sales of our small formats have dropped 16% as people seem to prefer buying something bigger. As such our bag-in-box sales are up 37% and in some cases this has been limited by the speed of getting product onto the shelf. Our branded sales growth or 12.7% was a very welcome surprise as promotions were restricted across retail, including the additional 25%OFF6 mechanics seen during the same period a year ago. People appear to have turned to brands they know and trust, but also represent great value such as Vina Albali.
Thank goodness for the exceptional weather so far during lockdown, as we all try and adapt to these big changes. Given the sunny weather I was not surprised to see our Penasol Sangria jump 45.9% as people mixed fruit, ice and our Sangria. What I did not expect to see was the jump in our red wine sales of +13.7% and conversely a drop of -11.3% for rose. It was also interesting to see that more people are cooking from scratch stuck at home, partly for financial reasons, but also because many people have more time as the pace of life since lockdown has changed. As such we have seen our meal deal wine ranges slow down by 11%.”
Has the shift in channels affected the volume and value of your sales to the same extent?
“People appear to be spending less on wine overall. In part because they cannot visit their favourite pubs or restaurants and thus buy their wine at retail prices. But we are also not seeing people trade up when applying the spend they might have made in a restaurant. We don’t have the data yet, but anecdotally sub £7 wine sales seem to be the main focus of growth. For us we have seen growth across all the price points we operate in up to £8, with a strong performance at around £5.”
How have you responded to the lockdowns as a company?
“In the UK the team are all working from home and I work from the office, which remains open. Teams and Zoom have replaced normal meetings and travel. I do wonder about which of these changes might become part of the future working landscape.”
Meanwhile, director of international trade at Félix Solís Avantis in Spain, Félix Solís Ramos, added:
“We have had to adapt quickly to the new environment. Our company belongs to an “essential” Sector, so we have remained open with less resources. The problem has come when we have had to deal with increased business from our current retail clients with less resource, so working hours and extra time has increased dramatically to give the necessary service to the current retail clients, that in several countries have increased sales by more than 30% (Spain, UK, Holland..). Our philosophy has been to stay open and satisfy our customers demand as much as it has been possible. For example last two weeks we have been working 24/7 in all our plants to satisfy this increased demand.”
And what will longer term physical distancing mean for you as a business in terms of sales and operations?
Félix Solís Ramos: “We have put in place a series of measures with our employees in all our wineries and offices that make sure that we will be able to continue business as normal, in spite of the requirements in terms of space.”