Troubled Berry Bros. wholesale division a sign of things to come?
News confirmed yesterday that historic wine merchant Berry Bros. & Rudd is “reviewing” its UK wholesale division, called Fields, Morris & Verdin (FM&V), is a sad early sign of the effect of the coronavirus lockdown for on-trade wine suppliers.
As Harpers was first to report on Wednesday, FM&V was believed to be in consultation with its staff – which amount to around 50 people – over the future of this business, which is owned by Berry Bros. & Rudd, and serves the restaurant and retail trade in the UK.
This news has since been confirmed by Berry Bros. & Rudd, with the company’s executive chairman Lizzie Rudd saying, “Like many businesses, the impact of the pandemic has forced us to step back from our business and review our structure.”
She added, “Covid-19 has completely changed the consumer landscape. It has created a highly uncertain market, particularly within the hospitality and retail industry, and we do not know when or how it will recover or what it will look like.”
We have reproduced the full statement below, but such comments from the Berry’s chairman are an early sign of an expected fall-out from the coronavirus lockdowns, which have seen the entire hospitality sector shuttered for more than 4 months.
And while there’s hope for a resurgence in the hospitably sector as 4 July fast-approaches – the date set by the UK Government for allowing the pubs, bars and restaurants to offer table service – several high-profile restaurateurs have said that they won’t be reopening, citing a number of reasons, but in particular the challenge of running a profitable business with a one-metre physical distancing rule in place.
As stated by db back in April, a closed down hospitality sector has a massive effect on those who supply alcoholic drinks to this part of the market, exacerbated by the need for them to pay excise duty on stock – and hence they require more government support to survive.
Commenting on the challenge for such suppliers, WSTA chief executive Miles Beale said back then, ““The cash flow element is particularly acute for a business in our industry because of the additional burden of excise duties – and if you are heavily dependent on the on-trade where cash is so important, then you have a double hurdle to overcome.”
Continuing, he commented, “Reduced cashflow is a real challenge for the hospitality sector, particularly for all on-trade retailers and suppliers. This is exacerbated by demands to pay excise duty, with no money coming in and bills stacking up this is a real issues for businesses, especially SMEs.”
In other words, saving on staffing costs by furloughing employees is not enough to secure the future of a business with no customers, as is the case for those wine specialists who supply the hospitality sector.
So it is saddening to hear that a business as respected as FM&V, with a host of incredible wine agencies, and respected white table cloth restaurant customers, is having to “review” its future, and it is a worrying sign of what one suspects will be further similar announcements from other drinks wholesalers.
But let’s hope that we are wrong on that.
The statement issued by Lizzy Rudd, executive chairman, Berry Bros. & Rudd, regarding the future of FM&V can be seen in full below:
“I can confirm that Berry Bros. & Rudd is in the process of reviewing its wholesale operation.
“Like many businesses, the impact of the pandemic has forced us to step back from our business and review our structure.
“Covid-19 has completely changed the consumer landscape. It has created a highly uncertain market, particularly within the hospitality and retail industry, and we do not know when or how it will recover or what it will look like.
“We are reviewing the size of the producer portfolio which we represent, how much stock we are able to hold to supply the trade, and the people structures needed to efficiently run our trade operations in this changed landscape. We are also reviewing how we can more closely align it with our fine wine client proposition.
“People working within our FM&V and BB&R Partnerships teams are currently in a collective consultation process which we hope to conclude by early August. During this time there will be no changes to our structure or trade operations.
“Berry Bros. & Rudd is a strong and resilient business which has weathered many a storm through our ability to adapt and change during our 300-year history. This present time is no different.”