The Wine Society charges ahead with £20m modernisation following ‘transformational year’
The Wine Society is forging ahead with a £20 million modernisation project, after a boost from online sales that its chief exec said has been ‘transformational’.
Speaking to the drinks business in an exclusive interview, chief executive Steve Finlan said the lion’s share of the £20 million would be spent in the next two to three years, notably in rolling out an entirely new IT infrastructure and website, and the enlargement of its warehouse in Stevenage.
“The Wine Society has been a very stable business for many years and part of our desire is to accelerate growth, we didn’t expect to accelerate so quickly. In many ways the pandemic came 6m – 12m too early!” he said.
However, the financial boost from rocketing sales in the last year had meant that it can move more quickly than it might otherwise have done.
“Whereas we were having to look at financial facilities to kick-start the modernisation, we will have cash now. That removes some additional complexity, but if anything it means we can move more quickly,” Finlan said.
“It’s been a transformational year.”
Finlan said the changes that had to be implemented as a result of the pandemic last year, had come as a “huge culture shock” to the business, but ultimately, the new skills learnt by the team and operational changes had resulted in a considerable uplift in the amount of stock shipped to customers.
“The biggest single element is the acceleration of the things we needed to do to keep people and operation safe. And we had to revamp the operation quickly to deal with the [increased] demand,” he said.
Following a two week closure at the start of the pandemic, the organisation introduced a two-shift system so that the same number of people could work the same number of hours, but with only 50% of staff being present at one time. This helped improve logistical efficiencies by easing bottle necks, resulting in a dramatic increase in capacity – from processing around £250k of wine every day to around £500-600k today, an increase of 30% from 2019 to 2020.
Going forward the team intends to keep many of the operational change that helped it unlock additional satisfaction amongst its members.
Unsurprisingly, the pandemic boosted the percentage of web-based sales, from 70% in 2019-20 to 85% last year, and this level was expected to remain stable. However Finlan admitted that it was a balancing act, between new, younger members and more traditional, older members who prefer to contact membership services and don’t use digital device or social media.
“As a consequence we’ve had to balance the way we’ve managed our communications, but members have enjoyed virtual events, and we’ve done a variety from Pierre doing desert island wines or wonderfully idiosyncratic recordings from his balcony to full on events zoom events with winemakers. They’ve been incredibly popular and we want to keep them going,” he said.”Normally in a year, we’d have 3,500 -4,000 members attend an event, this year it’s been 7,000 at virtual events – so a great way to engage and a showcase for our buyers.”
It is also a great benefit to producers, he adds. “The best thing about it is members and growers coming closer together and we’re in between piecing them together,” he explains. “The winemakers have a platform back, before winemaker relied on us to communicate, now they have a platform, its wonderful!”
However the team are also planning to return to physical events in the second half of this year.
New website and increased warehousing
The organisation is set to unveil a new website in the next few weeks, having continued to work on the website during the pandemic, which Finlan admitted had been challenging and also counter-intuitive.
“As a mutuality, we do a lot of things other wouldn’t consider, either because they’re inefficient of more inexpensive – but they result in members satisfaction,” he explained. “Websites are better tested when people are working in the same room, swapping ideas, and of course with home working, we’ve had people in various different parts, but we’ve kept that running, and hope to launch in three of four weeks.”
It has also ready to start working work on a new warehouse at its Stevenage site that will significantly boost capacity, after putting the project on hold during the pandemic. This was necessary due to the increased demand from online orders and the fact that the site was already over capacity.
“Our founders were forward thinking in buying a freehold in Stevenage, but did buy it on a hill, which is problematic as it means you have changes of levels.” he explained. “Our current operation is like spaghetti, round and round, but this will be straight and it will make us fabulously effective.”
The new warehouse will boost efficiency, Finlan said not only by making logistics simpler, but also by future proofing the operation.
“It will increase total space on site by 20%, but the benefit will be more like 60-70% on the regular wines people buy day in day out,” he said. “And we still have space so we can build more warehousing if we need it, but it will be transformational for us.”