(Header image credit: Jascots Wine Merchants)

2020 will go down as one of the tumultuous in world history. The impact of Covid-19 has been crippling and devastating across the globe as virtually every country in the world has had to find its own way to battle this dangerous and highly infectious virus.

It’s not just people’s health that have been put at risk because of Covid-19, but their livelihoods too as whole industry sectors have had to close down, or force their staff to work from home on limited hours, pushing many out of their jobs for no fault of their own. 

The drinks industry has been particularly badly hit as restaurants, bars, pubs, and hotels have had to go through a series of shutdowns, ranging from an initial total lockdown, followed by a series of local and regional bans and ever-complicated rules about what they can and can’t sell and to whom. 

The knock-on effect of which has been felt right down the drinks supply chain from wine producers, brewers, distillers and then through their importers, distributors to the actual hospitality outlets that have been unable to sell their products. 

Creating new business models

For many importers, it has meant not being able to trade at all. Or at least not to your usual customer base. Up to March 2020 being a dedicated on-trade drinks, supplier was a respected and successful business model. And has been for generations. 

Many of the UK’s most famous and celebrated drinks importers – from Berry Bros & Rudd to Davy’s Wine Merchants - started out importing ports and sherries in the 19th century and selling them to the pubs, taverns and restaurants across the country. 

Over the years they have been joined by a vast range of different sized operators, from the big national distributors, right down to single person operators. 

The majority of the biggest drinks suppliers in the UK rely on the on-trade for most of their business. But all of that came crashing down in the UK on March 23 when the Prime Minister announced a national lockdown and all hospitality outlets had to close. 

Suddenly what had been a successful business model was now the complete opposite. Totally out of kilter for the unprecedented times we were living in. 

They had to adapt and move fast if they were going to have a business to go back to once the lockdown was over. 

Going direct to consumer 

It has meant some have had been forced to go against their normal principles and start selling direct to the consumer. 

Jascots Wine Merchants, for example, was arguably the first publicly to do so in the UK, switching almost overnight from being a purely on-trade supplier, to set up its own e-commerce platform the moment the UK went into national lockdown on March 23. 

By doing so it was able to claw back around a quarter of its usual sales, cover its overheads and keep its staff in a job. Within two months, for example, it had been able to do business with over 1,000 private customers. 

But, as co-director, Miles MacInnes admits it was touch and go for weeks and the team had to work as one, almost around the clock to keep their heads above water. 

“We were having to make a lot of complex decisions quickly,” he says. “Every day brought with it new opportunities and challenges. We were determined to do everything we could to keep our very talented team together. We wanted to do everything we could to stay together and come through this period strong.”

Another big name, Berkmann, went a step further and set up an e-commerce model that also helped raise money for outlets forced to close and drinks charities at the same time with its #Help4Hospitality website. 

It proved to be an inspired move for not only did it allow the business to keep going by selling its wines to the public for the first time, it also meant restaurants and bars that were closed could use drinks from Berkmann to run their own DTC initiatives to their customers. 

Restaurants and bars were given a code to send to their regular customers to use when placing an order with them. In return they got a 5% discount, and Berkmann donated 12.5% of the order value to the outlet in question. They could then decide whether to use the money to help their own business or donate to two charities supporting the hospitality industry: The Drinks Trust and Hospitality Action. 

In the months of lockdown that it was running was able to raise £75,000 for hospitality charities. 

Alex Hunt MW, Berkmann’s director of purchasing, said: “This year was the first time Berkmann went direct to consumer in any significant way. We look back on this with a certain amount of surprise that such a large organisation could reinvent itself as a micro start-up – it was both stressful and exciting.” 

It has now launched a separate website aimed exclusively at independent wine merchants with a carefully selected range of 300 wines. As well as introducing a range of 14 wines, priced one step above entry-level to help drive sales in the on-trade. 

Rise of the independents 

Drinks importers also switched their attention, en masse, to the booming independent wine merchant sector during lockdown, and beyond. 

Local wine store owners went from fearing the worst when the country went into national lockdown and they had to close their shops, to suddenly being hit with an unprecedented demand for their wines. 

Mark Wrigglesworth, owner of The Good Wine Shop, that has four shops around southwest London, said it was almost impossible to keep up with the level of demand and rather than doing a handful of orders a week on its online site, it was having to handle over 200 a day. 

Across the country independents enjoyed an increase in demand of 400% to 500% as people, stuck at home, turned to their local store to get quick, reliable delivery. 

Independents were suddenly also in high demand for all the drinks importers that usually served the on-trade. Andrew Bewes, managing director of national distributor, Hallgarten Druitt, said their independent sales were fundamental to helping it through the height of lockdown and continue to grow now. 

How well the independents were able to benefit from their newfound popularity rested on how well they had set up their online e-commerce platform. Wrigglesworth, for example, said he was fortunate in that he had just taken on a dedicated e-commerce manager and spent 2019 investing a large amount to get its online offer right. 

Going digital 

Enotria&Coe, which usually relies on the on-trade for 90% of its turnover, was in the good position of already having its own specialist drinks retail - the Great Wine Company. It also saw an increase of 400% in sales during lockdown and chief executive, Troy Christensen, was quick to divert resources and staff to maximise the opportunity, by taking on extra vans and drivers around the country. 

He says the situation means it is having to change its business model and to put digital at the heart of what it does. Which will see Enotria&Coe become more like a ‘fulfilment centre’ where it can work with a large number of dedicated B2C partners – be it hamper businesses, specialist food and catering companies - and act as their drinks partner to go direct to consumer. 

“A lot of people are questioning the [distribution] model,” he says. “There is no-one expecting to sit tight for six months until there is some sort of miracle cure – so things will have to happen and they will happen quickly.”

The overall structure of the UK wine industry has been stretched for a number of years with simply too many importers and playing chasing what is ultimately a slowly contracting market. The impact of Covid-19 has put enormous pressure on that already stretched supply base and it is inevitable that a number of companies will go to the wall unless they are adapt and create new business models that keep them and their customers in business. 

About the Author

Richard Siddle is an award-winning business editor with 30 years of experience working across a number of fields including computing, FMCG, grocery and convenience retailing, travel, and for the last 15 years wine and spirits, initially as editor of Harpers Wine & Spirit before co-founding his own drinks website aimed at the premium on-trade, The-Buyer.net, which has quickly become recognised as one of the UK's agenda-setting, must-reads for the drinks and hospitality sectors.