Ehrmanns origins as a wine supplier date back to 1875 and today is a leading provider to multiple channels of the trade. It works with, typically, family-owned wineries from over 30 producers from 15 countries. The Beefsteak Club is their brand which reminds us of the dining clubs of the 18th & 19th century and celebrated the beefsteak as a symbol of liberty and prosperity. There are now 15 different wines from Argentina, Spain, South Africa, France, New Zealand, and Chile in the range which now extends to the Salmon and Tuna Club. They are supporting Movember charity for the fifth year running.

Keith Lay, Head of Marketing, whose drinks and marketing experience spans nearly 40 years and includes major brands such as Grolsch, as well as wine brands, shares with us deep insight into the current and future trading environment.

How was 2020 going before Covid-19?

2020 started very well.  We had ambitious plans for range extensions for Beefsteak Club and Carta Roja during the year as well as a busy programme to bring new wine brands to market.  Export has become an important part of our business, so we were gearing up for Prowein too.

How did you respond as a business to the lockdown in terms of managing teams and furloughing staff?

No staff were furloughed.  Operations did a brilliant job in ensuring that everyone in the team could work remotely.  We locked down prior to the official government announcement which gave everyone a few weeks to get used to new working practices. We are a small team, so we were able to adapt very quickly.

How have you found the various teams working from home – any challenges and how did you overcome them?

Like everyone else we were entering unknown territory as individuals and as a business, so it was very daunting to begin with.  I think we responded well.  Fortunately, the tech, cloud-based systems, and video conferencing software have worked effectively and reliably.  Everyone got used to working and collaborating in a new way very quickly. If the same circumstances had occurred even 12 months ago it would have been disastrous.  I remember trying to conduct video meetings in the past and spending most of the time relogging in because of loss of sound or freezing screens.  Throughout all of this we have found that it is easier to arrange quick meetings to progress projects as no travel is involved.  Consequently, productivity has been good.

Have you seen an increased demand from retailers selling online? If so, what trends did you see there in terms of styles of wine and prices people were paying?

There was a lag.  Capacity was an issue in the first months but then our on-line customer orders started to scale up quite quickly.  

How has the physical distribution network (warehousing, couriers, etc) coped?

I think logistics along with all the people working in retail have done a brilliant job in extremely challenging circumstances.  

I have been very impressed by our supplier (both in UK and abroad) ability to work effectively during lockdown.  Shipping; has also run smoothly. 

How were your off-trade sales during lockdown and what lessons have you learned?

Sales were up close to 100% in the first three months.  Initially, we saw the sales of our main brands dramatically increasing.  With very little linger time at the beginning of the pandemic consumers were picking up brands that they were familiar with rather than exploring the shelves.  So, both Carta Roja and Beefsteak Club sales jumped.  We saw data from Kantar that suggests that this was happening across all consumer categories. Mainstream brands performed better than more niche or higher priced brands.  This did lead to a period of OOS as retailers struggled to move stock from their hubs to store to respond to the spike in demand.

In wine, the sweet spot is £6 to £9. This continued in the multiples but then we also saw the independent trade kick in during April with customers placing orders for a much broader range of wines.  Again sub £10 retail was the place to be.  Order frequency and size increased in both independents and impulse with many customers moving from monthly to weekly orders.

From a marketing perspective, the on-going experience demonstrates the importance of packaging design.  It is not so much a lesson learned as one that has been reinforced and applied to outer cases too.  We have completely redesigned many of our outer cases to increase the visibility of our brands in Cash & Carry to make it easier for trade customers to shop quickly.  The so-called traditional corner shops worked really hard, particularly at the beginning of the pandemic, to maintain availability. So, time to browse wine aisles disappeared.  One customer told me he was driving a thousand miles a week to find pasta, toilet rolls, and other staples to keep his shop stocked.  Everyone was time-poor, so anything that speeds up selection provides a competitive edge.

How about the on-trade? What steps have you taken to keep in contact and support your customers?

Both from an account management and credit control perspective we worked with customers to reduce the stress. Stock was uplifted were requested and our credit controller maintained a light touch.  Our view was it was more important to maintain an understanding dialogue than to add more stress to the situation.  We think customers will appreciate that going forward. 

From a marketing perspective, we also completed some on-trade projects which we expect to revisit in 2021.  We think the demand for wine in cans will continue to grow so decided to go ahead with a planned launch of Beefsteak Club Malbec in 250ml cans.  It is the perfect serve for bars and outdoor events and has considerable environmental advantages to glass. 

What changes have you seen in the on-trade since the lockdown has been lifted?

Customers are very cautious.  It will take a long time for the sector to recover but we think it will also be a very exciting time.  A lot of very smart operators will have been using this time to think of new formats.  Tech and apps will be used on a much larger scale.  Table service, which was virtually unheard of in the UK prior to lockdown may be a key feature of the future.  Shouting “two pints of lager and a packet of crisps” at a packed bar may become a thing of the past. 

What have you done in terms of online tastings and Zoom events?

We are working on plans to use Zoom to offer a much more flexible way for trade customers to interact with us.  We have also been working with on-line influencers using Instagram Live to run food pairing tastings for Beefsteak Club.  This has worked well for us.

What lessons and opportunities have you learned for the future in terms of how you do tastings and events?

Simply that a physical presence is not a prerequisite to effective communication.  The Zoom culture is here to stay, so persuading customers to give up valuable time and spend money travelling to an event, which was already difficult prior to lockdown will be harder in the future.

The Brexit issue still looms - what impact, if any, do you expect to have?

Impact on new Labelling requirements – not just for exports out of UK, but also impacting our customers in Northern Ireland. We still have little information regarding import duty from EU imports. We have concerns over disruption to transit times and have increased our stock holdings in the UK to mitigate these potential delays -though this is a revisit of the March 2019 Brexit deadline. Once again Brexit will affect demand with many of our customers overstocking themselves to mitigate potential short term shortages, so we need to account for this excess short term demand in our forward planning, just as Covid19 has also created very erratic demand which is playing havoc on our forward planning and the only mitigant is increasing our stocking. 

What are your thoughts on what might happen over the next six to 12 months? Are you optimistic or pessimistic?

Optimistic with a strong streak of realism.  Covid has accelerated change and its legacy will have a profound effect on every strand of society. In wine terms that means being able to react really quickly to bring ideas to market.

What will be the key factors that will determine success that you need to get right?

Data and gut instinct.  Both are going to be important.  The latter because sometimes by the time data is available you have already missed the bus. 

If you could have just two wines from the Ehrmanns Range which symbolised 2020 & the 2021 expectation respectively what would they be? 

Already mentioned:  Beefsteak Club and Carta Roja, we have invested a lot of time and money in adding range extensions to both brands over the summer.  Beefsteak Cabernet Sauvignon from Chile has just been launched and adds to a range which includes wines from Argentina, France, South Africa, Australia and Spain.  More new wines are in the pipeline for 2021. 

2021 will also see new organic wines added to the Carta Roja range following the success of Carta Roja Pura No-Added-Sulphur Monastrell.  Carta Roja is in the top five best-selling Spanish brands in the UK off-trade market and organic wines are increasingly popular and Spain offers brilliant value in organics.

About The Author

The article is contributed by Alistair Morrell a Wine Inspector, wine industry consultant, journalist and, commentator. Over 30 years as a wine business professional, Alistair shares his global knowledge, network, and experience of growers, importers, distributors and buyers.