• Conviviality and Bibendum PLB: how it’s going to work

    The Buyer was able to sit down with Diane Hunter, chief executive of Conviviality PLC, and Michael Saunders, chief executive of Bibendum PLB, at yesterday’s London Wine Fair to assess exactly how the two are going to bring their two businesses together.

    The Buyer was able to sit down with Diane Hunter, chief executive of Conviviality PLC, and Michael Saunders, chief executive of Bibendum PLB, at yesterday’s London Wine Fair to assess exactly how the two are going to bring their two businesses together.

    mm By May 4, 2016

    We assess the challenge Conviviality faces bringing its business together with Bibendum PLB

    It can be hard as an observer looking in on two businesses that have just gone through a major acquisition process to really get a grip of what the deal has meant for both sides of the fence.

    The buyer, in this case Conviviality, clearly has all the cards, whilst the bought, Bibendum PLB, is nervously sitting there wondering what all this really means in reality.

    First impressions are very good. Diana Hunter is a very impressive operator. Clear, focused and with a top line strategy that is hard to question.

    The two business, she stresses, are complementary. The challenge is to bring them together in way that their complementary skills are harnessed to the overall good of the business. All parts of the company from Bargain Booze to PLB, from Matthew Clark to Bibendum Wine, Walker & Wodehouse to Wine Rack are all going to continue to operate separately.

    Their respective teams have all been assured that there is a great opportunity here for them individually and their careers. There is no talk of redundancies at this stage. But there rarely is until the engineers really get under the bonnets of the respective business parts to see what is actually happening.

    For a business the scale of Bibendum to be bought for £60m with a whole series of financial measures, share offers and payment structures to be put in place behind then scenes, then clearly not everything was as rosy in the garden as it would appear.

    Where the horns are will ultimately determine how the two businesses can come together. They are also the areas competitors will look to exploit. 

    Hunter and Conviviality’s track record will assure customers, producers and the wider trade that they will get this right.

    Time and a place

    But, as she was keen to stress, this will take time and change will be introduced “at a speed that suits their customers and their producers”.

    The biggest possible change will come with group buying. Particularly for wine.

    Hunter was happy to confirm that group buying will be put in place. At some stage. When it does the impact on the trade will be enormous. This new £1.4b billion turnover business will then be able to look the likes of Tesco and Asda in the eye and negotiate deals with the world’s biggest wine companies that they will struggle to match.

    Why? Well because they have so much more of the UK’s pie to play with. Tesco may famously sell one in four bottles of wine sold in the country. The new Conviviality business will effectively be selling wine to 80% of the population through all its various business units.

    There are even rumours of other deals in the pipeline that could see other big wine names join the Conviviality machine, with the high street being the place to watch.

    If a producer wants to do business with a company that can offer them national coverage in all areas of wine retailing and every on-trade channel then it will be very hard not to be talking to  Conviviality’s buyers.

    Hunter confirmed at central buying team would eventually be put in place. So whilst the various groups will work separately, and it seems Matthew Clark and Bibendum will continue as they are for now, there will be a central buying operation that can work across all the company. But eventually there will have to be consolidation of teams and duplication cut from the business. 

    But this will not be overnight, says Hunter, and it will be done in a way that takes their staff, customers and producers along with them.

    Focus on customers 

    She admits the biggest challenge is not to take their collective eyes off the ball whilst all the background changes are being made.

    All staff have been reminded their number one priority is to focus 100% on customer service. Hunter says it has to keep its “foot down on the customer service ball”. It can’t afford to be distracted for a minute. Hence the reason for keeping the businesses, as much as they can be, separate for at least the short or medium term.

    You get the impression such challenges and bringing businesses together is very much what Hunter thrives on. The Buyer has already this week looked at the success story it has had bedding the complicated Matthew Clark business in to Conviviality. There is no reason, says Hunter, why it can’t do the same with Bibendum PLB.

    Encouragingly she agreed one of the biggest assets it has acquired with Bibendum is its marketing and insights division. We can now expect to see this move on to another level. For once Bibendum’s micro data analysis of the UK on-trade is then matched with Conviviality’s tracking of high street retailing, through Bargain Booze and Wine Rack, plus the national picture offered by PLB’s retail customers, it will have insights that cover what 80% of the UK drinking population is buying, consuming on every drinking occasion and at every time or day of the week.

    These are learnings and insights that Hunter says she will be actively sharing with its customers and suppliers and producer so that they can all benefit and run their businesses more effectively.

    The other major wider benefit to the trade will be in logistics and supply chain costs, says Hunter. By shipping, buying and moving such quantities of product around the world and the UK it will have a knock on effect on the capabilities of the companies it chooses to work with.

    All change for Bibendum

    Michael Saunders is staying with the business in a role yet to be determined
    Michael Saunders is staying with the business in a role yet to be determined

    The deal, confirms Bibendum’s Michael Saunders, is the end of a reasonably lengthy pursuit to find the right business to pass the business on to.  He told The Buyer that he wanted three key things out of any such deal: that the staff would be very much part of the new business; that its customers and producers were completely respected and brought along with the new business; and that the legacy of Bibendum that has been built up over three decades continues and thrives.

    He confirmed to The Buyer that he will be staying with the business and working in the new company in a position to be agreed with Hunter.  But he  is clearly confident it has found the right partner in Conviviality.

    From the outside there is bound to be a lot of gnashing of teeth and scratching of heads trying to assess how this is going to affect the rest of the trade. There is bound to be some fall out of producers, suppliers and eventually staff.

    There was a mixed response at this week’s London Wine Fair. Leading competitors were remaining officially chipper about the situation, but then off the record soundings were more circumspect.

    Domino effect

    The Conviviality and Bibendum PLB deal is likely to have a domino effect with other big deals and mergers imminent. Businesses that been “talking” will now be forced to get on with any acquisition talk.

    Again the wine fair was full of rumours of at least two of the other top five national distributors being in talks are about to announce similar major deals.

    Again the wine fair was full of rumours of at least two of the other top five national distributors being in takeover talks with outside players and are about to announce similar major deals. So watch this space.

    There will be customers, particularly on the on-trade, who might prefer to work with a smaller, more specialised supplier base. Ironicallly it could be the smallest player in the market, independent merchants, who might well prosper as the more esoteric producers wander where their future lies in such a colossal sized business. 

    The new Conviviality business may now be the biggest drinks operator in the UK. But we could soon end up like the US market where a small number of super suppliers dominate the supply chain.

    But the ball has been pushed off the mountain and it is only going to get bigger as other businesses look to take on Conviviality.

    Game on.

    1. ….is that the same ball that Diana Hunter is keeping her foot down on? On no, wait, that is the ‘customer service’ ball. I thought that was in the air? Or was it being juggled? This one must be a snowball! Or a rolling stone? Will moss be gathered? I think we should be told.

      It looks like they have all of their balls in a row (or is that on the line?) Sorry, I meant ducks.

      Anyway – exciting news, and good luck to all involved. I hope that wine will be the winner!

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