They say a week’s a long time in politics, well try the machinations of the UK drinks distribution sector as C&C Group adapts its PLC model to allow Bibendum-PLB and Matthew Clark to regain their separate identities by bringing back big hitters such as former Bibendum chief, Michael Saunders.
It’s not surprising it’s taken C&C only a matter of weeks to get its head round what it has bought by taking on drinks distributors, Bibendum and Matthew Clark, from the haggard corpse of Conviviality PLC.
Rather than embark on a course of world domination and look to bring as many disparate parts of business together under one giant all buying, all selling, margin contracting PLC machine, C&C has simply decided to let the two companies do what they do best. Run separate drinks distribution businesses with their own management teams, corporate cultures and brand portfolios.
Crucially The Buyer understands the standalone Bibendum and Matthew Clark businesses will also be able to set their own sales targets, margins expectations and incentive schemes and get away from the unrealistic, and for some, impossible PLC-driven expectations from its former life.
But then as a brand owner, 100% focused on finding the right routes to market for power brands such as Magners and Tennents, it’s perhaps not surprising C&C naturally knows what’s the best channel, and the right distributor, to get any drinks brands, not just its own, into the right bars pubs and restaurants.
Back to the future
On the face of it C&C has simply pressed the rewind button and put Bibendum and Matthew Clark back to where they were before being pushed onto the Conviviality rollercoaster to potential oblivion.
But dig a little deeper and it is actually similar, but different, if you get my meaning.
Similar in that Bibendum is now back in control of its own destiny, with even, yes, Michael Saunders back in charge as chief executive. The company’s old chief operating officer and Saunders’ proclaimed “number two”, James Kowzsum, is also back in the fold picking up his old position,
Matthew Clark has arguably gone back even further in time to its pre-Accolade, Constellation days with this C&C announcement. OK, it ultimately still has a brand owner in overall charge, but it appears, reading between the lines of C&C’s plans, it will now have more autonomy and control over what it can do than it probably knows what to do with.
It too has been deeply strengthened by the return of some tried, trusted and familiar faces back running the company on a day-to-day basis.
Saunders is back…
Reasons to be cheerful…part two. Michael Saunders is understandably delighted to be back at the helm of Bibendum-PLB
It’s Michael Saunders return as chief executive of Bibendum-PLB, however, that is the most eye-catching. Arguably the most charismatic and passionate chief executive in the wine industry is back at the helm of the only company he has ever worked at.
His presence can only re-assure customers, suppliers and producers alike that Bibendum is back in business, whilst also giving its competition a little more to think about.
As Saunders told The Buyer he hoped the decision to bring him back into the business will give his competition some “pause for thought” with his “unexpected return”.
“Compared to another chief executive they could have brought in C&C know I can hit floor running from day one. This is a business I know inside out. I have relationships with customers, suppliers and producers going back decades,” he said.
Which is potentially bad news for its competitors as they don’t now have what Saunders called “a year of grace whilst Bibendum sorts itself out”.
No second thoughts
It’s only been in the last week that the idea of Saunders coming back to Bibendum in his old role was first mooted by chief executive, Stephen Glancey. It did not take Saunders long to grasp the opportunity with both hands.
It’s pretty clear why Glancey has been prepared to go back into Bibendum’s past in order to try and secure a healthier, more secure future. C&C is experts in creating brands and bringing them to the market. It’s not in the business of distributing them.
Saunders was also quick to stress he was not just there to rewind the clock 24 months and take Bibendum to where it was pre-Conviviality. “I am not here to do a pastiche of Bibendum,” he stressed.
Things have moved on and the Bibendum he now encounters is in a “very different situation” to where it was when Conviviality first came calling.
Saunders was also typically frank about the challenges that lie ahead.Yes, the DNA of the business might be the same, but there has been a fair bit oftinkering to its working parts over the last couple of years.
Or as Saunders succinctly put it: “To say Bibendum has not been through its problems would be bollocks.”
It’s now a case, he said, about putting “the right ingredients” that are still very much part of Bibendum back together.
Leading separate lives
Both Bibendum and Matthew Clark will have autonomy over their own sales targets and margins
Whilst Matthew Clark and Bibendum are going to be run as separate business units within the C&C group there will be some coming together, particularly in how it runs its centralised functions like finance, marketing, human resources, and some buying.
Whilst the main drinks portfolios will be very different there will be room for sensible group buying on certain lines, and in key categories where economies and volumes of scale just make sense.
Bibendum, PLB and Matthew Clark, for example, were previously enjoying joint buying on some good value, house and a little higher level wines, often bottled in the UK, and we can expect that to continue. With other central buying opportunities across the full beers, spirits and wine categories.
But from a sales point of view Matthew Clark and Bibendum are being re-presented to the trade as two very distinct, separate beasts. Two companies, two lists, two sales and developments teams, two sets of invoices.
Bibendum will be free to become an even more focused wine specialist, whilst Matthew Clark will be open to consolidate and grow its position as one of the country’s leading composite wholesalers that’s strong across beers, wines and spirits.
Two companies back in their familiar, traditional roles where they are most comfortable and effective, is the C&C strategy going forward.
Two companies also mean two leadership teams and it will be up to them to drive this strategy both internally and to the trade.
What does this mean for you?
Matthew Clark and Bibendum will be free to service their respective restaurant customers with their own standalone sales and development teams
What this means to the rest of the industry probably lies in which part of the trade you are in and whether your glass is always half empty or half full.
For owners of bar, restaurant, pub and hotel groups it has to be good news in that two of the country’s biggest distributors that control huge swathes of their lists are on the face of it back on solid ground. They’re certainly not tip toeing across the equivalent of a shattered frozen lake as they were in the dying weeks of Conviviality PLC.
Equally for the producers and suppliers whose payments and debts were caught up in the collapse of Conviviality, they now have a clear, concise model to do business with. You’re no longer a Conviviality supplier, but are with Bibendum-PLB or Matthew Clark, or both, with the financial clout and support of C&C in the background.
Open season
For the rest of the trade looking in then it’s probably more of a mixed picture. For a few of Bibendum and Matthew Clark biggest rivals the last few weeks have been open season with understandably aggressive steps to claw business and people away from their two biggest competitors.
After all we might all share the same spittoons at trade events, and sit side by side flying out to the next Prowein, but behind the friendly smiles and coloured trousers the drinks sector has never been more competitive. Or should that be cut-throat. After all there are only so many places on a wine or drinks list and there are a lot more Great Whites circling around trying to get their share.
The ever falling rate of sterling, coupled with rising businesses costs and the lack of wine to sell, means the market as a whole is an attack mode and with Bibendum and Matthew Clark both taking standing counts in the last few weeks, it’s only to be expected that their competitors have beenlooking to throw their own knock-out blows.
But are they too late? C&C’s revival plans are the equivalent of a sponge over the head and a stiff intake of sniffing salts between rounds.
What sort of Matthew Clark and Bibendum is left to fight back remains to be seen over the coming weeks, but the news coming out of their respective corners is, as you would imagine, positive, upbeat, probably a bit relieved, definitely humble, but also ready to get back into the game…sorry fight.
Having taken a standing count Bibendum-PLB and Matthew Clark will now hope they have missed any knock-out blows from their competitors
The “next chapter”
The talk internally at Bibendum is very much about this being “the next chapter” in the company’s history. There is no need for a major overhaul, is the message. Instead it’s time to re-focus and get the energy in the business completely behind pushing what Bibendum believes is still the best wine range in the business, despite what has happened over the last three months.
After all before the wheels fell of Conviviality’s wagon all appeared fine and dandy behind the scenes.
But however sugar coated that message is there is still a lot of dust to settle. Both internally and externally.
Whilst some big names internally have come back to the Bibendum and Matthew Clark businesses, or being freed from their Conviviality PLC responsibilities, there have also been some losses. The competitors have come a-calling and offers have been too good to refuse for some senior members of staff.
But then would you expect anything else at a time like this? Take-overs, mergers, acquisitions and whether you’re being bought or sold is an emotional and highly stressful period for anyone.
Again individual circumstances apply, and there are personal, and financial, reasons why someone might choose to stay and fight another day, or look to move on and work for a direct rival.
What’s in it for C&C?
The straight-talking Stephen Glancer, C&C’s chief executive, has moved quickly to put in place a strategy for Bibendum-PLB and Matthew Clark
The news that C&C, backed up by the power and funds of Anhuesuer-Busch Inbev, one of its key distribution partners as well as being the world’s biggest brewery business, had stepped in to save Bibendum and Matthew Clark was well received by the industry and City alike. This was a robust, hard, safe business capable of getting what were previously solid businesses firing again.
The move to run Matthew Clark and Bibendum separately will probably also be well received by investors and shareholders. Particularly as the motivation behind is, well, to make money.
C&C’s own strategy is not about selling to each and every single part of the high street. It’s not a Conviviality. Its brands are very focused on key routes to market and that appears to be the strategy it believes will work for Matthew Clark and Bibendum.
The key word here is being ‘focused’. If a deal is not right, or the market conditions needed to work in a particular sector or channel are not going to make the return on profit it needs, then this is a business quite willing to walk away.
C&C has made clear, internally and externally, that it wants to drive more value and margin through the business. It’s what successful companies do, particularly big brand, PLC ones. It will expect the standalone Bibendum and Matthew Clark businesses to generate far better returns and margin growth than they were capable of, or able to do, being pulled increasingly together.
Generating more value in its own supply chain also makes Matthew Clark and Bibendum far more attractive as potential future businesses to sell. Which also has to be very much at the top of C&C’s thinking.
Remember this is a drinks branded company, focused on creating the next big thing to drink. It is not a natural drinks distribution company by any stretch of the imagination and it noticeably only came in to save the businesses at the last minute with its Florence Nightingale act.
Its bedside manner is probably a little less touchy, feely for the long term and once Bibendum and Matthew Clark are out of intensive care and in full recovery mode then it will probably look to move two much healthier patients out into the big wide world. But that’s another story, for another time.
