On-trade suppliers are having to face up to levels of disruption and uncertainty that many say are unprecedented. But from all the upheaval those suppliers that have the stability and security of a major producer behind them appear better placed, like Negociants UK, the distribution arm of Australian producer, Yalumba. We talk to Negociants’ UK managing director, Simon Thorpe MW, about being able to keep your eye on the long term.
Negociants UK is firmly focused on raising the bar and driving premium Australian, New Zealand and New World wines on to more restaurant and bar wine lists.
“It is the best of times, it is the worst of times.” Sorry to bring back memories of revising for English A levels during the Easter holidays, but Charles Dickens’ famous opening line feels very appropriate when looking at the prospects of those in the UK drinks and on-trade sectors at the moment.
Particularly when you read on a line or two and come to “it was the season of darkness, it was the spring of hope”. For you sense it really is a Tail of Two Cities for many drinks businesses, split between those scrambling just to keep their head above water, and those with the strength to take a longer term, more relaxed view of the world.
All highly disruptive times result in both winners and losers. But with the vicious circle of greatly increased import costs on the back of the collapse in sterling, and the double whammy of inflationary duty rises across all drink categories, coupled with higher employment, and business costs, then it’s not surprising there is more knitting by the guillotine waiting for the next business to have their proverbial heads cut off.
Amongst the potential winners in the wine industry are those suppliers, importers and exporters backed by large wine producing businesses. Companies that have the resources, the assets and the security of controlling their own wine supply chain to then be able to take more long term positions about the markets they want to be in. They still have to navigate their way through the same choppy waters they’re just in a much bigger boat to ride the waves.
We are seeing more major wine producers set up their own satellite offices in their key markets, ensuring they have their feet on the ground and are able to listen and adapt to local market needs far better than playing the field from a distant winery.
Negotiating your way through difficult times
Take Negociants UK, which is part of the Negociants International export and import arm of the wider Yalumba Australian wine business, which has power brands such as Oxford Landing to help it steer a longer term course of action. What’s more Yalumba remains family owned and is therefore even better positioned to take a longer term view as it does not have to answer to shareholders or analysts in the City.
Simon Thorpe MW, UK managing director of Negociants UK, is very aware of the relatively privileged position it is able to take. Particularly with a portfolio of brands and wines that allows it to operate in all the major on and off-trade channels with its range of discerning New World wines.
Without having to get down in the dirt and fight for pennies of market share.
Thorpe is one of the industry’s great commentators. Able to assess the macro and micro challenges at the same time and make a composed analytical assessment of the challenges and opportunities that are there for businesses such as Negociants and Yalumba.
“This is a massively dramatic time. There are all sorts of pressures on the industry that are currently unappreciated,” he says.
“There is a massive amount of cost of being taken out of the supply chain,” adds Thorpe. “There has to be collateral damage out there.”
But equally, he adds: “You are well positioned as a producer-led business. When there is such turmoil there are also new opportunities. Particularly if you are able to take a clear strategic view of things.”
On top of the short and long term
That means being on top of both short and long term possibilities. Where you have the capability of taking advantage of gaps in the market now, whilst working with partners and customers on the long term.
For Negociants UK that means being very much on top of the key trends and opportunities in both the on and off-trades. Particularly as 80% of its business currently goes through the off-trade, with 20% in to the on-trade. Having a brand of the reputation and strength of Oxford Landing – it is the UK’s biggest selling Australian Sauvignon Blanc – certainly helps build that flexibility in to your overall strategy.
“You have to treat every channel differently. From mainstream through to premium. From regional through to national. This is very much a time for reflection and working out the right strategy for each channel.”
Thorpe believes the premium on-trade, in particular, still offers huge potential for Australia and New Zealand. The number of listings may have fallen back compared to where they were 10 years ago as other New World countries have enjoyed a greater share, but he believes the innovation, the dynamism and the sheer diversity of wines now coming through to the market means buyers have to be re-considering their ranges.
Particularly in terms of raising the bar and agenda for Australia and New Zealand.
“Producers are not going to be able to use the UK market to deliver large volumes. They can do that in more profitable markets like the US and China. But here they can look at driving more premium wines,” explains Thorpe.
It has plans, for example, to introduce more super premium wines to the on-trade to shine the spotlight even more on what, for example, Australia can do.
Making Australia great again
There are also many important influencers in the trade who are helping to make Australia great again. Be it Matthew Jukes’ breakthrough and hugely significant 100 Best Australian Wines lists.
Or the agenda setting work being done by The Buyer’s editor at large, Roger Jones of the Harrow at Little Bedwyn. His premium Australian wine tasting competitions, both in the UK and around the world, not only helps bring the trade together to celebrate Australian wine, but it provides a platform for producers and importers like Negociants (seral winners of Jones’ Mamba Australian wine competition ) to showcase the diversity of wines available in the UK on-trade.
By raising the bar for Australian – and New Zealand wines – in general can only benefit Yalumba and its portfolio of on-trade wines.
These now stretch from Yalumba’s The Y Series and Victoria Park which both offer good varietal led Australian range that are working well for wines by the glass listings, and then moving up the range to its premium Rare & Fine Yalumba lines, which includes The Signature Cabernet Sauvignon and Shiraz.
It is also in the process of launching a new premium-tier of Oxford Landing Estates wines – Marty’s Block, which will soon be available in the mainstream UK on-trade featuring a Chardonnay, Shiraz Cabernet, Viognier and Tempranillo.
From New Zealand its Nautilus Estate range from Marlborough is also showcasing how well different varietals are performing, for as well as the classic Sauvignon Blanc and Pinot Noir it has alternatives such Gruner Veltliner and Albarino.
Other key Yalumba favourites include Jim Barry, Chaffey Bros Wine Co, Vasse Felix, Brokenwood, Rockford and Jansz Tasmania. Not forgetting Two Paddocks from Hollywood actor, Sam Neil.
Wines it is also able to serve direct to its key on-trade customers in London, building partnerships and long term relationships with the key sommeliers and restaurateurs. A model it is not able to replicate for the rest of the country, where it looks to build “long term relationships” with regional and independent distributors and national players where relevant for its brands. “You are trusting them with your wines,” says Thorpe.
“You have to control your supply chain as much as you can,” he adds. “You have to have those long term relationships. That is how you build your wines in the sector. That is why we are able to have this longer term producer driven view. It is a very different model. We are always thinking about our long term strategy.”
A strategy designed to ensure “the best of times” always lie ahead.