First Unwins, then Wine Cellar, now First Quench. But while the chains crumble, independent off-licences are doing rather well. Graham Holter reports
The maxim "be distinct or be extinct" has been echoing around the off-trade for years but it's a mantra that seems easier to utter than abide by.
When Unwins buckled at the end of 2005, its estate almost entirely comprised shops offering so-so wines that could be found cheaper elsewhere.
The same charge could be levelled at First Quench Retailing, which was placed into administration last week while the business is stabilised and a buyer is found. Even FQR's more premium Wine Rack range is no match for that of Majestic or a specialist independent. And Wine Cellar, once the most radical of all the off-licence groups, was essentially just another convenience operator by the time of its collapse last month.
Other factors were also at work in all these failures: rising rents, supermarket encroachment and escalating duty, to name just three. But these pressures affect independents, too. So why hasn't the recession proved as disastrous in this part of the drinks market?
Specialist independent wine stores have been quietly booming for several years, though most of the evidence for this is anecdotal, since none of the major monitoring companies have attempted to audit what remains a market niche. Those who have tried to measure the sector generally end up with a figure of at least 450 stores, though this creeps higher every year.
This year has not been the easiest for the sector there have been store closures in Norwich, Lewes and Bournemouth, for example.
But such losses seem to have been outweighed by the gains. Cheshire's Corks Out entered 2009 with three stores, and will end it with five. Oeno, a Stroud wine merchant launched in 2008, has opened a second shop, in Cirencester. The Sampler, an acclaimed London merchant, has announced two new branches. And start-ups include Bottle Apostle in Hackney and Scarlet Wines near St Ives in Cornwall.
Wine specialism is what drives such businesses, which is why owners who stick to their guns and position themselves as experts are fairly insulated from multiple grocery ranges that have become more restricted and conservative.
Many independents have been reporting double-digit year-on-year sales increases. Jim Dawson, owner of the Jolly Vintner Too in Bournemouth, says although the past couple of years have been tough, the past five months have been "excellent". If the sun had shone in July and August it would have been even better, he adds.
"The start of the year was horrible, to be honest, but I was 20% up in June [year-on-year], 18% up in September and 15% up in October," he says. "If I can continue with those sorts of figures through next year I'll be delighted. The general press 12 months ago was all doom and gloom deep recession, troubled times ahead but in the past three or four months we haven't seen so much of that."
Dawson offers 500 wines, which he promotes, like most specialist independents, with in-store tastings a tactic that remains rare in multiples. The former Oddbins area manager believes FQR was "too big and unwieldy" to respond to consumer demands.
Rather than offer a unique point of difference from the multiples, FQR went toe-to-toe with them on price, offering deals such as three bottles of wine for £8 as part of its The Big Bottle sale. When commercial director Mike Osmond joined from Somerfield in July, he made it clear that top of his agenda was to improve the price perception of the retailer. Meanwhile, independents have on the whole steered clear of price competition.
Lewis Matthews, who opened The Bottle Bank in Falmouth, Cornwall, in spring 2008, says the main reason people choose his shop over a mainstream retailer is because they want to talk to staff who know "every wine inside out" and can help them find what they want. Where Threshers went wrong, he suggests, was in "trying to go head-to-head with the multiples".
The fact that indies have consciously differentiated themselves from chain stores means they're unlikely to benefit significantly from Threshers' demise, according to one expert. "Threshers ended up as a bit of a beer stop with everything on promotion," says Graham Wharmby, sales manager at Boutinot, one of the biggest suppliers to the independent wine merchant sector. "The independents will pick up a bit of its trade, but the supermarkets will pick up more."
Where indies could capitalise is in buying up Threshers' sites, many of which are in prime retail locations and attractively priced in the current economic climate.
"I know a couple of my customers have looked at local Threshers branches and wondered if they can put a bid in for the shop," says Wharmby.
It might seem like a risk to be expanding at a time when the economic outlook is so uncertain, but Wharmby believes indies that command their niche can continue to prosper. "People are saying they have had a good October," he reports. "They are still a bit twitchy and nervous, but the actual results seem to be quite good. Box numbers are up and takings are up though this is largely because of the duty increase. Our profitability is down a couple of points because of unfavourable exchange rates, though, and independents who are importing some of their own wines will be in the same position."
Wharmby does, however, describe one "slightly worrying underlying trend". "There's a little bit less adventure in the market, I would say. You've got stuff-all chance of getting someone to take on a new Saint-Nicolas de Bourgeuil and one or two of the classics are dead in the water. But a solid new Chilean varietal will go in just like that because it's the flavour of the month. Anything Chilean, South African or from southern France up to a certain price point you can launch."
The Bottle Bank strikes a balance between caution and adventure by offering wines from £4 to £200. It is "surviving", rather than booming, according to Matthews. "We have about 400 wines and all have been hand-chosen to offer good value. Nobody's getting that rich out of it, but we're not poor either."
It's a typically pragmatic response from a sector that rarely seems short of optimism. The recession may be hitting the chains hard, but as Wharmby says: "there's definitely life in the independent market, there's no doubt about it. It's not curling up and dying in fact, quite the reverse."
One third of First Quench stores were not profitable, says KPMG (7 November 2009)
Hundreds of stores and 1,700 jobs go in First Quench fall-out (6 November 2009)