What now for Bargain Booze after the ECI deal? Rod Addy reports
The acquisition of Bargain Booze from BWG by venture capitalist ECI Partners for £63.5m means all parties can now get on with the job in hand, after a year in which developments at the franchised off-licence chain were effectively put on ice while the fine details of the deal were hammered out.
Bargain Booze joint MD, Matthew Hughes, who will remain in place alongside Tim Stanley, admits the deal took a long time. “We’ve got 600 stores with 320 franchisees. It was always going to be a complex process.”
But the wait was worthwhile, says Hughes, who explains that in ECI the business has found the ideal investor. Despite the delays in clinching a deal, which is less than the orginal £70m price tag put on Bargain Booze, Hughes insists that it was right to target venture capitalist investors as they were more likely to support the company’s direction than other retailers.
Given that Bargain Booze is a rare success story in the troubled off-licence sector, there will be few changes to the business.
However, the management team has been strengthened with the arrival of Roger Pedder as non-executive chairman. Pedder has a strong retail backrgound: he has held chairman roles at bed maker Silent Night and shoe retailer Clarks, helped found Pet City and turned Robert Dyas into a retail success story. He was also involved last year in an abortive attempt to buy Woolworths.
Pedder’s appointment is viewed as a concrete sign of ECI’s support for Bargain Booze’s retail development plans.
Hughes explains that there is no intention to tinker with existing fascias Bargain Booze, Bargain Booze Plus and Thorougoods. The franchising model will also stay in place. “If it ain’t broke, don’t fix it,” reasons Hughes.
ECI director David Ewing confirms
that the new Bargain Booze owner is happy to leave things as they are and says his firm is treating the acquisition as a medium-term investment of between three to five years.
During that time, franchised stores will be rolled out at a rate of 50 to 60 per year, with the focus on the south of England. Store owners will be allowed to decide which fascia is best for them, albeit working in close collaboration with the company.
“A proportion of sites will come from independents converting to Bargain Booze, plus existing franchisees that take on board multiple franchising,” says Ewing. However, some areas will be avoided. “We’re steering clear of London for the moment,” says Hughes. “We distribute all our products from our Crewe depot, so getting in and out of London is a problem.”
He adds that there are no plans to expand the distribution network for the time being.
Clearly, franchisees will be vital to the future success of Bargain Booze. And while there have been grumblings from some franchisees, a straw poll carried out by The Grocer last October found the majority were happy at the idea of a sale to ECI.
There has also been no news on the widespread rumours of rival wholesalers launching Bargain Booze lookalikes - something that would clearly impact on its ambitious expansion plans.
With Bargain Booze’s purchase agreed, ECI is looking elsewhere. “It’s unlikely we’ll be buying another off-licence chain now we have a presence in that sector,” says Ewing. “But there are opportunities for turnarounds in retail, which we’re interested in, as well as chances to back growing businesses.”
As for BWG, chief executive Leo Crawford says it will continue to invest in its Spar business in the south west of England and its operations in the Republic of Ireland. He says: “The deal allows us to focus on our grocery retail business and clears our debts.”
Mind you, the story does not end there. BWG’s venture capitalist backer Electra will soon be looking for an exit. You can expect more news on that sometime next year.
The acquisition of Bargain Booze from BWG by venture capitalist ECI Partners for £63.5m means all parties can now get on with the job in hand, after a year in which developments at the franchised off-licence chain were effectively put on ice while the fine details of the deal were hammered out.
Bargain Booze joint MD, Matthew Hughes, who will remain in place alongside Tim Stanley, admits the deal took a long time. “We’ve got 600 stores with 320 franchisees. It was always going to be a complex process.”
But the wait was worthwhile, says Hughes, who explains that in ECI the business has found the ideal investor. Despite the delays in clinching a deal, which is less than the orginal £70m price tag put on Bargain Booze, Hughes insists that it was right to target venture capitalist investors as they were more likely to support the company’s direction than other retailers.
Given that Bargain Booze is a rare success story in the troubled off-licence sector, there will be few changes to the business.
However, the management team has been strengthened with the arrival of Roger Pedder as non-executive chairman. Pedder has a strong retail backrgound: he has held chairman roles at bed maker Silent Night and shoe retailer Clarks, helped found Pet City and turned Robert Dyas into a retail success story. He was also involved last year in an abortive attempt to buy Woolworths.
Pedder’s appointment is viewed as a concrete sign of ECI’s support for Bargain Booze’s retail development plans.
Hughes explains that there is no intention to tinker with existing fascias Bargain Booze, Bargain Booze Plus and Thorougoods. The franchising model will also stay in place. “If it ain’t broke, don’t fix it,” reasons Hughes.
ECI director David Ewing confirms
that the new Bargain Booze owner is happy to leave things as they are and says his firm is treating the acquisition as a medium-term investment of between three to five years.
During that time, franchised stores will be rolled out at a rate of 50 to 60 per year, with the focus on the south of England. Store owners will be allowed to decide which fascia is best for them, albeit working in close collaboration with the company.
“A proportion of sites will come from independents converting to Bargain Booze, plus existing franchisees that take on board multiple franchising,” says Ewing. However, some areas will be avoided. “We’re steering clear of London for the moment,” says Hughes. “We distribute all our products from our Crewe depot, so getting in and out of London is a problem.”
He adds that there are no plans to expand the distribution network for the time being.
Clearly, franchisees will be vital to the future success of Bargain Booze. And while there have been grumblings from some franchisees, a straw poll carried out by The Grocer last October found the majority were happy at the idea of a sale to ECI.
There has also been no news on the widespread rumours of rival wholesalers launching Bargain Booze lookalikes - something that would clearly impact on its ambitious expansion plans.
With Bargain Booze’s purchase agreed, ECI is looking elsewhere. “It’s unlikely we’ll be buying another off-licence chain now we have a presence in that sector,” says Ewing. “But there are opportunities for turnarounds in retail, which we’re interested in, as well as chances to back growing businesses.”
As for BWG, chief executive Leo Crawford says it will continue to invest in its Spar business in the south west of England and its operations in the Republic of Ireland. He says: “The deal allows us to focus on our grocery retail business and clears our debts.”
Mind you, the story does not end there. BWG’s venture capitalist backer Electra will soon be looking for an exit. You can expect more news on that sometime next year.
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