As everyone knows, the way to make a small fortune in the wine business is to start with a large one. But that hasn't stopped an enthusiastic army of entrepreneurs opening dozens of wine merchants across the UK over the past few years.
Why are they doing so? Haven't they read the stories about collapsing margins and supermarket dominance? Somehow these shops are not only surviving, but in many cases they are thriving.
Until now, nobody was sure about the size of this marketplace - how many independent wine merchants are there, and what kind of turnover do they have? What sort of wine are they selling? How optimistic are they about the future?
So OLN has teamed up with Wines of Chile on a major project that maps out this fascinating market sector. Over a period of months we have painstakingly compiled a definitive
database of all independent wine
specialists. In doing so, we carried out an extensive telephone survey of the OLN circulation (which covers just about all of the UK off-trade) and also teamed up with Liberty Wines and Bibendum, who have shared details about their customer base.
The result is a roll-call of 512 retailers with a heavy reliance on wine (typically at least 80 per cent of turnover) and usually just one branch. There are exceptions: Tanners, for example, has four shops. All are primarily retailers, though in many cases wholesale is becoming an increasingly important part of their business. As well, online sales are growing stronger, too.
Michael Cox, director for Wines of Chile UK, calls the growing band of enthusiastic independents and specialists "the lifeblood of the wine trade".
He said: "These are the people that stimulate and inspire wine drinkers to be more adventurous and knowledgable in their quest for wine pleasure and fulfilment. In some sense, the same analogy can be made for the wines coming from Chile, and this is why the association of Wines of Chile with this independents project is so apt and important.
"Modern Chile, with its increasingly innovative and dynamic winemakers, offers creative wine merchants exciting opportunities to inspire wine lovers with a wide range of sensibly priced and unique wines that are a far away from the 'Homogenous Highway'.
"So Wines of Chile looks forward to developing, with OLN, the 'road map to wine diversity'."
Over the coming year, OLN will be following the progress of this dynamic area of the market - meeting the people who are driving it forward and examining the issues they face.
To begin our project, we can outline our initial findings.
Where are the stores located?
Not surprisingly, England is the biggest market, accounting for a whopping 84 per cent of independent wine merchants. London by itself is almost as big a market for these stores as Scotland, Wales and Northern Ireland combined.
The UK population is 60.6 million, meaning - in theory at least - that there is one independent wine specialist for every 1.2 million people.
What's the main area of strength?
France may be looking over its shoulder at California in the general off-trade league table, as it struggles to hold onto the second spot, but it's a completely different story for the independent wine specialists. More than half of our retailers said France was their main area of expertise, though Australia's second place was more than respectable.
Chile, Italy and "other" 5.6%
South Africa 2.5%
It was a slightly different story when we asked retailers to spontaneously list all their areas of specialism. This time,
although France was still the front runner, Australia was not such a distant second. The fact that so many shops cite organic wines as an area of strength may also be significant: might that figure be even higher than 20 per cent when we ask the same question in a year's time?
All areas of strength
South Africa 48%
What do retailers predict about their sales performance in the coming year?
Much higher 16.5%
A little higher 46.9%
About the same 28.1%
A little lower 7.8%
How big is an average specialist's turnover?
According to our figures, it works out as £601,887. That is quite high because it has been skewed by some very big numbers from a handful of larger shops at the top end of the market. Seven per cent of merchants, for example, claim their turnovers are above £1.5 million per year.
However, two-thirds of our retailers - 67 per cent - report a figure below the average.
Shop annual sales
£1.5m plus 5%
Diversity, knowledge and service key to success
While the retail giants shift their drinks on volume promotions, there are plenty of independents winning customers over with their personal approach. Emma Eversham reports on just three
Vinology in Stratford- upon-Avon may only have opened eight months ago, but the business already has 1,000 customers on its database and is seeing consistent sales growth every month.
Set up by former SH Jones & Co employees Matt Cowan and Mark Archer, Vinology is primarily a wine specialist, but the shop also stocks 130 whiskies.
The wine range is diverse. Both European and New World wines are stocked, but Cowan says European wines are currently selling better than those from other countries.
Cowan says: "One country that's been most consistent is France, but Italy is performing well. We do amazingly well in sales of Pinot Grigio."
To keep customer interest thriving, wine and whisky tastings are regular fixtures in the Vinology diary, and Cowan and Archer have even teamed up with a local branch of cheese merchant Paxton & Whitfield to host wine and cheese tasting events.
The pair also collaborate with local restaurants on special wine and food tasting nights, with the shop finding wines to match menus supplied to them by the chefs. Cowan says he believe s the shop is thriving because it has a loyal following of customers who trust them to find the right bottle.
"We had a good customer range before when we were at SH Jones & Co and, fortunately, people followed us to Stratford when we set up here," he sa ys. "We give customers the personal touch that I don't believe you get in supermarkets."
H Needham & Sons
Brothers Ralph and Malcolm Needham have managed to stave off competition from supermarkets and off-licence chains to survive in the independent wine trade for almost half a century.
Set up in 1960, H Needham & Sons in Sevenoaks has grown into a flourishing wholesale and retail business which not only supplies restaurants, pubs and clubs with a diverse range of wines, but has also been the UK agent for Guy Charbaut Champagne for 33 years.
The shop, which started life as a grocer and off-licence in 1958, has become somewhere customers regularly seek advice on the wide range of wines stocked since it stopped selling food when the brothers took it on.
Today, Australian wines are the biggest seller at H Needham & Sons, but sales of Chilean wines are also rapidly increasing and Ralph says the South American country's wines are certainly ones to watch this year.
The clue to survival in a crowded retail market, he says, is offering what the competition can't - range and product knowledge.
He says: "Our strength is that we can diversify because we have good links with different suppliers. Of course, there is great competition from the supermarkets, but not everyone wants to spend £3.99 on something that they have no idea what it tastes like.
"With a specialist you can ask advice and not just chuck something in your basket that you haven't really thought about."
The fact that the owners of Scottish wine merchants Villeneuve Wines have not one, but three flourishing shops is evidence in itself that times are good for many independent wine merchants.
The company has been trading since 1983 when Kenny Vannan and Alistair Rae launched their flagship store in Peebles, before opening shops in Haddington and Edinburgh.
Villeneuve Wines lists more than 2,000 wines and 150 whiskies, which are also available to buy over the internet.
One of the reasons business is so strong, according to manager Njord Maciver, is because the company employs enthusiastic and knowledgeable staff. All staff try wines before they are put on the shelves so they know exactly what they are selling and some have even visited vineyards where the wines they stock are made.
It is also this specialist knowledge that sets Villeneuve Wines apart from its competitors.
Maciver says: "There's a bit of a polarisation between what the supermarkets offer, which is mostly cheap brands, and what specialists offer, which is value and quality wines. There's nobody in the middle now, because Oddbins and Thresher increasingly seem to be going down the brand route, so I think that's where we are gaining sales."
By being independent the company can also be more adventurous with the wines it chooses to stock, and if a producer whose wine it has been stocking starts selling through a supermarket, Villeneuve Wines isn't afraid to move on. Maciver s ays: "We have been successful with Pinot Noir from New Zealand which we got into five or six years ago, well before everyone else did. We also do well with niche Australian wines and France has done very well for us, particularly wines from the Languedoc."
Do you use an EPoS system?
The size of the market
We asked our retailers to tell us their turnover. A high proportion of those we contacted were able to do this . Averaging out the figures we received gave us a total of £309.4 million as a value for the independent wine specialists. But we think this is a little high - remember, our stores typically generate 80 per cent of their turnover from wine, so it seems reasonable to deduct 20 per cent from our total to allow for the contribution made by other product areas such as spirits, beer and tobacco.
We calculate the market is therefore worth £247.5 million. That's a little under 5 per cent of the total off-trade wine market (including sparkling and fortified), which ACNielsen values at £5,192 million.