Since the summer the new off-licence group has opened 15 stores across Scotland, trading under its Winehouse and Cellar No 1 brands, with a further six opening by the end of this month – all in former First Quench premises.
The Winehouse stores operate as “a wine-led mid-market specialist”, with a focus on small to medium-sized growers as well as leading brands. The Cellar No 1 stores are more mainstream off-licences, with less of a focus on wine than Winehouse. Within two years the BIG partnership expects to be operating 50 stores, comfortably creating the largest independent off-licence chain in Scotland.
Founders of the company Philip Craig and George MacRitchie have eyed up the First Quench estate before. In 2006, and again in 2009, they launched fully-funded bids for all of First Quench’s 254 Scottish stores, both of which fell at the last hurdle when First Quench withdrew.
Despite losing out on those two occasions, Craig says the experience provided them with vital information.
“We’ve got profit and loss figures for every shop in Scotland since 2005, so we know which shops performed, and which didn’t,” he says. “Looking at the business we’re building now, we have selected 21 shops. We are now moving up to 30, then 50 of the most profitable shops, going back to 2005, and tracking how those shops have performed through time.”?While the current shops are all ex-First Quench, that may change as the estate grows. Craig adds: “We’ve been able to walk into these shops, clean up and paint and rebrand very quickly. Going forward, probably into next year, if any of the sites are still free we will certainly look at them, but the shop next door or round the corner may actually be better for us. We’re pretty open-minded as to where we go next.” Craig has a strong drinks background. Working for Jim Beam in the early 1990s, he launched Jim Beam Bourbon in Eastern Europe and Russia. In 1996 he joined the board of Whyte & Mackay as head of international sales. Then in 1999 he became head of emerging markets and global duty-free for Maxxium Worldwide, which brought him plenty of wine experience in addition to his spirits knowledge.
MacRitchie brings a financial and corporate banking background to the company. He’s worked at National Westminster, private equity groups 3i and Bridgepoint, and corporate finance group Cavendish.
MacRitchie says the locations BIG is targeting for the stores will help the company win customer loyalty for the new brand: “They’re really part of the local fabric. Apart from the five Edinburgh stores, we’re not heavily represented in the big metropolitan areas like Dundee and Glasgow – most of them are in secondary, or tertiary locations like Oban or Rothesay. I think those stores stand out as being part of the local community rather than just another convenience store that sells alcohol.”?There’s a wide geographical spread
to branches opened so far from Aberdeen in the north east to Campbeltown in the south west and Edinburgh to Oban.
Craig believes that to operate across these diverse locations, you really have to understand the individual consumer. The Kilmacolm and Helensburgh branches, for example, are just a few miles apart on opposite banks of the River Clyde, but while conducting in-store wine tastings to assign the stock to each branch they noticed clear differences in customer choice.
Craig says the company’s structure, with a small head office and strong branch autonomy, allows it to understand the local consumer and adapt to that.
“What we’ve done”, he says, “is to give the managers the flexibility to define their own stock assortment, to do their own promotional activity and run the store like it was their own.
“From a head office point of view that takes a lot of trust in the manager, but I think we have a good team and that’s what will make the difference – really drilling down to the detail of that catchment area to maximise it.”?So who is the average consumer for the new stores? Craig and MacRitchie are clear that Winehouse is not aimed at the “top-end consumer”, who may be used to shopping in more specialist wine shops.
MacRitchie says: “We know how to speak to that customer, but it’s generally the main market consumer we’re aiming for. We are a mainstream provider of wines to the general public, so some of our stores do have value brands in them, but we are trying to get interesting wines – with a good story – into them too.”?Currently its range is being supplied by Glasgow-based Alexander Wines, as well as Bibendum, Hatch Mansfield and others – all of which win praise from Craig and MacRitchie for their support for the new venture.
The company is also keen to make its beer range distinctively Scottish, reflecting the diversity of small Scottish breweries and helping brewers to convey their message to consumers.
With a company name like BIG, it’s clear there is an appetite for further opportunities. While the focus is currently on building and developing the Winehouse and Cellar No. 1 brands, in time it may well invest in other related activities – perhaps, says MacRitchie, a spirits or wine brand, or a vineyard. The ambition is certainly there.