Wine Rack was bought by Bargain Booze owner Conviviality Retail this week from London-based wholesaler Venus Wine & Spirit Merchants in a £1.6 million deal.
The acquisition of the 22-strong Wine Rack chain brings the Bargain Booze group’s estate up to 633 and gives it a significant entry point into upmarket wine retailing and London and south east England – a key target area for expansion.
But Conviviality chief executive Diana Hunter told OLN that expansion plans for Wine Rack would see the format made available as a franchise package both to existing and new retail members, with no geographical limit on where the fascia could operate.
Currently only one Wine Rack store, in Henleaze in Bristol, is outside London and the south east.
“Our intention is to create a franchise model for Wine Rack for the future and we expect any growth [in store numbers] to come from that franchise model.
“That will include new franchisees and some of our existing ones where they see good wine trade and where they are in the right location. We have 100 stores that have a strong wine trade and it may well be that some of these will end up as Wine Racks.
“But the priority at the moment is learning about the business, understanding the operating model so we can decide how it will work as a franchise.”
Hunter said that Wine Rack had ticked several boxes for Conviviality. “It is a destination wine proposition that has been managed well and the fact it is London is helpfully in line with our strategy,” she said. “It’s also a well-known and loved consumer brand in its own right.”
Hunter said existing franchisees who continue to operate under the Bargain Booze name and other fascias within the group will be able to access wines from the Wine Rack range.
Venus has been given a supply deal to continue to supply Wine Rack until January of next year, at which point Conviviality will be able review the agreement.
“It will remain in place if all goes well,” Hunter added.
She said that the acquired Wine Rack stores will continue to operate as company-owned, manager-run stores for the foreseeable future.
Ron Booker, Wine Rack’s regional operations manager, will remain with the business.
“They will continue to trade as managed stores. Keith [Webb, deputy chief executive] is visiting all the stores this week and in the process of welcoming them into the group.
“The managers and people who work in the existing Wine Rack stores are vital to us because they understand the operating model.”
Wine Rack was bought by Venus after the collapse of previous owner First Quench in November 2009. It was originally founded as the posh wine arm of Thresher under Whitbread ownership in 1989.
Chairman Laki Christoforou publicly stated his intention to build a chain of 100 stores, but the pace of growth proved slower than originally expected.
Conviviality raised £66.7 million to pay off debts and fund expansion in a share flotation in July.