With the stroke of a pen – not to mention a £200 million cheque – Conviviality has been transformed from a buying, distribution and marketing operation for its 611 franchisees to the biggest specialist drinks wholesaler in the UK with a truly national reach across both off- and on-trade.
Anyone who reasoned that chief executive Diana Hunter’s first major acquisition, of Wine Rack in 2013, signalled an intent to nail the company’s colours firmly to the take-home mast has been forced to reconsider.
The deal appears to have gone down well with shareholders who rubber-stamped it at a general meeting last week. It brings scale at a swoop, promising to accelerate returns on their investment, and breeding confidence through a clear demonstration of ambition. Lest anyone was in doubt, Conviviality – as the company will be known on completion of the Matthew Clark deal, reflecting the shift in balance from retail to wholesale – is not content to tread water with a few hundred discount alcohol shops in the north of England.
Indeed, there’s an argument that the Retail bit was overplayed all along. Bargain Booze is historically a wholesale supplier to independents who’ve adopted the fascia and bought into its sourcing expertise and deal broking, while they did the retailing.
The deal has not been without critics. Some question the marriage of buying for on and off-trades, suggesting that the pub customers supplied by Matthew Clark won’t want the same wines that are going into cut-price off-licences. It’s a fair assumption, but such structures aren’t without precedent.
There are numerous examples of agency companies with dedicated teams and/or subsidiaries sourcing separate wines for the on-trade, top- end wine shops, convenience stores and supermarkets.
Matthew Clark and Bargain Booze will retain their separate identities and respective headquarters at Bristol and Crewe, Hunter says.
The growing number of operators at retail level who successfully combine on- and off-trade elements of business shows that rigid separation of the trade into two distinct factions is an anachronistic conceit.
Indeed, in many ways the new Conviviality is a throwback to the heyday of post-war off-licence retailing when, far from being breeds apart, off-trade and on-trade were inherently intertwined under the ownership of pub-owning brewers – Bass with Augustus Barnett, Allied Breweries with Victoria Wine, Grand Metropolitan with Peter Dominic and Whitbread with Thresher.
Times have changed, but with off- and on-trade boundaries blurring like never before, Conviviality will be well-placed bringing Matthew Clark on board.
“There isn’t another company in the market that will have the same insight into consumer drinking habits across on and off-trade,” Hunter told OLN. “It gives suppliers access to all those touch points and the opportunity to work with us on them under one umbrella.”
Hunter is keen to stress that the deal doesn’t represent a shift away from the on-trade. Aside from giving Conviviality the biggest on-trade order book in the country, Matthew Clark’s national coverage will help Conviviality realise its ambitions to roll out Bargain Booze and Wine Rack to new parts of the UK.
“Conviviality’s growth plan as we’ve already set out is to expand into the south of England, the north east and Scotland, and Matthew Clark has 14 regional distribution centres from the south of England to Dundee,” Hunter notes.
It also gives Conviviality the potential capacity to expand its coverage in take-home to third-party clients – like that secured by Nisa to supply the grocery needs of the My Local convenience stores bought by Mike Greene from Morrisons last month – or through further acquisition such as that of GT News in February.
Is this on Hunter’s radar? “Absolutely,” she says. “I can see that potential very clearly. It would be entirely logical to do that.” But she’s quick to add: “We have to make sure where we do that we avoid competing accounts [with existing franchisees]. In everything we do in the business we’ll ensure we protect the interests of our franchisees first and foremost.”
Ah yes, the Bargain Booze and Wine Rack franchisees. With City commentary on the deal focusing on the big-picture issues of scale and synergies, there’s a danger that the franchisees become, well, not the elephant in the room perhaps, but more the hamsters on the wheel in the cage in the corner.
Hunter insists they won’t be reduced in status as far as head office is concerned, pointing to a recent “culture survey” and ongoing franchisee contact meetings as evidence of its engagement and involvement. “Our franchisees can see the rationale and are looking forward to seeing how they will benefit,” says Hunter. “The franchisees are the heart of the business.”
Hunter’s sincerity isn’t in question, but perhaps what the Matthew Clark deal demonstrates most about the reformulated Conviviality is that, with dividends and stock prices at stake, shareholders in the City are at the heart of the business too as the new era dawns.