Diana Hunter’s ambitious expansion drive has irrevocably changed the face of the BWS trade, bringing retail, wholesale, on-trade and events together under the Conviviality banner, with Bibendum PLB the latest to join in a £60 million deal in May. She has placed her trust in Shaw to manage wine buying at the enlarged group, which grew revenue by 137% to £864.5 million in the past financial year.
It is a welcome return to retail buying for the man who headed the Waitrose team for almost six years. Bargain Booze represents a completely different challenge – it is hard to imagine a retailer more diametrically opposed to the upmarket supermarket that has spawned the Overheard at Waitrose Facebook page, featuring quotes such as, “Jemima, you’ll have to take the rosemary off the focaccia before we feed the ducks, darling, they can’t digest it…” – but Shaw is relishing the challenge. He also calls Wine Rack “a hidden gem” and believes it can become an unrivalled national chain. It leaves him heading a team of 36, including buyers from Matthew Clark, historically a fierce rival of Bibendum when it came to supplying the on-trade, which could leave him needing levels of tact and diplomacy to rival Theresa May as she attempts to bring together warring factions of the Conservative party post-EU referendum.
Conviviality is now the second largest wine buyer in the UK, behind only Tesco, but Shaw has arguably a broader remit, responsible for more than 4,500 SKUs from around 600 suppliers. It may sound like a very demanding and high-pressured job, but Shaw appears relaxed and cheerful when we meet at the Bibendum PLB headquarters in London’s Chalk Farm.
“It’s very clear that Conviviality has bought Matthew Clark and Bibendum PLB as growing concerns to grow and invest in,” he says. “It’s a very motivated and motivating company. The dynamic between Matthew Clark and Bibendum is unbelievably positive. The individuals all have different accounts with different propositions. We have been incredibly clear that the two propositions remain absolutely separate in customer facing and ranging. Nothing will be shared.
“We put sales teams together at meetings and they are all drinking and laughing with each other. The feedback was that you couldn’t tell which of the individuals were Bibendum or Matthew Clark. There are far fewer differences than were perceived in the past. At the end of the day we are all in the drinks world, we do the same thing as one another and we fell into it because we enjoy drinks and connecting products and customers.”
Shaw grew up in Somerset in what he calls “a wine family” that counted the Averys of Bristol as family friends. His first job was at an English vineyard and he worked at Oddbins before making wine in New Zealand for a year. On his return he started buying wine for mail order companies and set up the award-winning indie Stone, Vine and Sun in Winchester. “I’ve been buying wine now in one form or another since 2000,” he says. “It’s flown by. I got into buying to engage consumers in something they like drinking, that changes their lives. That’s what inspires me to buy something better or different. At Oddbins you see the enjoyment of a customer on a shop floor. That’s the bit that inspires me the most.”
He was wrestling with MW studies when Waitrose came calling in 2006 and he joined Bibendum for a new challenge in 2012. That new challenge seems to be growing increasingly challenging. “My previous history was out and out off-trade. Bibendum was 80% on-trade. We picked up PLB, which was the perfect balance. Now I have experience across all categories to give the breadth of understanding. It’s great to get back into Bargain Booze and Wine Rack, getting me back into retail.
“We have had such a tough decade in the high street. There was no real long-term vision and very little investment. Now we have Oddbins and a whole host of interesting regional independents like The Sampler, who are doing a great job, but not a nationwide job.
“I have been very impressed with Wine Rack’s focus on the customer and its ranging. They are taking it seriously and with the group buying power and insight and awareness of consumer demographics and consumer taste profiling requirements we can do a fantastic job with Wine Rack. We are having really interesting conversations about really stamping our footprint with Wine Rack.
“We have a nationwide distribution footprint so we can streamline that and drive efficiency of supply chain management. A Wine Rack could be supplied out of a Bibendum regional distribution centre.”
Shaw freely admits that Wine Rack’s rivals are Oddbins and Majestic while Bargain Booze’s rivals are practically anyone, from the big four and the discounters to the various symbol groups and indies – and all of these are either existing customers or potential customers for PLB and Walker & Wodehouse, historically the Bibendum arm aimed at supplying independent wine merchants. That creates a pretty obvious conflict of interest, as those retailers are essentially buying from a group containing their retail rivals. The only way to operate is by keeping retail and wholesale very separate, according to Shaw. “We need to be very transparent. There’s no point in damaging the long-term relationship or opportunity with all of the retailers by not offering price parity. We need to ensure that all our retailers have a margin they can deliver their aspirations on. That includes Wine Rack as much as Majestic. We are here to ensure longevity. Something selling in Wine Rack, Waitrose and Majestic is the same principle – to deliver the margin aspirations, to ensure they aren’t exposed on retail price – and that will absolutely be maintained. It would be a very short-term, naïve, blinkered benefit if we were to do anything other than that.
“We have talked it through. If I was sitting in a retailer’s office it’s the first thing I’d want to know about. This is a business built for the long-term. We are not trying to capitalise on a short-term window. The strategy is to build up trust through long-term relationships.
“PLB sells to Bargain Booze. Walker & Wodehouse sells to Wine Rack. It’s a transaction. If our retailers ever question it, we need to be credible and transparent. My buyers for Wine Rack and Bargain Booze negotiate a margin with the account managers [for Walker & Wodehouse and PLB] and find the best proposition for their retail base. If [buying] doesn’t come from the group, fine, that’s completely acceptable. If PLB or Walker & Wodehouse can’t deliver Bargain Booze or Wine Rack the margin they need we won’t buy from the company supply base.”
Bargain Booze’s mission statement is to sell booze cheaper than the supermarkets, and Shaw believes his experience at Waitrose – where he had to brand match with Tesco in its discounting heyday – stands him in good stead when it comes to buying wine for the chain. “We need to work with franchisees to deliver the best price on the market. Brand owners and suppliers need to sympathise and work with us. There is the old school way of buying, which is bang your hands on the table and threaten delists, but this is about ensuring we have the right relationships with the right suppliers for our customer base and building up long-term relationships with them.
“The average price point is around £5. It’s very much about being cheaper than the supermarkets on a like for like basis. Realistically everybody is a competitor of Bargain Booze. It comes down to the margin aspirations of the outlets. Our challenge is to get the right proposition for our customer base and make the model profitable for them.”
The rise of Aldi and Lidl has forced the supermarkets to overhaul their wine offerings, focusing on EDLP and tighter ranges with more facings for bestselling SKUs, and Shaw believes the EU referendum result has shaken things up even further.
“Multiple retail post-Brexit is a different place than pre-Brexit,” he says. “None of the retailers are really profiteering at the moment. Everyone is looking again at routes to market.
“My understanding is that the situation at Tesco, they turned it around pretty quickly with a positive performance that’s driven by a reduction in line counts. If the Aldi and Lidl model is a route to go down the retailers will be determining that line count and allocation space is an important element of their total proposition.
“Where does wine sit in the retailers’ armoury? What’s the point of difference? The discounters have shown it doesn’t need to have volume of lines. You need a clear proposition.” But he adds: “Multiple retail has a very strong future. They have the access to the customers to engage them on many levels.”
Uncertainty over exchange rates and trading relationships with Europe after the referendum result could open the door for China to seize a far greater share of the UK wine market, according to Shaw, who says he “firmly believes in the quality of Chinese wine”.
He says: “We have started doing something with China. China could capitalise on this market uncertainty in the Eurozone. It is the fifth largest supplier of wine, strategically wanting to [increase] their distribution model in global markets, particularly in the UK, and the timing could be perfect for China.
“We have pitched to retailers and we are going to bring in one supplier from September and two more in April 2017. I firmly believe in the quality of Chinese wine and I am an absolute supporter of their capabilities and we want to be at the cutting edge of it.”
The EU referendum result has sparked uncertainty in the markets and caused the pound to struggle against the euro and against the US dollar, which will affect the price of wine bought from Europe and the Americas.
Shaw added: “With Brexit, so much depends on what happens to the EU as a group of nations in the next six months and our relationship with that infrastructure. In the short-term it’s the uncertainty that is prohibitive and slows the relationships down.
“But as one opportunity goes down, one goes up. It might play to the strengths of Australia, New Zealand and South Africa. We may well find that there’s a more stable long-term buying opportunity in other nations that aren’t on our doorstep.
“The currency swing is the biggest concern on an immediate basis in Europe. If it diminishes it threatens the infrastructure of many suppliers in Europe, if they are UK-centric.
“For six months there will be uncertainty. There will be increased cost of administering business with Europe. Fundamentally it destabilises the supply base in Europe and may strengthen relationships with other parts of the planet. For key commodities like Prosecco, it’s going to be fascinating how that plays out.
“Most have hedged to carry through the majority of terms until the end of the calendar year and by then you would hope that the FX swings would be minimised but the rates at the moment are certainly several per cent worse than they were.”