Pour decisions for wine companies can lead to Administration

The wine and drinks business can be particularly tough for traders, even if you’re selling one of the most popular products in human history!


Wine sellers look to avoid going bottoms up

wine business

Dealing with producers, imports and other duties can just be the beginning of a struggle to stay afloat as well as navigating the online versus physical store battle that many retailers are waging amongst themselves and each other all across the country.

 

The famous Oddbins chain went into administration earlier this year along with sister companies Whittalls Wines Merchants and Wine Cellar Trading affecting 101 stores and 550 staff. Their parent company European Food Brokers blamed Brexit, economic uncertainty and poor high street sales over the Christmas period.

 

Phil Duffy, joint administrator, said that Oddbins was a victim of tough times on the High Street, with a decline in consumer spending pointing to a squeeze on household finances. “Add into that mix rising business rates and rents, and traditional bricks and mortar retailers are undoubtedly feeling the strain.”

 

Industry experts also said that Oddbins faced specific challenges in challenging supermarkets offering a wide selection of discounted and premium wines. Oddbins previously went into administration in 2011 after HMRC refused to support a deal with its creditors.

 

Majestic Wines is also looking at a different future for itself after announcing that it’s going to rebrand its business and revamp its operating model.

 

The company, which is the UK’s largest specialist wine retailer, will change its name to Naked Wines which Majestic purchased in 2015 and is its online division. The move will see some of the company’s 200 stores closing as the company pivots more strongly towards online and international sales which account for 45% and 20% of sales respectively.

 

Naked Wines operates on a subscription model where customers pay a certain amount a month to gain discounts on wines and access to other exclusive offers and promotions when they become available.

 

Majestic Wines CEO Rowan Gormley, who is also the founder of the Naked Wines brand, said: “It is clear that Naked Wines has the potential for strong sustainable growth, and we will deliver the best results for our shareholders, customers, people and suppliers by focusing all our energies on delivering that potential.

 

“We also believe that a transformed Majestic business does have the potential to be a long-term winner, but that we risk not maximising the potential of Naked if we try to do both. Where we have no choice but to close stores we will aim to minimise job losses by migration into Naked.”

The market can be tough from top to bottom for anybody in the sector as the past 12 months alone have shown.

 

Online wine retailers Wine Direct and Just in Cases were liquidated after going into administration earlier this year and wine bar chain Veeno has only just emerged from administration as did Conviviality retail last year, the company that owns the Wine Rack and Bargain Booze branded off licence chains.  

 

As these and other companies have shown, going into administration does not necessarily mean the end for a business, it can provide valuable time to restructure and reorientate the direction back to profitability.

 

If your company needs a time out and room to breathe then contact us. One of our expert team members will be able to talk you through your options and how to find a way forward  even if it looks like every path is blocked.

Contact Us

More News