Wine: News Analysis
Negociants UK’s decision to leave Berkmann and handle its own distribution is part of a growing trend. But, David Williams asks, will it work?
They call it disintermediation – a complicated word for a simple act: cutting out the middleman. And while it’s not quite got to the point where you’d say disintermediation is a craze that’s sweeping the nation, for an increasing number of wine producers it’s clearly become an attractive option.
The latest firm to make the switch is Negociants UK, which has left its on-trade and independent off-trade supplier, Berkmann Wine Cellars, following the likes of Concha y Toro and González Byass, to become a fully-fledged UK operation. The company, a wholly-owned subsidiary of the Australian Yalumba Wine Company, will now be selling its portfolio of antipodean brands, which includes respected names such as Jim Barry, Nautilus and Vasse Felix, as well as the various Yalumba labels, direct to the on-trade from its UK office. The company was already selling direct to the supermarkets.
A jump or a push?
There has been some speculation in the trade that Negociants was forced into the move after Berkmann radically reshaped its range of Australian agencies at the beginning of this year, replacing many of its brands. According to Berkmann purchasing director, Alex Hunt MW, however, it was more a case of Berkmann ‘responding [pre-emptively] to a shift we perceived in Negociants’ distribution strategy; we needed to revert to a sole distributor model, which is what we do best, and are really pleased to have eight great producers on board.’
That left Negociants to embark on what managing director Simon Thorpe MW calls an ‘exciting’ new challenge that had been in the pipeline for the ‘past couple of years’.
Thorpe stresses the move isn’t about making more profit. ‘In the grand scheme of things, we think we can represent our brands ourselves in the best possible way – better than anyone else,’ he said, adding that the balance between increased costs and savings ‘ought to be about even. We’re not paying a percentage to a distributor, but we have higher overheads – it’s quite an investment. And this isn’t necessarily a market people are looking to invest in at the moment.’
Those higher overheads come in part from an increase in personnel, with three new staff added to the existing team of 11 to take care of the new trading channels, and a ‘dedicated team to sell into and support London accounts’. Outside the M25, the company is currently building what it calls ‘a carefully chosen network of talented distributors to sell to on-trade outlets around the country’.
Thorpe also said that Negociants is looking to ‘engage directly with the sommelier community. We’re very well set-up when it comes to staff training, and in the second half of September we’re going to be doing a number of events around the country with some of our winemakers.’ The winemakers’ tour, which will take in 10 different events, will feature Louisa Rose (Yalumba), Iain Riggs (Brokenwood), Virginia Willcock (Vasse Felix), Tom Barry (Jim Barry), Clive Jones (Nautilus) and Jeff Clarke (Ara).
Chances of success
Will the move work? According to Mark Wilson, general manager of the UK operation of another Australian producer, De Bortoli – which has had its own UK office since 1997 – the benefits of striking out alone are most evident in the off-trade, where supermarket buyers are keen to strip out as many costs as possible. ‘It’s attractive [for customers] as they get to speak directly to the horse’s mouth, and we don’t have to give away a piece of the pie,’ says Wilson. ‘But the obvious disadvantages are the costs and how overheads are managed.
‘We still have difficulty managing the on-trade,’ Wilson added. ‘It’s difficult for Australia because so many restaurants are looking for commercial Shiraz and Chardonnay and not much else. We work with regional wholesalers, but in London we may find it necessary to go with a bigger player, an on-trade specialist, to get into top establishments.’
That would be the opposite route to Negociants, but Thorpe is convinced the time is ripe to strike out alone. ‘This is a long-term thing, which we can do because we’re a family company,’ he said. ‘We’re trying to get customers as close to the producers as possible. It sounds a bit airy-fairy, but we want to convey the love and passion we have.’
Editorial feature from Imbibe Magazine – May/June 2012