The shutdown has forced suppliers to make radical changes to their business models and reassess their relationships with venues. Jacopo Mazzeo takes a look
‘Importers like us are the people that bear significant risks in terms of inventory capital in order to keep hospitality businesses going, so I hope we won’t be forgotten in the midst of all of this,’ Graft Wine’s Nik Darlington told me in March, just a few days before the Covid-19 lockdown was announced. When restaurants, bars and pubs were eventually ordered to close, Britain’s on-trade suppliers lost their principal, often only, route to market.
Despite the initial shock, merchants didn’t take long to react. ‘When it became obvious that a lockdown was imminent, we immediately trialled a 100% work-from-home policy,’ says Andrew Bewes, managing director at Hallgarten & Novum Wines. ‘Nothing fell over in terms of systems, processes and people... so by the time we got to 23 March we were already able to fully operate without being physically present at our offices.’ Bibendum prepared early too, 10 days before lockdown: ‘I remember the day I left the office,’ recalls CEO Michael Saunders in quite a melancholic tone.
I remember the day I left the office. It was quite a weird feeling. I said goodbye to my team and I didn’t know when I was going to see them again. At that time it didn’t cross my mind that we would still be sitting at home at the end of June
‘It was quite a weird feeling. I said goodbye to my team and I didn’t know when I was going to see them again. At that time it didn’t cross my mind that we would still be sitting at home at the end of June.’
Once staff safety had been taken care of, it was time to implement the necessary measures to minimise the financial damage brought by the lockdown. Responses varied considerably; some upped their independent off -trade game, others found a safety net in direct-to-consumer (DTC) and e-commerce sales, tapping into the spike in demand for home wine deliveries.
A wine trade approach
Hallgarten made the most of its dynamic growth in the retail sector, both multiple and independent, but eschewed the DTC wave: ‘Hallgarten is a trade supplier and we have always been clear that our role is to support, rather than go into competition with, our trade customers. There is no doubt that the loss of 98% of our core business overnight made us re-question this maxim, but we are long-term players…’
Berkmann went for a more ‘holistic’ approach with its #Help4Hospitality initiative. By selling directly to consumers, the merchant managed to shift otherwise immovable stock while helping ensure there is an on-trade to go back to once lockdown is over, hence securing some post-Covid-19 business. Help 4 Hospitality is a pop-up online shop that gives consumers access to some of Berkmann’s wines and delivery services, while channelling a percentage of the revenue back to the on-trade. Consumers can even use a venue-specific code to ensure that their donation goes to their chosen outlet. At the time of writing this article, the initiative was responsible for over £45k destined for venues and hospitality charities.
For some of the smallest clients who might struggle with cash flow we offer delayed payment
‘Help 4 Hospitality was Rupert Berkmann’s characteristically neat solution to three separate problems: Berkmann having stock and infrastructure but few orders, on-trade customers having no income, and (at the start of lockdown) many existing retailers running out of stock or suspending deliveries due to overwhelming demand,’ explains Berkmann purchasing director Alex Hunt MW. Smaller suppliers did their bit to help hospitality businesses, too.
Fine wine specialist distributor OenoTrade quickly implemented measures to help venues get through the crisis. ‘No minimum order, and for some of the smallest clients who might struggle with cash flow, we offer delayed payment,’ says former somm and OenoTrade director of trade, Olivier Gasselin. ‘They’ll only pay once they sell the wines. It’s a question of trust.’
Technology turned out to be vital for the drinks industry’s survival during lockdown. Virtual meetings allowed the drinks trade to keep in touch with clients, press and the public on a consistent basis. Loved by some, criticised by many, virtual tastings have given merchants an opportunity to remain relevant while business is stagnant and at a time when ‘the days of big mass tastings are probably done for a while’, as Bibendum’s Saunders puts it.
For Armit managing director Brett Fleming, ‘Instagram tastings, webinars and social media events with our suppliers... have proven to be key in keeping engaged with many people in the trade in all channels.’ Hallgarten’s Bewes, meanwhile, says they’ve launched a three-month-long weekly programme featuring a number of key suppliers to help customers familiarise themselves with winemakers, their wines and the regions they’re from.
In the brave new world of social distancing post-lockdown, technology will remain a life-saver for venues. Shortly after the UK’s national lockdown was announced, for example, Bibendum launched Local, a free app that allows pubs, restaurants, bars and independent drinks merchants to easily take delivery orders from customers. ‘So far it’s been hugely appreciated,’ says Saunders, who adds that they’re also planning to develop an in-venue ordering system, ‘so you have the ability to take orders and pay from your phone’.
Thinning the list
Taking orders from one’s phone means that everything will have to be simplified, adds Saunders, ‘because you might not have someone in front of you pointing at things behind the bar. Going
forward, given the restrictions, venues with 50 gins and 20 different tonics might have to reduce their off er to 20 gins and 2 tonics, to give customers a clearer choice’. With venues expecting to work at a significantly reduced capacity, cutting down on SKUs would help stock-level management. ‘Restaurants will of course have to do what it takes to manage inventory levels and cash flow very carefully,’ explains Berkmann’s Hunt. This might translate into shorter menus and even into a consolidation of the supply chain: for Saunders, ‘back-of-house areas are often tight, so the idea of having 20 or 30 different deliveries coming in a day could be quite problematic.’
With venues expecting to work at a significantly reduced capacity, cutting down on SKUs would help stock-level management... This might translate into shorter menus and even into a consolidation of the supply chain
Hallgarten’s Bewes confirms that according to feedback from their accounts, many reopening venues will work with a reduced wine list for at least the rest of the year. ‘This is understandable,’ he says, ‘but there is a danger that lists could reduce to the lowest common denominator of well-known wines or varietals – a trend that Bewes says Hallgarten will be counselling against. ‘Although short lists will require some well-known “accessible” varietals, we don’t believe that restaurants should abandon the lesser-known or even eclectic wines, as these represent or define exactly what makes each restaurant unique. If anything, we believe that the consumers most willing to risk returning to eating out will be those who actively embrace diversity and who are looking for an “experience” in what they eat and drink.’ (See our tasting on white Mâcon on the 2020 Summer issue of Imbibe for more on this idea.)
What's the plan?
As consolidation of the supply chain becomes an increasingly realistic post-lockdown outcome, how can distributors retain customers and work successfully with them as venues reopen? ‘It won’t just be social distancing issues that impact how any specific venue will trade,’ explains Armit’s Fleming, ‘but what wines will work, how people will actually feel in this environment, how do our staff actually conduct training, tastings, negotiations and much more.’
Post-lockdown, more than ever, choosing a supplier will be as much about the human relationship as it is about the service they provide
Fast adaptation, daily contact with customers and pristine levels of service will be key. ‘Competition will be quite stiff and people are going to be really picky about the kind of service that they get from their suppliers, so the companies that won’t deliver good service are going to be in trouble,’ warns OenoTrade’s Gasselin.
Four trying months of lockdown and the dangers of a second wave looming in the background have certainly provided evidence that diversification and technology will be key to ensure that distribution – and hospitality – businesses can survive and thrive in the post-coronavirus world. Crucially, however, a global pandemic has shown how the relationship between venues and their suppliers must now go beyond a mere business collaboration to become a genuinely sincere partnership. When choosing a wine, we often buy into the winemaker as much as we do the liquid itself. Post-lockdown, more than ever, choosing a supplier will be as much about the human relationship as it is about the service they provide.
This feature was orignally published in the 2020 Summer issue of Imbibe Magazine.