The dedicated focus and expertise of their on-trade suppliers are going to be crucial in how well and how quickly the on-trade is able to re-open its doors in April and May, say the senior Bibendum management team.
There is that moment before a group Zoom conversation starts when you sit waiting for other participants to join, when you wonder about the kind of chat you are going to have and what sort of mood everyone is going to be in.
Which was very much the position I was in waiting to talk to the senior Bibendum team about their on-trade business when I knew all their customers were closed. Just how upbeat could they possibly be?
Well, as it turned out – when our screens flashed into life – their mood was infectiously positive, eager to get across the message that not only are they desperate to get back to business, their customers are all chomping at the bit, full of ideas and inspiration to hit the ground running as soon as the government finally gives them the green light to open their doors.
The Bibendum team were in upbeat mood about how strong the on-trade will bounce back in the coming summer months
Yes, everyone in the on-trade has been through the mill and many outlets will not be able to survive what has effectively been the third national lockdown of the hospitality industry, but those that have are more than ready to jump start the sector when they can.
Michael Saunders, Bibendum’s chief executive, says he has been blown away by both the “amazing resilience of our customers” and their indefatigable spirit to keep going.
“Since the clarity about when they are re-opening there has been unbelievable excitement [amongst our customers]. We’ve never been busier. It’s just gone completely nuts.”
What is particularly encouraging for a business like Bibendum, he adds, is that most of the conversations they are having with their customers are not about consolidating supply and stocking up on tried and trusted brands, but what they can do together to push the boundaries and “really engage with their customers” when they can go out to eat and drink again.
“It’s not going to be the same as it was before and that’s the exciting thing,” he adds.
Saunders offers the example of a good quality, small hotel group, with whom he had been trying for years to take on a more ambitious wine range, who have finally given Bibendum the go ahead to go in and “rethink its drinks offer and make it more interesting”. “These are things to get really passionate about,” he says. “I can feel the adrenaline surging through the industry again.”
Lockdown learnings
(Click here for How Bibendum’s John Graves expects the on-trade to come back post lockdown)
John Graves, who heads up Bibendum’s on-trade channel, said from the moment that April 12 was cited as the date when the on-trade could get going again, he was being contacted by customers eager to see what they could do to ramp up their wine lists.
He says suppliers and operators alike have “learnt a lot from lockdown” about what works, what doesn’t and what both sides need to really focus in on. The momentum the on-trade was able to generate in just the few weeks when it was able to operate close to normal during 2020 has really helped businesses hone in on what is important to them.
“The mini opening we had before Christmas certainly showed us what was going to happen because the quality of sale that was going on then was a different class to what it had been before,” he explains. “People were not coming in and asking for a glass of house wine, they were looking to order something good. That’s the mantra I am taking and encouraging our customers to do.”
Equally everyone has to do what is right for them to make it commercially viable as well. “They have got to work out how they can give their customers what they want and still make a good margin from it. That’s what I am working on mostly – just how do we do that.”
Richard Hayhoe, Bibendum’s head of marketing, now hopes the on-trade can benefit in the long term from the up-selling and higher priced wines that have been bought in specialist retail during the whole Covid-19 period, he adds. That thirst to find something new, different and exciting to keep people upbeat during lockdown, can only be good news for restaurants as well.
“People are going out to shops and spending £12 to £13 on a bottle of wine as opposed to £8. Iam absolutely sure that’s going to impact and that experimentation will stay with them when they get back to the on-trade.”
This is potentially the opportunity the on-trade and its suppliers have been craving for years, says Hayhoe. That natural thirst for knowledge and being willing to pay a bit more to find out how a particular wine is made, who the producer is and where they come from can only be good news if restaurants and suppliers can find ways to galvanise that and bring them together.
Are we ready for nirvana?
(Click here for Bibendum’s Michael Saunders on why he is so positive about potential “nirvana” that awaits the on-trade re-opening)
Having the “protection” of major drink brands producer, C&C Group, behind it has once again been crucial for Bibendum in the last year, says Saunders.
Its support has allowed it to furlough staff where needed but also to “maintain the business that we are,” he adds, and continue to take on new agencies and work closely both with its customers but also its producer partners too.
Clearly having a more balanced route to market thanks to its strong off-trade arms – Walker & Wodehouse for independent wine merchants and Bibendum Off-trade, serving major multiples – has been crucial whilst the on-trade has been closed.
All of which has left it with a “strong balance sheet” from which it is “ready to explode” when the on-trade comes back, he adds.
Saunders was also in a reflective mood and hopes the last year will make the industry wake up to what is really important in life and the relationships that businesses and their people have. In particular he hopes the focus can switch far more to what everyone can do positively together rather than the negative.
“Underneath the bonnet we have to deal with a lot of shit,” he says. “We have to deal with some pretty aggressive people, and stuff you want to leave in Pandora’s Box.”
His hope is that suppliers and operators alike can be jointly far more focused on the end consumer and what they want and need then it will be much better for both sides. “I am very optimistic, perhaps naively, that we could be entering a little bit of a nirvana, where it’s all about doing things well and collectively, with a sense of fun, definite quality and a lot of passion. If that happens, won’t our world, and the world, better.”
Graves agrees and says he is having similar conversations with his customers: “Everyone I am talking to is super optimistic.”
He is particularly pleased to see so many operators start to look at how they can change their sales mix, particularly on impulse drink purchases at different times of the day. It is an area he has been pushing for some time. What can we be doing both at 11am and 11pm to promote drinks sales?
“Everyone is looking at that now. It’s been that time for reflection. The opportunity is there to do great quality soft drinks now is fantastic. It’s not just about Chablis any more but going out and having an experience in an on-trade environment. It’s really exciting.”
Long term impact of Covid
(Click here for Bibendum’s Michael Saunders & Richard Hayhoe on major difficulties ahead for the on-tradein the coming months)
Saunders believes it is too early to say how many casualties we are going to see in the on-trade sector due to Covid-19. “I think we will see by the end of this year how damaging it has been on the sector, and that’s in the supply chain and with our customers. A lot of customers have been able to defer their bills, they have not gone away. They have been able to defer their rent, defer the tax, it’s just pushing the problem down the line. I am very aware that that true problems are yet to surface,” he explains.
Hayhoe agrees: “There are so many variables to consider,” even with how far do you go with re-opening outside in April. But what is clear, he stresses, is just how “incredibly resilient and creative” the hospitality sector continues to be. Be it the switch to delivery, the use of Deliveroo, opening up dark kitchens, and, in particular, the quality of the at cook at home meal kits that have been introduced that will put the on-trade in a much stronger position coming out of lockdown.
“I think operators have become a lot more creative in lockdown because they have had to be – we have seen how many have switched on to the in home experience.”
The fact you can now get Michelin standard food to cook at home has been a real breakthrough and a service many restaurants will carry on with, says Hayhoe. This, in turn, has also opened up a new potential revenue stream for Bibendum to partner with those operators and supply the right wines to go with that high end, at home premium service.
Difficult trading decisions
(Click here for Bibendum’s Michael Saunders on the difficulties of deciding which customers they can and can’t trade with)
There is also the brutal reality of knowing which customers to support and carry on trading with, which is a real test of just how well Bibendum and its teams really know its on-trade customers, says Saunders.
“The closer that John and his team can get to his customers, the more aware we are of what the pluses are and where the potential pitfalls are,” he adds. “The other thing that the last year has taught us is that relationships really matter.”
Graves says says he is very proud of the support his team have been able to give their customers and the strength of the relationships it now has with key customers as a result. But equally it is so much harder, he adds, to do your usual due diligence on a customer when they have not been trading for so much of the last year.
Ultimately, adds Saunders, they have to “look at people in the eye” and judge whether they are going to be able to “honour” what they are promising to do.
Graves and his team have also worked hard to do all they can to support and keep close to their customers, many of whom he considers friends, like having a regular drink in the evening online. “We are getting a feel from when we talk to somebody about what they are going to do, if everything goes well. It’s the learnings [from the last year]. Before we would have done a credit check, but now that’s a bit pointless because nobody has been trading for a year. You have to delve a little deeper into what they are going to do when they can re-open.”
Future of drinks distributors
(Click here for Bibendum’s Michael Saunders on future winners and losers in the UK drinks distribution sector)
Saunders fears there is going to be a “big polarisation” in the drinks supply chain in the coming months when it becomes clearer which businesses can come out of covid stronger than others.
That “polarisation” will be driven by the whether or not you have the rights “people, skills set and attitude” in your business. He concedes Bibendum is certainly “not alone” in being able to deliver many of the added value services that the on-trade, in particular, is going to need.
“We have some very cool competitors that we think very highly of and, in all our various disciplines, we watch them to try and understand what they do, and learn from what they do, and they will do to us as well.”
The big losers, however, will be those suppliers operating at what he calls the “transactional” end of the market, where it is simply all about the product, the price, the promotion and nothing else and they are “not intimate with their customers”.
“I think there is going to be quite a seismic change actually,” says Saunders in the make up of the drinks industry in the months ahead. “It’s not just about size. To me it’s about skills set and attitude and approach that is going to divide the winners and losers.”
Trading challenges
There is also the added factor of dealing with the major changes in trading and importing because of Brexit that is going to have an impact too, he stresses.
The businesses that are intent on trying to win business by “cutting their margins to below zero” are not doing any one any favours, particularly their customers, in the long run. Saunders dismisses them as being “stupid” and “can only think it is a last gasp before death frankly”.
Ultimately, he adds, it is about how hard you are willing to work for the long term security of your customers, he adds. How determined are you to build those long term relationships. “We think we can help you, we think we have got the right products, the right people and the right resource you can draw upon to make your business better. Our job is to convince them that we are their right partner.”
Before adding: “I believe the team that Bibendum has developed is really going to show a good pair of heels to quite a good number of our competitors.”
Who is going to be in demand?
As to who is best placed to go and work for Bibendum? Graves jumps in first by saying he is looking for someone who is first “vinous and cares about the product they are selling” but he is also looking for people that are “commercial and understand their customer and their customer needs”.
Then there is the added factor on really understanding the business you work for and the fact it is part of this wider C&C group and all the strengths and benefits that can bring as well, adds Graves. “It’s not about poncy wine any more. It is about supporting businesses and doing the drinks category justice. That’s who I am looking for.”
Hayhoe says he looks at how well someone genuinely understands how the drinks supply chain works. What efficiencies can they offer their customers more, be it flexible and low minimum order values, or composite delivery options, and next day delivery. “We have got the best capability over anyone to deliver that,” he claims. “That service package is going to set us apart” – backed up with all the insights they need.
- In Part 2 of our in-depth analysis of Bibendum’s plans for the future we look at its culture and why it believes it is so important to any future success, supported by the analysis and insights that allows it to become far more than just a drinks distributor.
