Richard Ellison is putting his years in finance and banking to good effect as he looks to shake up the wine sector with Wanderlust Wine.
(Click here to watch the full interview with Richard Ellison, founder of Wanderlust Wine and its new head of trade, Françoise Mathis.)
Rules, as they say, are there to be broken and over the last six months we have seen the traditional ways of doing things in the drinks industry stretched, and twisted as retailers, importers, distributors and on-trade operators have all had to adapt just to say in business.
The biggest change has arguably been the number of companies that have opened up direct to consumer and e-commerce platforms as suddenly online was the only place where you could actually grow rather than just rescue sales.
But for Wanderlust Wines the outbreak of Covid-19 has not required any new change in direction. In fact it has, in the main, proven that it had a business model that is flexible enough to cope with and cater for the needs and demands of potential wine customers from whichever channel they are in.
For this is a business that was not set up just to supply the trade, be it the specialist retail, multiple or on-trade side of it. No, it was launched four years ago with the sole purpose of sourcing exciting, off the beaten track wines that people could buy in whatever setting they wanted. Be it in their homes, at the office, on the shelves of their local independent wine merchant, or whilst out dining in a restaurant.
Ellison says the inspiration for Wanderlust Wine was more of the cumulative effect of his years in banking and determining which business he came across that he felt the bank should be investing their money in. “It was a great way of learning business through the eyes of an entrepreneur,” he says.
When he did think about his starting his own wine business it was a return to his more “gastronomic roots” and his “love for food and wine” as he originally trained as a chef and then became a food and wine technologist.
(Click here for Richard Ellison’s original premise for Wanderlust Wine, its multi channel approach and why technology has been key)
The name ‘Wanderlust’ could not have been better picked as that is what he likes to do is travel to a region and then go off piste to find the real characters making wines that he can really get behind and promote with passion to his customers – wines with provenance, that are ideally organic and fully sustainable as well.
“It’s going off to find these gems and these small producers,” and bringing them exclusively to the UK, he explains.
All about the technology
How technology has helped Wanderlust Wine grow so quickly
The more he researched the wine supplier sector the more he realised how closely it followed the same principles as the banking world. With a number of major dominant players at the top, that have huge operating costs, a big gap in the middle of medium sized companies, and then a whole host of smaller, niche and new players into the market at the bottom.
That’s when he realised he would not be able to build a business with scale going through the traditional route of adding more people as you grow. He simply could not afford it. But technology“could do it for us”.
“We have no operational staff – the technology does it all for us,” he says, thanks to the partnerships he has set up with third party computer businesses that handle the orders and then automatically order and get couriers to do the deliveries.
(Click here for how Richard Ellison realised technology was the way he could build scale quickly for Wanderlust Wine)
It’s a model that has really proved its worth during the Covid-19 lockdown as the technology was able to handle the big pick up in orders and keep the whole system working, he adds.
How ‘vintech’ businesses could be the fintechs for wine
Ellison says there is an opportunity for wine businesses to learn from how new fintech businesses have transformed the traditional legacy based banking sector and enabled highly profitable, hugely scalable, very popular new companies to emerge. Why can’t technology help create what he calls the same highly profitable ‘vintech’ businesses in wine that enable companies to be “operationally efficient”.
(Click here for Richard Ellison on how wine can take inspiration from how fintech has transformed banking and create a new raft of highly profitable ‘vintech’ businesses)
Interestingly he says it might even be easier for some companies to literally “start again” rather than try and adapt existing systems that are not fit for purpose.
Proving doubters wrong
Now this technology first approach is somewhat different to many of his more established – and larger – peers in the trade. Who have not always been shy in questioning whether he knew what he was doing. Four years on and Ellison hopes they are starting to give him a bit more respect for the approach and strategy he has taken.
It seems the “quips” from the sidelines have only spurred him on and stick to what he calls the “full service model of connecting the consumer through the different channels with that small organic producer”.
In fact Covid-19 has ended up being what he describes as a “perfect storm” in that is had a “scaleable model, based on DTC, a wine club and hourly delivery” backed by what turned out to be the perfect time to run what had been a long planned equity fund raising campaign, which closed 200% above its target, during lockdown.
(Click here for how Covid-19 was a perfect storm for Wanderlust Wine to grow and to raise extra equity funding)
Ellison says the extra funds will allow him to get out of the cycle of simply re-churning profits into paying for any extra stock you need to take on by listing a new producer.
But what is it about Wanderlust that brought the investors in, particularly at such a turbulent time? Ellison believes it is down to the fact it has been able to prove it has a trusted, scalable model that does not have the usual large operational staff and costs associated with growth and that its baseline economics are already delivering higher margins than much bigger, more established suppliers.
It’s also the idea, he adds, that “technology powers a much better economic model and there is more money to do other things”.
(Click here for Richard Ellison on how investors want to back a business that is commercially driven by investment in technology)
Wanderlust’s flexible technology based business model also meant it could cash in during the first weeks of lockdown when the country’s biggest most established online players – most noticeably The Wine Society and Naked Wines – had to actually stop trading in order to keep up with the demand in orders.
Rather than wait for more capacity in its own distribution model, using its own vans, Ellison says he was able to simply place more orders with third party national couriers.The fact it had a model that allowed it to scale up so quickly meant it saw an increase in orders of up to 500% in the first two to three weeks of lockdown.
Investing in building trade distribution
He says prior to Covid-19 60% to 70% of what it did was through the trade, be it to the on-trade or specialist wine merchants. During Covid-19, and thanks to how quickly it could turn to DTC that split has reversed.
But Ellison knows that if he is to take the business to the next step then it also has to build up its trade distribution, particularly across the on-trade in the months and years to come. Yes, the trade might be taking its time to return to pre-Covid-19 levels, but now is the time to be investing in finding new customers as well as helping previous customers return.
That’s why he has been prepared to take, on paper at least, the brave decision of recruiting a head of trade at this time with the arrival this month of Françoise Mathis, who had just been let go by Roberson Wine.
It was a position he has been keen to fill for some time and is delighted to have someone with the experience, reputation and contacts as Mathis – and the fact he says sommeliers kept telling him how good she was.
Yes, it might be growing 100% year-on-year, but if it is to keep that momentum going then it has to invest in the right people to help grow more trade business, he explains.
(Click here for why Wanderlust Wine has invested in a new head of trade and why Françoise Mathis is delighted to take the role)
Mathis says she is delighted to be joining Wanderlust at this time and has been “blown away” by his approach to technology and how she can play a part in building up its trade profile and really making the most of that digital strategy.
The new equity funding also gives the time and space to really develop Wanderlust’s trade portfolio and ensure it has the right wines for each channel of the market, by working closely with sommeliers and customers.
The Wanderlust model also means Mathis, and the other members of the small Wanderlust team, will also be given equity in the business, so as it grows, and they play their individual part in making that happen, they also will benefit financially.
Trading strategy
Mathis and Ellison will now work, as part of their new trade strategy, on a more defined range for each of its main channels with, in particular, special parcels and cuvees sourced and sold into the specialist independent merchants, that give them a solid “pricing structure” to work with them on.
There is still huge potential, adds Mathis, with Wanderlust’s existing range as it still “relatively new” and not all merchants may be aware of it. She’s also keen to push the big benefit that Wanderlust has in being able to supply just one bottle as a minimum order, giving independents the flexibility to buy and build up mixed cases.
Ellison says having Mathis on board will enable Wanderlust to define and then really push a trade only range that works back from finding the right quality wines at the price points that merchants and restaurants want.
Part of its trade strategy is to offer a different kind of consultancy and partnership opportunity for its customers. One where, yes, they can work together to source and provide the right wines, but also work together to help promote and sell them.
But to get its foot in the door of more trade businesses means “fundamentally” getting its portfolio right which is where the focus, with Mathis on board, can now really drill down into.
“If we get the portfolio right with the names of want and can build those brands in the UK and get them in the right segments, that ultimately what will give us the expansion and the volume increase that we are looking for across the three channels,” says Ellison.
