Saturday 2 April 2011

Thoughts on Oddbins - Where did it all go wrong?


Where did it all go wrong?

[n.b. these are my own views, and I don’t claim to be objective about Oddbins]

It’s a question many people associated with Oddbins will be asking. After all, it’s good to have someone to blame. But who is responsible for the demise of the UK’s most innovative and exciting wine shops?

Looking in the rear view mirror, Oddbins was already in trouble when I joined in 1994. Of course, I had no idea of this at the time. Like many others I was caught up in the excitement of wine, the über cool and sexy young things working in stores (well I was definitely young), and Oddbins winning Wine Merchant of the Year… again. I hadn’t even heard of Majestic, and I looked down my nose at the dross being sold as wine in supermarkets. I had a t-shirt with a quote on it: something like “if you don’t have an Oddbins near you, move house”.

During the expansion in the eighties, as Seagram sought to expand the network of outlets for their own products, Oddbins acquired and opened more high street stores around the country. Some of these shops turned out to be winners, but there were also many new stores in market towns around the UK that while starting out well, rapidly became victims of the decline of the high street. Councils did their bit: pedestrianisation of town centres had a long-term impact on the viability of Oddbins stores. Booze is heavy, and customers who weren’t as lucky as Patsy – living above a shop – weren’t too enamoured with the town planners’ idea that they should carry their cases of wine half a mile to the multi-story car park. Supermarkets at the time were accelerating their growth of out of town supercentres, exacerbating the customer drought in town centres.

The management at the time may have been prescient in their anticipation of the impact of the new world on wine, but it seems to me that they missed this glaringly obvious trend right under their noses. When Majestic’s expansion was picking up pace in the nineties, they got it. Their sites were on arterial routes, often ex-service stations or old car showrooms. All had ample parking. It wasn’t until nearly the end of that decade that the first Oddbins Ultimate Wine Store opened in Battersea. If you snooze you lose.

The Maastricht treaty of 1992 enshrined the free movement of goods in Europe and then the 1997 Schengen agreement abolished physical barriers at internal borders. Cross-channel shopping was booming at the time, as “rip off Britain” became the catch cry on the front page of the tabloids. Oddbins shops in the south east of England suffered, but nowhere near as much as Unwins or Fullers. White van man was driving on his axle up the M20 from the channel ports, as off-licenses in Kent withered and died. But if you can’t beat ‘em… at least Oddbins opened in Calais, and had a moderately successful store there.

To compound the issue, UK duties were on the increase in the run up to the millennium. Petrol, company cars, cigarettes and booze were easy targets for a new government and ‘sin taxes’ were hiked up rapidly. Looking back at those duty rates now, maybe they were the glory days.

Arrogance had set in and was spreading like an undiagnosed cancer. We were that good, we could treat our customers ‘like dirt’, as one wine writer found out herself. Shops were tatty, and there wasn’t enough money for investment from sugar daddy Seagram. But we were winning Wine Merchant of the Year and drinking Champagne in Dick’s Bar in The Atlantic, so all was well.

As the century ran out of years, Oddbins was running out of wine regions to discover and champion. Regional France was on the up, but Australian wine was losing its lustre as an armada of sugary-sweet critter wines landed on UK shores. Wine writers were quick to cut down what they had helped to grow, and the reputation of Australia – Oddbins’ second most important source of wine – suffered overall.

Like any retailer in the Doom Loop, Oddbins raised prices under pressure to generate higher profits. To appease suppliers and generate income, new lines were added for cash and the range ballooned. With too much of the wrong stock in stores, inventory weeks’ cover went up and up.

By the time management were weaving that special kind of For Sale magic that makes 2+2=4.5, and Oddbins was unceremoniously ‘offloaded’ to Castel in a side deal to the main Seagram/Diageo/Pernod Ricard transaction, Oddbins wasn’t in great shape. Thankfully, we won WMOTY.

It’s easy to blame Castel for the demise of Oddbins, and I certainly do. They’re French, for a start, so an easy target for blame. But there was much more to it than that. They’d paid too much for Oddbins, and soon discovered that was the case. I thought at the time that they only wanted outlets for their wines, and I remember asking over and over: “why didn’t they buy Thresher?” It was already awful, and full of terrible wine.

The first manager from Castel opened the books to an unholy mess, and to his credit he set about fixing it. As an accountant, he focused first on the lazy inventory and I remember the puzzled look on his face as yet another batch of full container-loads of ‘discoveries’ arrived, to join the rest. When I added responsibility for Greek wine to my buying portfolio in 2003, I kid you not there were 78 Greek wines that accounted for not much more sales than my measly salary. It was absolute madness.

At about that time, a friendly writer stepped up and wrote an obituary for Oddbins. Thanks for that, we thought as we tried to turn it into a business again. Obituary, or just bitchery? As Castel’s wines ousted big-selling staples from sensational small producers in Chablis, Sancerre and the Cotes-du-Rhone, the criticism in wine columns became louder. While some was justified, it was like people running in to join the mob, kicking some poor sod on the ground. It certainly didn’t help, as customer numbers fell away.

For his work on Oddbins, the man from Castel was banished to Nigeria to brew Guinness, or so we heard. If he’d stayed, he just might have saved it.

A village somewhere in France was missing an idiot, about that time. At Oddbins, we had a new boss and he set about applying the Nicolas touch of genius. I couldn’t watch any more, and fled the country.

Since then, ex-colleagues and friends in wineries around the world have kept me somewhat informed about the death-throes of the company that I spent ten thoroughly enjoyable years in. As I understand it, once the business had been partially dismantled, and had the eyes picked out of it, the last owners arrived on the scene with promises of a return to the glory days. At the least, it was a ballsy move at the height of the GFC.

Everyone who’d seen that glory wanted to see it again, and for a short period of a couple of years there was strong support. Journos wrote about the positive signs, and suppliers willingly supported the revival, particularly with their credit. When Threshers folded, the stench of bad debt started to attach itself to Oddbins, by association. I have no idea if the business was solvent at the time, but it certainly made creditors nervous and I imagine this further starvation of cash would have sealed Oddbins fate. From then on it was when, not if.

It’s apt that it was seemingly the taxman who eventually pulled the plug. Duty is now such a massive proportion of the cost of goods of liquor in Britain, that it places an enormous burden on any liquor retailer. As we’ve seen, the taxman doesn’t wait for his money, and duty is usually payable before goods are sold, or other creditors are paid.

I feel sympathy for the good people in the shops, and for the small suppliers who won’t see very much of the money they are owed. Who should they blame? Well that’s a complex issue, as I hope I’ve shown, but it shouldn’t just be the people who touched the hot potato last.

Sad day indeed.