From
supplier to retailer the wine industry has altered at an astonishing pace in
the last decade. Pushed and pulled by these two protagonists the shippers have
had to be at their most flexible to maintain their position as the central link
in the chain. Chris Brook-Carter spoke to Gerard Desbois CEO of industry number
one JF Hillebrand to understand the nature of this challenge.
From educating on bio-terrorism to negotiating as the middleman between giant
retailers and boutique wineries, in the last decade the traditional shipper
has been forced to evolve as the landscape of the wine trade has undergone the
most radical period of change in its history.
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The growth of the retailers, the arrival and rise of New World wines and even
the “war on terror” have all had an impact on the industry and the
way wine is moved from supplier to retailer. As the world’s largest beverage
shipper – handling 22% of all global beverage shipments – JF Hillebrand has
been at the centre of this change.
“We are challenged everyday by companies requesting more services and
different services,” says JF Hillebrand CEO Gerard Desbois. “When
you are in transportation you are born flexible and you will die flexible.”
Though the wine industry has been slow to modernise, compared to other consumer
goods sections, the demands on the shipping industry are still being made on
numerous levels. Most recently the high profile tightening of US importing laws
to fight the potential bio-terrorism threat, has forced Hillebrand to turn educator.
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“Don’t underestimate the number of small businesses,” says Desbois.
“The Diageos and Allied Domecqs will take care of their own, but for the
guy that ships a couple of hundred cases a year to the US there is a lot of
education to do, and it is not always the importer in the US that takes care
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By GlobalData of it. It is quite a US-centred approach that these importers take without realising
too much the impact it has on their small suppliers.
“We see an opportunity here to obviously re-enforce our image as a specialist
but also educate the wine industry. It is in our interest to see that this flow
keeps going and containers do not get stopped.”
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Gerard Desbois
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But the real changes to the market have come at the macro level, in particular
the growing power of the retailer and the arrival of the New World segment.
“The New World countries have come up over the last eight years taking
up huge volumes on the shelf,” explains Desbois. “There are a lot
of advantages for the consumer but it brings a lot of complexities for the importers.
Instead of working with 50 suppliers some of the big retailers now work with
200, 300 or even 400 and they have to manage the trade processing between all
those products.”
He goes on: “We realised, and importers realised, that we were in a position
more or less in the centre of this network of suppliers and the importer. We
were the logical party to come up with something that would help and it was
more or less expected of us.”
To a large extent this has resulted in the Supply Chain Management (SCM) programme,
which Hillebrand has developed initially with the UK’s Thresher Group,
but which it is looking at expanding across the business.
Essentially the programme centres round establishing a clear partnership between
the retailer, the shipper and the supplier. Hillebrand then uses forecast data
to predict production needs and schedules, bringing shipments in line with sales
demands.
The pilot scheme was rolled out in South Africa and here Hillebrand set up
a giant warehouse that can hold 450,000 cases a month, where it holds suppliers’
products and then ships to the UK.
“On average UK importers were holding 25 weeks’ worth of stock of
South African wine,” says Desbois. “We have pushed that back to approximately
five weeks of stock. There is a tremendous saving associated with that.”
Such has been the success that, after a nine-month trial, Thresher expanded
the deal with Hillebrand to include seven trade lanes on a similar system. South
Africa was followed by Chile and Argentina and, soon after, California. Meanwhile,
the group is close to implementing the programme in France, Italy and Spain
while Australia is also on the map for 2004.
So far Thresher is the only client using SCM but Desbois confirms that a number
of other customers have shown a keen interest and the company has plans to use
the model to import into other markets aside from the UK.
“We are planning in 2004 to start developing in Benelux, Scandinavia and
Germany,” he says.
While consolidation at retail and supply level within the industry continues
to alter the market Hillebrand operates in, it has also affected it on a more
direct level. Hillebrand’s structure, until recently, was to own a share
of a logistics company in each of the countries it operated. Six years ago the
decision was taken to buy out these subsidiaries completely. Only one –
Ireland – is left to acquire.
Despite this spending spree, and the boost it has given to the company’s
bottom line, Desbois says the company will not pursue further acquisitions.
“This was for us a natural integration process. Acquiring companies is
not a strategy. We have a need to keep the culture of this group and we don’t
think the best way to keep it is to acquire outside,” explains Desbois.
“And secondly the list of companies [to acquire] is limited if we want
to stick to beverages.”
And neither do the figures suggest there is a need to grow by acquisition.
In the past three years the company’s volumes have risen between 15 and
20%, of which only 4-5% has come from the market, says Desbois. “The rest
is coming from our own development. We are pretty busy with that,” he points
out.
