Conviviality has agreed to purchase Bibendum PLB

Conviviality has agreed to purchase Bibendum PLB

Earlier this week, UK drinks company Conviviality agreed to purchase Bibendum PLB for GBP60m (US$88.5m), in what the country's Wine & Spirit Trade Association CEO Miles Beale called a "potentially seismic deal" for the industry.

In its new form, Conviviality will have a presence in the UK's premium and value off-trade with Wine Rack and Bargain Booze, sizeable operations in the national on-trade through its recently-purchased Matthew Clark wholesaler business and now a premium on-trade presence - with particular emphasis on London and the South East - with Bibendum PLB. It also has a stake in events company Peppermint. At the London Wine Fair yesterday, just-drinks sat down with Conviviality CEO Diana Hunter to find out what effect the latest acquisition will have on the drinks landscape in the UK.

just-drinks: What is the strategy behind this week's transaction?

Diana Hunter: The aim of the company is to influence every consumer drinking occasion. We're in a unique position to be able to do that because we can touch consumers in the off-trade and drinking out of home at pubs, clubs, restaurants and events. If you laid out all of the propositions underneath Conviviality, then you can see how they really do complement each other rather than overlap or duplicate.

The other part of our strategy is that we want to strengthen our position in wine and in London as well as those premium on-trade markets that build up in some of the cities as well.

j-d: Why did you go for Bibendum PLB?

DH: It was very clear that we needed to complement Matthew Clark (which the company bought for GBP200m last year) with another business or brand. It was a very purposeful target. You always have choices in business - you either grow organically or you acquire. Because Bibendum was so strong in the London on-trade, the only option was to acquire.

j-d: What does the purchase mean for Conviviality's competitors?

Conviviality CEO Diana Hunter

DH: The overall annual turnover [will be] GBP1.4bn (US$2.05bn). When you look at the size of the market and you break down the different turnover levels of the components of the business, there is still significant room for our business to grow and our competitors' businesses to grow. The difference with what we've done is that we've connected the on- and off-trade. There isn't anybody else that does that.

j-d: Is your business complete now? Would you consider online retail, perhaps?

DH: We're not always going to be acquisitive. Acquisition is one of the roots to growth, but we are growing organically as well. We already have an online offer in retail (through Bargain Booze), but our preference is to use 'click and collect', because then it benefits the franchisees who retail with us. It may be that we develop an online presence - we haven't got any plans to yet. Now that we've done this, we'll take a step back, look at our businesses, look at the capabilities within each business area and then take a view.

j-d: What back office synergies do you see?

DH: The main reason for this acquisition is one of positive growth, one of recognising a premium proposition. We're not coming at this to make cost savings. There is some real opportunity here to drive efficiency and drive customers service: We can serve nationally, next day to our customer base through our network. It'll take a bit of figuring out but in time, that's what we'll be doing. There's definitely [synergy] potential for logistics and distribution. There is naturally potential for buying because when you buy the volumes that we do, we would expect to work with suppliers who want to grow with you and will benefit from that growth as well. So, there will be supplier synergies.

j-d: Will there be job losses further down the line?

DH: No. If you're buying a business and you want to grow, there is no reason to expect job losses. If you're buying a business and you start going backwards, then naturally you start looking at your cost base. We're not going backwards, we're going forwards. 

j-d: Is this multi-channel business model essential to the wine trade now? 

DH: Is it essential to the wine trade or is it a great way to do business? I think it's a great way to do business because what it means is that we can give our customer base exactly what they need: Unique insight into not only how the consumer is drinking but also into shopping missions. With the supplier relationships behind us, we can help our customers select the right range and the right assortment to meet their customer needs.