The grand Wine Shak plan?

19 March, 2010

When First Quench Retailing went into administration, it was established high street chains which emerged as front-runners in the race to buy all or parts of the collapsed business.

With all eyes on favourite contenders Bargain Booze, Oddbins, Costcutter and Greggs, the move by Hampshire-based Wickham Vineyards to snap up a clutch of former Threshers and Wine Rack stores came as a complete surprise to the trade.

As an English wine producer with only one retail shop, Wickham Vineyards might seem an unlikely candidate to take on a 14-strong estate, but owner Nitin Parekh is determined to make the new Wine Shak chain a roaring success in its south west heartland.

“We don’t want to rip the customer off and we’ll offer good value, everyday wine,” he tells OLN.

“It’s very important for us to get wine to a wider audience. The name Wine Shak conveys that we know about wine, but it’s not a grandiose, overbearing type of name. Customers aren’t going to feel overawed by esoteric vintages – why walk into a wine shop and feel intimidated?”??Customer comfortMaking sure customers are put at ease is key to Parekh’s vision for the new off-licence chain, which he sees as being positioned between “high-end specialist shops and where Wine Rack was before”.

While he’s the first to admit that an English winemaker is an improbable suitor for parts of the carved-up First Quench estate, Parekh believes knowing how to make wine, rather than simply knowing how to sell it, puts Wickham at a competitive advantage.

“We are coming at it from the other side – when you go into a Wine Shak store you know one of the best British vineyards is behind it,” he says.

Established in 1984, the vineyard occupies 7ha of Wickham’s 16ha estate in the Hampshire village of Shedfield. It was bought in 2006 by Hume Capital, a commercial real estate company headed by Parekh as chief investment officer. His 15 years’ experience in business, including the hedge fund industry, means he is only too aware of the numerous risks associated with setting up a new venture like Wine Shak.

“We are pretty familiar with the problems of small companies and know how hard it is to manage growth,” he says. “Wine Shak will be very people-oriented which is absolutely critical. It’s people who make companies, not bestsellers – people deal with people and that means we need to put together a great team.”?For Parekh, that team doesn’t just mean the 30 members of staff at head office,

but also the 64 shop staff retained in the deal.

“Our philosophy is to make everyone feel as if their contribution is valued. We’re very close to managers of the shops and talk to them on a daily basis. We empower people to make decisions and come up with ideas,” he says.

But despite promising to forge close relationships with both shop and head office staff, Parekh knows setting up a new business in a post-recession economy isn’t going to be easy. “Most businesses go bust in the first 18 months after a recession because they run out of cash and are unable to meet demand.”?So how does he intend to stop Wine Shak from suffering a similar fate???Going local“As a retailer you have to find your niche and exploit it as best you can,” Parekh asserts. For Wine Shak that niche will be local products sourced from local suppliers. “The first thing we wanted to do was source as locally as we could,” he says. “Our key to differentiation is we are a local company – we want to make sure other local businesses survive.”?As well as talking to local wine suppliers and breweries, Parekh is hoping to stock a strong organic and Fairtrade offering. “Anything that helps local people, or local producers elsewhere,” he explains.

Although the shops will have a section of Wickham’s own wines, there will also be a “big focus on New Zealand, the US, Australia, Chile, Spain and Italy”. In a bid to compete with the supermarkets, Parekh is determined to avoid stocking what he terms “household names”.

Managers will be given some autonomy to source wines that suit their shop’s particular customer demographics.

“It’s very important to understand each individual shop,” according to Parekh, who says the entire estate will be “restocked slowly” over the next month to ensure each store gets an individually tailored range. “Sometimes the shops are looking a little bare – that’s deliberate.”?When it comes to pricing, Parekh maintains Wine Shak will be “able to provide very attractive prices compared to the old First Quench”. “Our single bottle prices are about 25% less,” he adds.

The chain will also be less reliant on price promotions. “We will do promotions where we think it warrants it, for example two-for-£10, but we would never artificially inflate a price.”?Although Parekh is critical of First Quench’s promotional strategy – which he believes obscured the true price of a bottle of wine – he’s reluctant to discuss the reasons for the company’s collapse. “That’s not for us to say,” he says, before adding that Wickham will fully assess the mistakes First Quench made to safeguard Wine Shak’s long-term future.

That future includes finalising a deal to buy one more shop, bringing the total up to 15. Although Wickham was initially hoping to buy 90 stores from administrator KPMG, Parekh admits that amount “was too big for us to handle”.

Eventually it bid for 21 stores but was?told by KPMG others had made higher bids for seven of those. “Five of those seven have since closed their doors. It seems as long as the administrator is paid, there’s no onus on it to act in the best interest of all parties. What it boils down to is there’s no regulation,” Parekh says.

His assertion that “the 21 we went for would have been manageable”, implies getting his hands on more shops could be on the cards, along with developing a franchised estate. “We’ll look at all opportunities once we bed down,” he says.

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