Last summer Fells pulled off a significant coup by taking on distribution for the Hill Smith family’s Negociants portfolio. Until that point, the likes of Yalumba, Oxford Landing and Vasse Felix had been distributed by Negociants UK, which the Hill Smith family decided to close. Fells hired eight members of the Negociants UK team and sold a 10% stake in its business to the Hill Smith family to cement the relationship.
It is now 80% owned by the Symington family and Miguel Torres owns the remaining 10%. The Symingtons produce famous port brands such as Cockburn’s, Graham’s, Dow’s and Warre’s, plus table wines from the Douro and Madeira wines. Torres has become the leading Spanish wine supplier to the UK through its relationship with Fells, while Viña Sol is the number one white SKU.
Fells also has a flourishing agency business, boasting Guigal, Champagne Henriot, William Févre, Vergelegen, Jackson Family Wines and many more. It also has a thriving business dedicated solely to gifting, working with all manner of prestigious retailers on luxury hampers that do not necessarily feature its own wines.
Annual turnover now stands at £75 million and it shifts 1.7 million cases a year, with roughly 90% of its business going through the off-trade. It has come a long way since it was set up as a shipper on Tooley Street near London Bridge in 1858, importing wine and spirits to distribute to the London on-trade.
It recently moved to plush new offices in Kings Langley, Hertfordshire, where 57 people beaver away and rarely shout about what they do. It is proud to be family-owned, and all but one of the producers it represents remain family-owned. Steve Moody is the managing director and he has been there for 27 years, following a 10-year stint working on brands like Chivas Regal, Glenlivet and Martell at Seagrams.
DRN headed to Kings Langley to catch up with Moody and hear his thoughts on how the business has progressed since moving offices, swallowing up the Negociants UK business and coming to the trade with an enviable portfolio of fine wines from across the globe.
How would you describe the business and the working culture at Fells?
I still think people regard us as a very traditional, fuddy-duddy business, but we are quite different culturally to how we are perceived. We’re a commercially focused and viable business. We are hard-working and the management team has a “rolled up sleeves” approach. I guess our secret is that we quietly get on with what we do, and we do it to the best of our ability.
We trade with in excess of 900 live accounts and we are profitable and financially stable. We are also family-owned and led by family morals, and we are very proud of that. The Symington family, our principal shareholder, is very caring of our staff, and proud of what Fells has turned into over the years.
We do a great job of distributing its ports and table wines, but on top of that it has the privilege and pleasure of owning John E Fells, which today is a leading business of its kind.
We are probably around 88-90% off-trade. The top five grocers control a massive percentage of our business. But when you look at that agency portfolio, much of it doesn’t appear on the high street. The high street today is about exclusive labels and own-labels particularly. There is room for brands, such as Viña Sol and Oxford Landing, but it’s less of a branded environment than it used to be 10 or 20 years ago. If you walk into any multiple grocer, you will see a plethora of own-label and exclusive labels. Our agency list, with 30-plus family-owned, prestige producers, is sold through our regional and London teams into the independent trade, prestige on and off-trades and wholesalers and to the Wine Society and Berry Bros.
What other strengths does Fells have?
The challenges of the current political and economic climate are causing the consumer to behave with caution, and we are seeing that reflected in our trading – both in and outside London – but overall we are doing well.
One of our greatest strengths is our shareholding, which enables us to look beyond the challenges of the current year and take a long-term view of things. Our behaviour is, therefore, largely geared towards the long term and we have sought to develop a viable business by building long-term relationships that are mutually beneficial. We are important to the major multiples, but we also build long-standing relationships with the independent trade and with the fine wine retailers.
We are not the only distributor that has the luxury of a long-term approach, but it’s a very different environment to the one I grew up with at Seagram, where you were chasing a number that had to be hit, and the long-term didn’t exist. We have numbers and objectives, but they’re
I have a respect for the people who run the companies that sit around us, such as Hatch Mansfield, Mentzendorff, Hallgarten and Liberty. The people running them have a challenging agenda in a challenging environment to operate in, as I do, so I have the greatest of respect for the individuals who do those jobs, and we have some very fine competition.
How do you see the UK market changing?
It’s inevitable there will be further consolidation in the distribution of wine in this market, and I believe that, in a quiet way, Fells is well placed through its shareholders and through the business we have developed to take advantage of consolidation when that occurs.
We are all aware that the distribution and wholesale environment is under pressure, and my personal view is that there will inevitably be further consolidation. We will try to keep this business viable and we are well placed, as are others, to take more in the future. It’s probable that Fells will continue to evolve, I don’t think we can stand still.
Taking on the Yalumba distribution was a very important moment in Fells history, and we are very fortunate. It has changed the dynamics and the personality of the business. We brought in eight staff from Negociants and expanding your head count with people from a different culture brings about a positive change.
Some of our better trading years have occurred during the most challenging economic environments. The prestige area of the trade, particularly in London, is a world within itself, and those with money still enjoy the finer things in life, even during the most challenging economic events. Our portfolio, and the premium end of it, has definitely performed well.
The diversity of this business, with our
port, gifting, this agency businesses, along with Torres and Yalumba, give us stability. When one area is difficult, it is probable that another area is strong.
We continue to do well with France. Burgundy, particularly at the high end, continues to be successful and important to us. Guigal, through the Rhône, is steady and important. We have had a good first full year with the Yalumba portfolio. We have a different reach through our customer base to what Negociants had, so we have been able to add quality distribution that it previously didn’t enjoy.
We are not going to have a record year this year as a total company, but we are trading quite well in a testing environment.
Port is key to your business. How do you see the future of the UK Port market?
There is a slight shrinkage of the port category. A lot of volume in the past was driven by exclusive stunt products that used to be sold at half-price, but while a few of these still exist the discounts now are much softer. They are also promoted less often and with less secondary space and feature, so port isn’t capitalising on the impulse opportunity in the way that it used to. But with Cockburn’s we have the leading brand of port, and Cockburn’s Special Reserve is the leading SKU, so as there has been a bit of contraction in the number of port SKU’s in the multiple grocers, Cockburn’s has been successful in that environment. Those that are left have a better time picking up additional sales.
We have had this back-to-back declaration of 2016s and 2017s, which has been successful. The take-up of the 2017s seems to be very good, so we are pleased with both last year’s declaration and how this year’s declaration is building.
We have a product called Graham’s No 5, a white port blended for long drinks with tonic or a cocktail. We are partnering with a Cask Liquid Marketing, a specialist spirits distribution company that reaches out to the trendy bar scene, which isn’t traditionally part of our customer base. We are seeing a really nice rate of return on repeat orders, and it’s all about long drinks.
It’s a bit like a spirit in appearance. It’s all about mixing it and being in a long drink. We have sold more than I thought we would do, and more quickly, and the most important thing is the repeats. It’s early days, but it is going very well.
The challenge of the port trade is to bring in new consumers and this is reaching people in venues who wouldn’t normally take port as part of their drink repertoire that evening, but now can.
The port environment is testing, but we have a strong position in the multiples. We also have a category leadership approach.
We are often fortunate enough to be involved in the supply of the multiples’ label ports, and we can come to them with all sorts of different branded solutions as well, so we have a unique position. It’s a huge responsibility, being in terms of the UK market for the Symingtons, but we’re not doing too badly.
Graham’s dominates the tawny area. There’s a lot of demand for tawnies, because it’s a nice way to drink port, and it chills. That’s going really well.
What is the main role of a wine supplier in 2019?
We have to tell stories. Every producer we represent has a unique history and a unique story, and as a distributor we have to find ways to tell those stories really well to the trade and the consumer, and when we do that successfully that’s when we justify the value and the premium we are asking for.
When you don’t tell those stories, the bottle is just another Chardonnay, but when you enrich it with the story of the family business, and the things they do differently, that’s when you justify that premium.
I think I have one of the nicest jobs in the drinks industry today, because I am lucky enough to lead this company and it has been very fulfilling.
We are doing very well. We don’t seek attention necessarily, but the reality is that day to day we are working very hard.