Premium spirits supplier Mangrove has broken away from parent company Coe Vintners to create an independent firm dedicated to driving value into the spirits market.
“We have grown up and left home,” said Nick Gillett, who is managing director of the new limited company. “Mangrove has grown to a size where it needs dedicated time, resources and systems.”
Mangrove was set up by Gillett and group owner John Coe as the specialist spirits division of wine wholesaler Coe Vintners, distributing brands including Portobello Road gin, Louis Royer Cognac, Beluga vodka and Mozart chocolate liqueur.
But sales are up 50% year on year following listings with key retailers and Mangrove now accounts for around 11% of the group’s turnover.
Though Mangrove’s ownership remains unchanged, the move strips tiers of bureaucracy from the business and allows it to be more flexible, react to trends quicker and put in place specialist infrastructure and staff dedicated to the spirits trade. “It makes us more responsible for our own future,” said Gillett.
He is now on a mission to help secure the long-term future of the spirits category by flooding the market with high-end products that offer strong retailer margins and consumer choice.
“Nobody likes discounting from the brands,” said Gillett. “It’s a great marketing tool for the retailers and it’s good for consumers, but it’s only the big guys that can do it. It’s leading to less consumer choice on the shelves and that’s a worrying trend for the long term.
“If you look at gin or vodka, whatever’s on price promotion wins. People have no brand loyalty. A better long-term strategy would be to promote the quality of spirits and promote at-home cocktail making and products that drive value.”
Around a third of Mangrove’s sales are in the off-trade and Gillett believes there’s scope for this to grow as the multiples’ appetite for premium brands increases.
“The majority of the off-trade volume we do is with the multiples,” he said. “Waitrose is a big customer, Sainsbury’s does a lot of tequila.
“Waitrose has a great range. It is pushing boundaries, offering consumers the chance to try some smaller producers. Sainsbury’s is trying something similar. We have a couple of products with Tesco. I don’t see the effort elsewhere, although Asda has a really good range of premium spirits.
“Retailers have a fixed idea of what consumers will pay. They didn’t want any products over £30. Tax and VAT have forced that up to £40. “Suppliers have brought out smaller bottle sizes so retailers can hit a certain price point because retailers think consumers have a definitive amount to spend. These smaller bottles are great for the brands that can do it, but they are actually terrible value for the consumer.”
Despite the challenges faced in convincing consumers to trade up, Gillett believes it is a good time to be in the spirits business.
“The off-trade is going to be incredibly important as people go out less and entertain more,” said Gillett, whose latest products include the £50 bourbon Old Forrester and a £100 Chinese baijiu called Moutai.
“We will grow in the specialist off-trade. I love working with independents. They are looking for interesting products with interesting stories and great quality. I predict a resurgence in the independent market.
“The biggest shame is the removal of a truly national drinks specialist since Thresher collapsed. It’s hard work to get around all the independents that have filled the gap – they have to hit minimum orders.
“We have started to do quite a bit of work with Oddbins and I am encouraged by them.
“Six or seven years ago people would have said every butcher on the high street is going to go out of business because everybody goes to the supermarket. But now butchers are making a comeback. If they can make a living then the likes of Oddbins offering a different range of products can.
“There are a number of one-man operations doing that on a small basis. There’s an opportunity for a bigger chain to come in.
“There’s a real trend towards provenance and authenticity led by the food market.
“Oddbins will struggle to compete against supermarkets if it stocks the same brands, but the national specialist staff used to be like sommeliers, offering different products with this provenance, and they can do that again.”
Gillett believes consumers are still getting value for money at higher price points from products made in smaller batches and using more expensive ingredients – the key is for retailers to convince them.
“We are about consumer choice and education,” he said. “We are comfortable with being more expensive than the main brands.
“We are offering a more interesting premium product that offers a better margin.”