A welcome change of direction for this important UK retailer?


Justin Howard-Sneyd at the Laithwaites store in Vinopolis

One of the UK’s most successful wine retailers is Laithwaites. Formed in 1969 by Tony Laithwaite and his wife Barbara (who still own the company), their big break came in 1973 when they launched the Sunday Times Wine Club. The business grew and grew, and Laithwaite developed a shrewd understanding of direct mail, the means by which the company grew, assisted also by the patronage of Hugh Johnson.

As a wine love, I must admit to having been a Laithwaites sceptic. While I admire their mastery of marketing and direct mail, I have largely been unconvinced by their wines.

The marketing angle? We go direct to the producer to unearth small parcels of special wine and by cutting out the middleman we save you money. The reality? We send in a consultant winemaker, buy clean but cheap wines, dress them up to look like more expensive wines (almost all the wines are exclusive private labels), and then list them at a higher price than the wine would otherwise justify. Then we reel customers in with what look like amazing discounts, advertised in newspaper supplements and through a range of co-branded clubs. And once we’ve got the customer to sign up to a quarterly case of wine, we've got them hooked on what are largely mediocre wines that don’t deliver great value for money – that’s where the profit is.

But I’m an open-minded fellow, and so I happily agreed to meet with Justin Howard-Sneyd, 9 months into his new job as Global Wine Director, and Becca Reeves, six months into her new job as buyer, along with head of PR, Kate Diggle, to hear about changes taking place at Laithwaites. We gathered at the new flagship store in Vinopolis, near London Bridge.

‘Laithwaites has changed a lot in the last three years,’ says Justin. In truth, it needed to, because Direct Wines (the company that owns Laithwaites, as well as Averys and Virgin Wines) had been going through a sticky patch. Some investment decisions hadn’t paid off: a big new warehouse resulted in logistics troubles which meant that customers were lost. And the wines weren’t as good as they should have been: the company was stretching the business model just a little too far. (In 2008 Laithwaites posted a loss of £5.5 million.)

But things have been changing under new CEO Simon McMurtrie. Initially, McMurtrie was brought in as a consultant to help Laithwaites spread to other countries, but Tony Laithwaite was so impressed he hired him as CEO. Justin describes McMurtrie as ‘an incredibly inspirational leader. Simon is not afraid to do what he wants at pace – it’s very refreshing.’

McMurtrie shook up things a bit, and made some personnel changes. He hired Justin, as well as Becca, and the quality of the buying has improved. ‘It’s turning us into a credible wine merchant as well as a mail order company,’ says Justin. ‘There are still a few wines in our range that I’m not super-proud of, but they will be going.’ He adds, ‘I’m ever more excited by the potential, knowing we are going in the right direction.’

I was surprised when I heard Justin had left Waitrose to move to Laithwaites. But the advantage of a direct-to-customer business like this is that there is a proper channel of communication with the consumer. It’s possible to tell them stories about the wines they buy, and suggest that they try new things in a way that simply isn’t possible in a supermarket where the only interface with the customer is the wine bottle sitting on the shelf. ‘The single most important reason I made the shift was the ability to connect with customers,’ Justin reveals. ‘The most important thing is the trust of our customers: we have a great relationship.’

Laithwaites is big. There are close to 1 million customers who have bought wine in the last year, and of these half are regulars. This core of regulars is strong and steady, but there is a portion of the customer base who buy just one or two cases and then stop, and they are replaced by 200 000 new customers who are recruited each year.

Virgin Wines and Averys, also part of the Direct Wines empire, are run autonomously: the buying, marketing and logistics are all separate. Virgin Wines is being rolled out to Australia and the USA soon.

Laithwaites is currently growing abroad. 70% of business is in the UK, but now some 25% is in the USA. They acquired Lionstone in Illinois in June 2006, which has helped them get a strong foothold in the notoriously tricky US market, with its three tier distribution system. A tie-in with The Wall Street Journal has been successful, and now Laithwaites operate in 37 US states with a turnover of $100 million. The remaining 5% of business is in Australia, Hong Kong, Germany and Switzerland.

In the UK, half to two-thirds of business is continuity: people who take a case a quarter, with a cost of £75–79 a time. Laithwaites have introduced a £99 ‘Discover Better’ case, which has proven extremely popular and went 35% over forecast.

While primarily a mail-order business, the website now accounts for 35% of sales (although most people will have seen the wines advertised in a print publication), and there are 11 shops, mainly spread across the southeast in quiet suburban locations. They act as a showcase of the Laithwaites range.  

‘My mission in retailing is to lift wine from being just a product,’ says Justin. ‘When someone reads a really good book, they have a relationship with it. Laithwaites are in a position to do this with wine.’

I tasted a small selection of wines from their range, and despite my initial scepticism, came away impressed. It seems that things are changing at Laithwaites. There’s quite a way to go, but a start has been made.

Some highlights:

Passa Pequena 2008 Douro, Portugal
Made by Jorge Borges at Quinta do Passadouro. Fresh, supple and bright with cherry fruit backed up by a savoury, mineral edge and some subtle herbiness. Simple and fruity but with Douro typicity and a hint of seriousness: I really like this wine, and it’s great value for money. 89/100 (£8.49 Laithwaites)

Gran Casali Lambrusco Grasparossa 2009 Italy
This is a top quality sparkling red Lambrusco, weighing in at 11.5% alcohol, and with sweet cherry and plum fruit backed up by good acidity, as well as some fizziness. Brilliant fun and actually quite food friendly, finishing dry. 89/100 (£9.99 Laithwaites)

Solar das Bouças Loureiro 2009 Vinho Verde, Portugal
Fruity and appealing with some mineral freshness on the nose. Bright, crisp mineral palate with good fruit precision and some pear notes. A nice fresh wine. 86/100 (£6.99 Laithwaites)

Hans Lang Riesling QbA 2009 Rheingau, Germany
Attractive fruity, lemony nose. The palate is crisp, fresh and bright with citrus fruit and a nice long finish. A hint of sweetness rounds things off nicely. Very appealing. 88/100 (£8.99 Laithwaites)

Valoroso Cabernet/Castelão 2008 Terras do Sado, Portugal
Made by Jaime Quenderas at Ermelinda Freitas. Fresh, plummy, cherryish and bright with lovely sweet, pure, focused fruit. This is a deliciously pure, fruity wine of real appeal. 89/100 (£7.99 Laithwaites)

Marimonti Barbera Montepulciano 2008 VdT, Italy
An unusual blend but it works brilliantly. Dense, dark plummy fruit with a delicious spicy intensity to it. Ripe but savoury and mouthfilling, this is a bit of a bargain. A blend of fruit from Abruzzo and Piemonte. 91/100 (£7.99 Laithwaites, currently on offer at this price)

Fairview The Back Road Carignan 2008 Swartland, South Africa
Bright, sweet, fresh dark cherry, plum and blackberry fruit nose. The palate is sweet and fruity with lovely density and nice spiciness. Oak is present, but it’s not overdone. Delicious stuff from Charles Back. 90/100

Lenswood Hills Pinot Noir 2009 Adelaide Hills, Australia
Produced by Pikes. Very open sweet cherry and berry fruit nose with a subtle leafy edge. The palate is generous, ripe and plummy with a lovely sappy edge. This is quite elegant, and at this price is fantastic value. Grown-up Pinot Noir at a great price. 90/100 (£9.99 Laithwaites)

Lustau Dry Oloroso NV Jerez, Spain
Orange/brown in colour, this is a serious Sherry. Lovely savoury, nutty nose with some sweet raisiny notes. The palate is dry with lovely concentration and nutty complexity, finishing fresh and tangy. 92/100 (£8.99 half bottle, Laithwaites)

Andresen Colheita Port 1982
Orange/brown colour. Nutty, waxy and tangy with lovely viscous texture and notes of raisins and casks. Beautifully integrated and showing great concentration. Lovely. 93/100 (£20 Laithwaites)

Wines tasted as 06/10  
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