Oddbins: Simon Baile gets bill for 28,000 Euros from Fontvert

The bill sent by Château Fontvert to Simon Baile

Oddbins – some further reflections

The latest edition of Off-Licence News (1^st April 2011) carries an interesting analysis by Nigel Huddleston called Where it all went wrong for Oddbins. Nigel highlights five fundamental factors that played their part.

1. The supermarkets who have ‘strangled margins, leaving specialists’ caught between trying to compete head-on with prices and brands, or pursue a high-risk strategy based on high-value wines and customer service.’ Nigel also highlights the widening gap between the buying power of the supermarkets and other retailers.

2. Hidden agenda – previous owners used Oddbins to sell their own brands and that through its history Oddbins has rarely been profitable.

3. The new independents – these have taken over the ground vacated by the multiple retailers. Many of them owned or staffed by Ex-Oddbins people.

4 Failure to embrace the web – unlike its various competitors, including supermarkets but also Direct Wines, The Wine Society, Majestic, Virgin Wines and Naked Wines, Oddbins has never successfully embraced the web.

5. The Majestic effect – Majestic has successfully captured Oddbins’ constituency – ‘high earning, inquisitive, discerning customers. It has also become ‘the destination chain for graduates’ wanting to get into the wine trade. ‘Today’s wine industry is peppered with people who cut their teeth in the Oddbins of the 1970s and 1980s, but in 10 or 20 years it will be former Majestic staff helping to fashion its future.’   

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Nigel’s analysis makes grim and sobering reading for anyone contemplating buying the whole Oddbins’ portfolio from the administrators, especially if you couple that with the results from a recent wine pages poll on 'do you shop at Oddbins'. Admittedly only 260 voted but wine-pages is inhabited by people who would doubtless shop at Oddbins as it was back in the 1990s. 55% said that they don’t shop at Oddbins, 21% do occasionally, 17% would if there was a branch near them (there will be fewer branches now) and only 5% shop there frequently.  Possibly most damning of all – only one of the voters admitted to buying online!

For the now shrunken chain to work it requires an imaginative new approach and considerable investment as there probably has been little investment for at least 10 years.

There have been strong rumours starting from last weekend that Simon Baile and Henry Young are amongst those looking to buy Oddbins from the administrators. Harpers wine & spirit are running a story on this today. Majestic are also rumoured to have considered Oddbins but felt that the shops are in the wrong locations.

If Baile and Young do regain control of Oddbins they can’t just hope that more of the same will succeed. It won’t and the debts will start to grow again, always assuming anyone will be prepared supply them. 

Finding suppliers is likely to be a serious problem for a ‘Young-Baile’ consortium. Certainly Fabrice Monod of Château Fontvert in the Lubéron won’t be amongst them.

Monod holds Baile ‘personally responsible’ for the £22,119 they are owed. In a bitter letter to Baile he accuses him of lying: “What we cannot accept is the fact that you lied to us, bluntly, straight in our face when we treated you at Terroirs, a fancy London restaurant, on a business dinner Thursday 25^th of November 2010, after a long day of tastings in your shops and you said” “you will be paid, we are just reviewing our policies for next year”.’

Monod also alleged that ‘your staff lied to us three times saying the transfer was on its way’.

Monad holds Baile ‘personally responsible for our debt regarding our wines and this is why you will find enclosed a bill of our due.’ The bill is for 28,173.55 €.

Baile has refuted the allegation.

This story first appeared in the Daily Mail on 4th April 2011.

Were there last autumn other anxious suppliers last who thought they had been reassured by Oddbins' directors that they wuld paid? 

I suspect that there will be many small suppliers who will only supply on the basis of cash with order. Equally companies, who have taken a large hit from Oddbins, are unlikely to extend credit or to be able to afford to do so. Then there are companies, for instance Moët Hennessy, Patriarche and the Symingtons, who saw the writing on the wall and refused to supply. Again it will have to be cash with order at best. And what of the HMRC? What terms will they want from Young-Baile?  

A senior member of the wine trade told me that Young-Baile would probably want to reduce the number of shops to around 50. "They will need about £250,000 to stock each shop, so that's £10 million to get the business running again. Who is going to give them credit?"