Monday, 1 December 2014

'Nothing modest?': The Wine Society

This article first appeared in Meininger's Wine Business International

At the Wine Society’s Stevenage headquarters there’s a nondescript storeroom which houses the archives of the 140-year-old cooperative. Here are shelves of leather-bound ledgers with membership details going back to the 1870s. Another handsome tome records the minutes of the first-ever meeting, on 4 August 1974, in which Major-General Henry Scott proposed  'a co-operative company' to buy good quality wines on a regular basis to sell to members.

That such evocative artefacts are kept in a cupboard more suited to mops and buckets is a testament to the ethos of the organisation. Where other companies might display their history in glass cases, the Wine Society is more low-key.

The International Exhibition Co-operative Wine Society, to give it its full name, came into being in the latter half of 1874, during the last of the Great Exhibitions that captivated the Victorian public (the first was the Crystal Palace Exhibition of 1851). Quantities of wine had been sent by exhibiting nations, and a series of lunches was held to publicise them. Many of the guests showed an interest in buying the wines, and so the idea of a mutual society, to source wines for members, came about.

And that is more or less what the Society has done for the last century and a half. Since then some 372,000 members have come and gone. There are currently 125,000 ‘active’ members, increasing at an annual rate of about five per cent. Each member buys a lifetime share in the Society for £40 (€50), and has access to wines from some 25 regions, sourced by a team of buyers of impeccable pedigree. There are other services: under the ‘Members’ Reserves’ plan, customers can store their wines in one of the Society’s vast warehouses, or the company will compile a cellar on their behalf, laying down red wines and white Burgundy, suggesting drinking windows and so on. The Society also keeps its own reserves, releasing them when the buyers decide they are ready for drinking. It has a retail outlet in Stevenage, where popular wine dinners are laid on in a somewhat soulless new dining room, and another in Montreuil-sur-Mer in France, but the company’s core business is mail order.

Of the 1500 wines the Society lists, about a third are own-label – the ‘Society’ range and the more upmarket, vintage-specific ‘Exhibition’ range. The main part of the list is a mix of the classic regions – Bordeaux, Burgundy, Rhone, Italy, Australia – and the new. A characteristic of members, chief executive Robin McMillan says, is that they are ‘keen on exploration. We see this as important.’ The Society was one of the first champions of Sicilian wines, and was an ‘early supporter of Eastern Europe.’ The list is rich in interest. In Spain, for example, ‘Other Spanish Wines’ runs to over 50 entries, some from the smallest and least-known DOs. There are 45 Sherries, there are wines from Romania, Turkey, Bulgaria and Morocco. There are a few holes, notably in the uninspired North American offering, and it’s essentially a conservative list (the top-selling countries are France, Portugal, Italy, South Africa and Chile), but there’s also enough of the unusual and the hard-to-find to satisfy any wine lover.
Warehouse 1, Stevenage

The Society does not pursue growth, so is happy with the modest year-on-year increase in its membership. ‘There is no growth agenda for growth’s sake. We have no outrageous ambition,’ McMillan says. ‘Of course we have to grow to be sustainable but our focus is on servicing the membership.’ It does not advertise, so new members tend to hear about it by word of mouth, or they inherit a share from a parent. ‘Modest’ is the word McMillan likes to use. ‘The Wine Society is really a well-kept secret. We’re here for our members, and not interested in any other agenda.’

Low-key its aims may be, but in reality there is nothing modest about the Wine Society. It turned over £93m last year, and is embarking on an ambitious plan to increase its considerable storage space with two vast new warehouses on the drawing board. When it moved out of London in 1965 it bought the huge industrial expanse it now occupies – the board, chaired by the legendary Edmund Penning-Rowsell, foresaw the need to expand in the coming decades. Currently it has space for around 500,000 cases, of which 230,000 are members’ reserves.

Serious wine merchants regard warehousing as key. As Adam Brett-Smith of Corney and Barrow told me recently, logistics will be the key development in the decades to come. Companies that can store large amounts of wine in optimum conditions can buy direct from producers and keep it for as long as necessary. In Bordeaux this is particularly important as chateaux – starting with Latour – may begin to opt out of the En Primeur system and sell to end consumers directly. Big Bordeaux negociant houses are maximising their acreage. Maison Joanne has temperature- and  climate-controlled space for six million bottles. For the Wine Society, En Primeur isn’t a big part of the business, but it's increasing, and with its vast square footage the Society seems positioned to exploit future developments in fine wine distribution.

And there’s also the issue of provenance. The Society buys only direct from domaines or from agents – ‘never from brokers’, McMillan says – so provenance is guaranteed, which is of vital importance as fraud becomes widespread. McMillan says he has even heard the phrase ‘ex-Stevenage’ used as a guarantor of a wine’s credentials. Again, they are ahead of the curve.

But however far-sighted it is, the Society has to strike a balance between tradition and modernity. The average age of members is a conservative 50, concentrated in London and the south-east, although with decent representation in the rest of the country. McMillan says it’s natural the customer base is more mature. ‘It isn’t for everyone. You have to be at a certain point in your wine journey. You’re choosing from literature, it requires investment and a certain level of confidence.’ Service is paramount: there’s no automated switchboard (‘over my dead body,’ McMillan says), and great store is set by the fact the printed list is available to those who want it. Apparently membership surveys suggest it’s the most digitally-aware members who insist on getting the quarterly booklet.

In terms of its digital presence the Wine Society is not cutting any corners. The majority of wines are ordered online, and spend on digital is doubling this year. This is not to create an achingly modern website, but to ‘enhance the service’, that is to make sure the ‘mobile, tablet and website experience is seamless.’ They're big on social media a well (marketing chief Ewan Murray is a prolific tweeter himself, and looks after an account with 39k followers).

So is up-to-date, but with its discreet burgundy- and-grey livery and old-fashioned nameplate logo there’s nothing remotely edgy about it. The one concession to modernity is that the ‘IECWS’ acronym in the logo has been dropped, although it still says ‘1874’.

It could be called staid, but McMillan comes back to a favoured word: ‘modest’. ‘We have an open, transparent dialogue with our members, there’s no hard sell. The tone of voice is critically important’ – but agrees that online is key to attracting new and younger members. To this end there are more features such as ‘Buyers’ Top Tens’ and ‘New wines’. The average age of new members is creeping down to a youthful mid-40s, the Society’s marketing chief Ewan Murray says.

The balance between the modern and the traditional is never more important than in the list itself. Buyers must service members’ taste for the traditional as well as introduce them to the unusual and the new. Pierre Mansour, responsible for Spain, Champagne, Sherry and Lebanon, says that on any buying trip he will spend about a third of his time searching out new talent, and the rest of the time dealing with existing producers. A good example is a recent trip to Rioja, in which he was ‘taken in the back door of Contino’ to make a special blend of the renowned producer’s 2010 Reserva. This will be ‘our own take’ on the 2010. ‘We have to put ourselves in the members’ shoes, and we know they like the more traditional style of Rioja.’

At the same time, he sourced a wine from a new producer who is experimenting with ancient Rioja varietals, indigenous grapes such as Maturana Tinta, Montastell (sic), Tempranillo Blanco, and a local strain of Torrontes. ‘I’ll take the wine if it can tell a story,’ he says. ‘If we can give our members the confidence to try something new.’

The fact that the Wine Society doesn’t pursue growth, with no shareholders demanding profits and dividends, means that buyers have more flexibility to take wines that might not be ready for some years. ‘We don’t have that pressure to push through stock to convert it into cash,’ Mansour says, citing the example of Toro producer San Roman. The Society is listing its 2010 at the moment, but the wine is produced in such tiny quantities that if they had to wait until it was all sold before they changed vintages, the 2011 would be gone. ‘The 2011 is a baby but I’ve been able to snap it up, and keep it until it’s ready for release.’

It’s difficult to find a flaw in the company’s modus operandi. It has won numerous awards, including Decanter’s Retailer of the Year three years running, as well as Wine Merchant of the Year and Wine Club of theYear at the International Wine Challenge. ‘What else could we do?’ the Decanter judges asked in 2013, going on to laud the fact that prices held steady on 1,100 of the 1500 lines, while ‘400 lines actually saw their prices reduced.’ The Society is praised by Oz Clarke (‘The quality of their Sherries alone would be an excellent reason to join’) and by Jancis Robinson MW (‘great value’).

There have been criticisms. The UK journalist Simon Woolf, who also writes on Tim Atkin MW’s website, recently took the Society to task for ‘massively undercutting all other retailers’. He cited various examples, such as the Domaine du Cros Lo Sang del Pais from Marcillac which is £8.50 on the Society list but hardly even less than £10 from other independents. This is undercutting, or deep discounting, he suggested.

‘I would change the language,’ McMillan counters. ‘Our intent is not to undercut; our model is to run a business that sources wines and offers best possible value. We don’t want surplus profits, and the mutual model demands we keep prices as low as we possibly can. People are cynical because it sounds too good to be true.’

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