Don’t Squeeze the Middle: Ian Cumming of Inverarity Morton

IanCumming
The old clichéd saying that ‘a week is a long time in politics’ can certainly be applied to many businesses all around the globe. In the wide and varied world of drinks wholesaling, a day became ‘a very long time’ in March of this year.
We had just emerged from an exciting and optimistic start to the year, including probably our most successful wine tasting event ever in Edinburgh, when the enormity of COVID-19 became a stark reality for us all.
It goes without saying that the health and welfare of the nation, and the entire planet, is by far the most important consideration in all of this and the decision to go into ‘lockdown’ was undoubtedly the correct one – we can always debate the timing, but that is not a topic for this particular piece.
There has been quite a lot of publicity around the effect of this pandemic on the hospitality trade in Scotland, and quite rightly so, but sometimes the guy in the middle can be slightly overlooked – the wholesaler is the wheels that facilitate the workings of the industry.
Brands need their products to get to the market and the outlets need a source to get the products to them. No brand owner would ever hold 5,000 products from over 260 sources and deliver in small quantities, in a combination of full and mixed cases, making single figure margins.
Large turnover, however, does not always lead to large profitability.
 Even putting to one side the pricing, wine listing, product range, menu printing, promotional activity, credit terms and business consultation that a good wholesaler will provide … page one of ‘the big book of delivered wholesaling’ and, the most important part, is the provision of a set of wheels to get the brand to the outlet and allow them to do what they excel at, by getting it in front of consumers.
When the lockdown was announced our turnover went from an average of £1.2m per week to virtually zero – as 98% of our business is the Independent On Trade in Scotland. We have a warehouse full of stock with no-one to sell it to. Overnight, the strengths and selling points of our business became our liabilities.
A warehouse full of classic products and new and emerging spirit lines, exciting new wines imported from overseas all waiting to be distributed into the dynamic On Trade market have essentially become frozen in time – without a welcoming home to go to.
We are Scotland’s largest independent drinks wholesaler having been around for 75 years and where we are a bit different is that we don’t rely on private equity or bank finance. We are family backed and that should help ensure we are still very much around for the next 75 years once we are through this difficult time.
We are not pretending that we are alone in having problems, far from it, but we had to think how we respond and very quickly.
What were the urgent issues – STAFF… CUSTOMERS … SUPPLIERS.
Our first consideration has to be for our staff – around 200 people employed in the business and dependant on us for a living. The government furlough scheme has been a huge help in this instance and we have topped up where necessary to ensure everyone is receiving 80% of their income.
This has left a core of 20 people employed in now business-critical activities – basically paying our suppliers and trying to ensure we are paid also.
There is a bit of a chain in the licensed trade … Supplier … Wholesaler …. Outlet … Consumer – we can only get through this if every part of that chain plays its part. We are engaged in proactive discussions with our suppliers as to how we can best settle our debts in a fashion that works for us both. The vast majority of our suppliers recognise the relationship we have and have acted accordingly in trying to support in different ways, however some have not and this may prove to be a very short-sighted approach when ‘normality’ returns.
We in turn have been attempting to help our customers in as many ways as we can to agree a payment plan that will help us all through this.
All I would ask from a licensee is please don’t run away from the conversation – we are here to talk and to help and almost always find a solution. Wholesalers will still need to be in existence when we come through the other side to oil the wheels and get our fantastic trade back on its feet.

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