The Chancellor signalled further support for the wine and spirit industry with the announcement of a 2% cut in spirits duty and a freeze in duty for wine in this year’s budget in March 2015.
This is the fourth time spirits duty has been cut in a century and the first time wine duty has been frozen since 1997. The changes are expected to save the industry £100m in new tax liabilities. This is welcome news for the beverage industry, which has seen alcohol consumption per capita peak in 2004 and then fall 19% over the last 10 years.
That said, today, the UK alcohol industry is still worth £39 billion in sales - not an insignificant contribution to UK GDP. In fact, in the UK there are 470 vineyards, 130 wineries and 202 registered distilleries. And that’s not taking into consideration the beer industry.
Even though beer is a very sociable drink, the way we purchase alcohol has changed dramatically. Pubs have declined as more and more folks drink at home rather than go out. Likewise off-licences have been impacted by supermarkets, who now stock just as broad a range of beer, wine and spirits as off-licences, at prices many of the off-licences find hard to compete with. For example Wine Shak, a chain of 14 off-licences created out of the ruins of Thirst Quench (Oddbins and Threshers), went into administration a couple of years ago taking with it Hampshire-based Wickham Vineyards as the organisation struggled to find its place in a rapidly changing market. We have also seen smaller wholesalers, retailers and distilleries making the move online, and in the last few years we have witnessed more and more innovative online beverage start-ups flooding the market.
Just last month there was an article in Fortune Magazine that talked about American firm Drizly which has just raised $13 million in its quest to sell alcohol via a smartphone. Drizly is one of the biggest players in the US market for online alcohol ordering, enabling customers to order drinks online or via a smartphone app, with the promise of delivery within the hour.
Here at NetDespatch we have certainly seen a lot more beer, wines and spirits (BWS) companies make the move online, particularly in the last 12 to 24 months. These innovative companies are using technology as a means of quickly and efficiently growing their businesses in a cost effective and efficient way. New technology is allowing them to streamline and automate previously manual processes in order fulfilment, shipping and logistics. For example, Kent-based BEERmerchants.com is a family owned business that sources and distributes top quality beers from all over the world. The company processes around 10,000 consignments a year for delivery throughout the UK via APC Kent, part of the APC Overnight network; the UK’s largest next-day delivery network. BEERmerchants has implemented our web-based solution to streamline its order fulfilment process. Prior to implementing our solution, BEERmerchants.com had to manually download all its orders, print the despatch labels and contact the carrier to collect the packages. Now our parcel data management platform seamlessly connects the BEERmerchants.com Magento order management system with its selected parcel delivery network. This has cut the company’s order processing time from eight hours a day to just 20 minutes.
Another example is Herefordshire based Chase Distillery, which has been turning potatoes and apples into vodka and gin since 2008. The distillery processes around 10,000 orders a year, supplying both businesses and individuals throughout the UK, and despatching online orders within 24 hours via the carrier’s local depot – APC Hereford. Prior to implementing our solution, Chase Distillery staff spent a lot of time manually keying in orders from its Sage system. We showed Chase how to use our Import Engine to import its order data direct from Sage. Where Chase used to spend up to an hour inputting order details and contacting the carrier, it now no longer needs to do this since the system automatically alerts the APC Overnight depot and Chase can track all its parcels online.
These are just two examples of organisations that thanks to new online technology are seeing significant benefits and savings enabling them to compete worldwide with much larger beverage companies.
While I can’t predict whether the beverage industry will continue to see its revenues decline, what I do know is that those that take advantage of technology to innovate and provide a faster and more efficient service to their customers will be the ones that survive. Certainly I can see that as a nation our penchant for buying all kinds of goods online will only continue to grow. Those organisations that can offer a great online service will be the ones who will steal a march on the competition. So, as we head into the summer with barbeques, picnics and summer parties, the BWS industry needs to take advantage by offering consumers the choice to purchase their favourite tipple via the most desirable channel.
By Becky Clark, CEO, NetDespatch