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Opportunities ripe for consolidation in independent wine sector, predicts Broderson

Published:  03 February, 2015

The time is right for many independent operators across the wine and spirits sector to seriously consider consolidation in order to strengthen businesses, says drinks mergers and acquisition specialists Broderson & Co.

The time is right for many independent operators across the wine and spirits sector to seriously consider consolidation in order to strengthen businesses, says drinks mergers and acquisition specialists Broderson & Co. 

For SaleExperts insist the UK wine market is shrinking, so the time could be right to consider consolidation?

The group focuses on the drinks industry and has in recent times advised German sparkling wine giant Henkell on its 60% acquisition of Copestick Murray, as well as UK spirits distributor, Marblehead Brand Development, on its partnership with Quintessential Brands, parent company of Greenall's gin distiller G&J Distillers.

The firm predicts change is required in the UK independent sector to ensure continued growth and development. It said merchants and retailers, as well as importers and distributors, ought to consider consolidation to strengthen their businesses and remain a viable force against the dominance of growing competitors within this sector.

The advisors' predictions come in the week that Harpers has launched its March for the Independents campaign that puts the spotlight on the trading and business issues that matter to the independent merchant sector leading up to a specialist indepdendent retail conference being held on March 3 at London's St Ermin Hotel. 

A recent Plimsoll analysis of 673 major wine and spirits wholesalers identified 31 top-performing companies, with outstanding growth and profits, while 125 companies are on the 'danger list" and currently in financial difficulties. Some of these could prove interesting from a mergers and acquisitions standpoint.

A host of independent merchants are currently looking to expand their businesses, with Northern Ireland's James Nicholson Wines recently telling Harpers.co.uk it had been looking to buy a business in Great Britain for the past two years, and in discussions with three firms in the last six months, but so far has not found the "right fit".

Larger independent firms have also been making moves in recent times, with Bibendum and PLB merging back in October 2014, and more recently, Scotland's Alliance Wines purchasing importer Rhone to Rioja

Jens Brodersen, managing director at Brodersen & Co, said: "Often these businesses, variable in size, are privately owned and managed, have established great reputations and strong localised, regional or even national customer bases but have reached a point where growth has slowed down or stopped."

James Connolly, consultant at the firm and a former owner of independent merchant, Imbibros, said factors including "inadequate funding, shortage of suitable premises or uncertainty over strategic direction" can hold back progression.  He added that consolidation can strengthen the new business by pooling resources, personnel, ideas, insight and expertise, as well as establishing economies of scale and additional routes to market.

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