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Looking ahead: Mark Lansley, Broadland Wineries

We continue our series with insights from Mark Lansley, CEO of Broadland Wineries.

How has the first half of 2018 been compared to 2017?

Sales are 15% up, and profitability is back up because this year we have overcome the post-referendum foreign exchange problem we had in 2017.

What, currently, are the biggest challenges for the trade (excluding Brexit)?

MUP in Scotland was both a challenge and an opportunity. We introduced some changes to products to help our retail customers maintain their sales rates.

And keeping up with demand during the world cup and the hot summer.

What outcome would you like to see from Brexit and why?

Frictionless, international, tariff-free trade and increased democracy.

What’s your strategy for the second half of the year, through autumn and leading up to the Christmas trading period?

Installing £1m of new equipment in our winery to help keep up with increasing demand, and implementing tightly targeted A&P campaigns to support our growing “focus brands” Three Mills, Proudly Vegan, Minivino and our Christmas favourites mulled wine and the 24 bottle advent calendar.

What will be your main focus during this time?

My main focus will be to ensure we are executing our new ‘brands’ strategy in a disciplined way.

Are there any specific challenges that you’re planning for?

The main one is meeting growing demand for our brands whilst also building extra stock for when we leave the EU at the end of March 2019.

Any specific trends you anticipate?

Given younger consumers thirst for trying something different and the fall we are seeing in still wine volumes, I think the innovations we have seen in other drinks categories will increasingly spread into the wine category. In terms of consumer propositions, brand designs, liquids and packaging that challenge existing wine category conventions.

Price inflation in wine is being partially driven by input costs, and to some extent by certain consumers’ willingness to spend more – premiumisation. That’s not too bad as long as wallets can stand it, but higher entry-level prices will lose some consumers – especially if we have an economic shock that sets wage growth back.

Which channels are likely to perform best and which will be under the greatest stress and why?

Online will continue growing unless the government taxes it more to level the playing field with bricks and mortar retailers that pay rent and business rates. And if Drone deliveries take off online sales rates may accelerate.

Convenience over-indexes with Gen Z and Millennials and these renting-cohorts will spend more on wine as they get older and they may stick with their local shops.

Discounters growth will continue unless new store opening rates fall.

Multiple grocers that are large and can’t adapt quickly enough to their changing situation will continue to struggle, although we are seeing some notable fight-backs. And regarding large mergers, historically mergers of direct competitors rarely enhance combined market share. In reality they are usually for overhead reduction.

The on-trade, like the bricks and mortar retailers, have high fixed costs and so are particular sensitive to decreases in footfalls. So I suspect the best will get better, and the worst will close.

How optimistic are you – will business for the drinks trade be better or worse between now and 1 Jan 2019 compared with last year and why?

For my company Broadland Wineries I am very optimistic. The growth of our brands is accelerating and our private label business continues to do well. Our team has never been stronger or more talented.

For the drinks trade generally, I think intelligent, well-informed innovation is the key to consumer demand. We need to evolve quicker than the external environment is changing.