EXCL – Majestic Wine’s CEO John Colley on why 2022 will go down as the year of fizz
Two years ago Majestic Wine went private, under the ownership of Fortress Investment. As a private entity, the company has enjoyed two years of transformation and the results have not gone unnoticed in the City: record growth and record sales.
The Watford-based wine giant also opened a number of new branches and undertook a turn-around plan whilst navigating the pandemic.
In fact, John Colley, since October 2019 the CEO and executive chairman of Majestic Wine, told Morning Wire in an exclusive sitdown that his company plans to open another 20 new stores across the UK in 2023 and the next few years.
Majestic is now a private company, and has been for over two years, under the ownership of Fortress Investment. How is it going?
Truthfully? Extremely well. Like every business, we’ve had our fair share of challenges. But having a consistent business plan, built around returning the company to profitability and growth, paired with a fully supportive ownership structure has really helped us to turn Majestic around over the last two years.
“The company was in a very difficult position prior to the takeover.”
John Colley
But despite the challenges of the pandemic, global supply issues, appalling harvests – and high street pressures we have made progress. The challenge now is to continue that. We’ve got an exciting growth plan which we’re putting into place, and a pipeline of over 20 stores we want to open in the coming years. We’re investing in this market and investing in our stores and people. It’s been a really exciting journey.
What are some of the main challenges your company is facing at the moment?
Like every business, it’s energy costs. It’s going to have a big impact on our bottom line – whether that’s for the shops, our fleet of over 200 vans or the supply chain pressure it creates. We’re looking to trial rolling out electric vans across our fleet in the Autumn as one example of how we’re trying to mitigate. The other key area is the threat of duty increases. The proposed changes planned for Spring would make it extraordinarily challenging for our suppliers to operate in the UK – and would be extremely difficult for our homegrown wine producers too. It’s something we would ask to be urgently reassessed.
The cost of living crisis is raging, household budgets are under pressure. Do you see a consumer shift towards less wine, or cheaper wines?
We don’t have a crystal ball, but history has shown that Majestic is an extremely resilient business. Even when budgets are tight, wine is still something people want to enjoy and savour. We see our job as pointing customers towards real value. So whether that’s introducing them to new regions which offer great quality at a lower price, like Romania, or Portugal, or helping them shop into different styles or grapes – South African fizz, for instance, which is flying currently for us.
“I think we’re likely to see a shift towards potentially drinking less, but better.”
John Colley
We also try to educate our customers on what real value in wine is – if you spend £8 to £10, for instance, you get such better quality because of the way duty is calculated. The 1300+ wine experts we employ across our stores are real experts in that. They’ll help keep budgets in check by offering great alternatives – and with our free tastings we still offer an experience every day of the week that we believe our customers will really enjoy over the coming months.
Has Brexit complicated the way you source, select, import and acquire wines from Europe, like France, Spain, Italy and Portugal?
Initially there were some challenges to overcome, but as a business adaptability has become our watchword. We work with longer lead times, bring in stock earlier ahead of crucial periods and deploy our over 200 warehouses across the UK to ensure we can meet customer demand.
What is, according to you, the one wine market everyone should be paying attention to at the moment?
2022 so far has been the story of fizz. We’ve seen record sparkling sales, with the category as a whole really firing. That’s not just been champagne or Prosecco – but rather wines from across the planet. Whether it’s South African, Spanish, or even English. This has been in part due to the return of weddings and parties – but also customers using wine as that extra little treat.
“In still wine, Greece is becoming one to watch. We’ve seen record sales this year and have added new lines accordingly.”
John Colley
I think with the return of the summer holiday season, you often see customers coming back to the UK and trying to find wines they discovered abroad. So that’s one that should continue.
Finally, a recession is looming, Covid cases are gradually rising. What will the second half of 2022 have in store for your company and the wider wine sector?
The Christmas period for us is crucial. So planning is already well underway for delivering a truly Majestic festive period. The market is going to be tough, but we’re confident that we’ll have the range, expertise and supply in place to be one of the key winners.