Interview: Don’t overlook The Wine Society
It might sound like an old-school wine tasting club for a select membership but The Wine Society (TWS) is in fact at heart an online wine retailer that is open to everyone and frequently beats the competition, winning awards year-after-year for its range and incredible levels of customer service.
I’ve been a very satisfied member for many years and recently sat down with Steve Finlan, CEO of TWS, ahead of a Press wine tasting in London to hear how the business has developed over recent years. “People misunderstand that membership is a one-off £40 and not an annual subscription fee. And the other assumption is from the name – it does not scream online retail and is old fashioned. We’re still in the foothills of addressing this,” he explains.
Improving the online proposition
At least TWS does not go by its legal name of the International Exhibition Co-operative Wine Society Limited. He suggests that back in the mid-1990s to 2015 there was not a huge amount of competition for buying wine online and TWS had the “worst delivery and website but great service”. “We recognised we needed to be excellent and went on a journey. The key point is to be as good as the competition in the online landscape,” he says, adding that at the end of the day it is still a wine club.
Subscribe to TRBThis gives it unique characteristics in the marketplace. Its co-operative structure means it is owned by the membership and it is also a not-for-profit organisation thereby all profits are invested straight back into the business. Finlan says he had 40 years working in retail fort the likes of Marks & Spencer and Clarks before joining TWS and had to unlearn much of what he knew in order to run the club.
Increasing frequency of purchases
He cites the decision two years ago to remove all delivery charges because “we could afford to do it” in a move designed to change the nature of the business by increasing the frequency of purchases. “It’s come at a little cost because we are a bottle short per order but the loyalty is there. It takes two years for members to develop a habit to buy but then loyalty is huge,” says Finlan, adding that TWS’ ownership model means there is no pressure to grow: “This is the principal advantage of having no shareholders. I’ve done [time at] M&S and it is grow, grow, grow.”
Despite this he acknowledges that membership has been growing healthily, with 5,000 new active members being added each year of late, which means since he joined six years ago the numbers will have increased from 141,000 to a predicted 184,000 by year-end. As well as attracting new people the retention rate of active members is strong at 85%, which if you add in the 10% who return to buying after one or two year gaps it hits an impressive 95%.
Against this positive backdrop Finlan says there is plenty of headroom on signing up new members. But he would not want 15,000 joining per year as this would affect the volumes it would need to handle. “We’ve got economies of scale for our business and we’d have to change things. We’d prefer to close the membership because we don’t want to change our buying methods. It works as it is,” he explains.
Looking for the curious
The average age of the current membership is 61 and although there is no plan to change this the plan is to stop ageing and to this end the average new joiner is aged 52 and the under-35-year-olds are the fastest growing grouping. This particularly pleases Finlan, not because they will live longer but because they are curious.
“Everyone can join TWS but ultimately we like members who want to learn about wine. Younger people are very curious and more likely to explore. They see it as more of an experience. It’s the same at our tasting events, and they want to talk to their mates about wine. They also like sharing bottles with people,” he suggests.
There is certainly helping drive a wide variety of purchases across the membership, with the top 10 best-sellers always including a £100-plus bottle even though the average price paid per bottle is £12.50. The highest seller by volume is an entry-level Portuguese red at £6.95 while the current fastest seller is the society’s own-label White Burgundy that sits alongside an extensive range of own-label Society bottles. These account for 35% of sales (when including its higher-end own label Exhibition range). Other notable current trends, according to Finlan, is red accounting for 57% of sales and the category is having an impressive September, with sales up 24% in September.
Maturing members’ journeys
Finlan particularly likes the way the membership matures in its buying behaviour, with a classic customer journey beginning with purchases for Christmas and within two years they are buying in bond. This refers to purchasing wine before the taxes has been added and also en primeur (before it has been bottled) and having it held in storage. When the UK duty and VAT is paid on it then it can be released for the owner to consume.
These wines are held in what TWS calls its members Reserves and the value of these wines is currently £150 million. On top of these bottles a further £20 million is held by TWS for ageing purposes. These bottles will be released over time and sold to members at the optimum times. Finlan reveals that the organisation is to launch a buy-back service for wines in Reserve because often members’ tastes change and they could then sell some of their stored wines back to TWS at the original cost.
There is also possibility of initiating a service for members to sell between each other but Finlan is wary that this could give the perception of TWS as a conduit for people buying wine as an investment rather than for drinking. This would potentially upset some of TWS’s long standing suppliers who would likely demur at dealing with TWS as a more monetary-driven type of organisation.
Developing fine wine category
Care will certainly have to be taken but fine wine is an area TWS has set its sights on and is committing more resources to the category. Finlan says wine valued at £6,500 a bottle has been sold in the same was as a £6.99 bottle but the market has evolved and there is now a need to better cater for the fine wine buyer. Fine wine is classified as £20-plus bottles and he intends to grow this as a percentage of overall TWS sales that currently stand at £150 million per year.
The society has just appointed the first head of fine wine that it has defined as a pivotal part of its bold new vision to reshape its fine wine offering. This will include add-on services such as advisors on the category, the buy-back service, and giving greater access to fine wine. “We’d like to sell fine wine more cheaply. Producers don’t want us to distort the market price but we’ll always be the cheapest in the market for £20-plus wine,” says Finlan.
Against this backdrop of progressive activity he cannot miss the opportunity to highlight the ongoing pressure faced by the wine industry that includes duty increases and EPR (Extended Producer Responsibility) relating to packaging. “In addition, what is not said enough about is the piecemeal nature of wine legislation and red tape. Just tax us, not keep adding more red tape,” he argues.
