A promising portfolio

Sally-Anne Cooney

2010 saw several potential bidders attempt to secure Diageo’s Gilbeys wine business, yet it was the Gleeson Group - distributor of Tipperary Water, Finches soft drinks and Bavaria beer - that emerged triumphant. Gillian Hamill spoke to general manager Sally-Anne Cooney to hear more about the business benefits created by the €6 million acquisition

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Off-trade

One of the most significant events to occur within the off-trade sector this year was undoubtedly the Gleeson Group’s acquisition of the Gilbeys wine business from former owners Diageo in July. Sally-Anne Cooney,  general manager of the Gilbeys division within the Gleeson Group, highlights the strategic importance of the deal costing nearly €6 million for the Tipperary based drinks distributors. 

She says of the wine distribution market: “Gilbeys actually owned over 13% so the acquisition is moving our market share in wine to over 15% of the total market.”

Industry reaction to the merger has been positive she adds, at a time of general consolidation within the sector. “Very much at the moment, I think the wine industry is in a time of consolidation; we’ve seen that with a number of other consolidations in the past such as Findlaters and Woodford Byrne.”

Partnering with advantages

The 28 strong-team who formed the Gilbeys group have all now transferred across to the larger Gleeson Group, which currently boasts just under 700 staff. And access to the Gleeson larger distribution network has proved a major benefit of the partnership.

Cooney explains: “We have our own distribution fleet; we have 120 trucks on the road and 10 distribution depots in Ireland. Something that we’ve been able to do quite seamlessly is to move from using the Gilbeys’ third party distribution provider into our own distribution logistics. What that does is it gives us control from the bonds to the customer, to ensure that we can offer the customer the best service possible.”

With the Gilbeys portfolio helping the company’s “depots around the country to ensure that all their trucks are full everyday”, it’s perhaps not surprising that the group has no plans to interfere unduly with the Gilbeys portfolio. A portfolio that includes successful retail brands, Blossom Hill, Santa Rita, Louis Latour, Drouhin,  and Yellow Tail, as well as several high-end on-trade brands.

“The aim is to keep as much of the existing portfolio as we can and it’s looking very, very positive at the moment,” says Cooney. “A number of the smaller brand names may not carry forward into the future but the majority of the portfolio we plan to keep intact.”

A value-adding proposition

The Gleeson Group is also focusing on providing a value-added proposition for its wines in a “predominantly price-led”market which has seen “a fundamental shift in consumers’ buying habits,” with people “very much trading down.”

“Prices have fallen hugely in the last two years; a lot of it has been driven by price competition in the multiples.” Cooney notes the group is subsequently trying “to move away from that price argument when we can” through the likes of Santa Rita’s hero campaign.

“What we’re asking for is for people to nominate a local hero in Ireland and we’ll then pick a winner in February 2011 who will receive *10,000 to spend on a local cause in the community. So we’re very much giving back to the community and trying to move away from that price proposition all the time into a more value-adding proposition.”

That said, she notes the group’s “prices have fallen significantly; I would say nearly double figures.” She also believes “the shift in sterling prices and changes in duty and VAT regime in the UK have helped suspend the tide of business going to the north of Ireland.” At the time of ShelfLife’s interview, prior to Budget 2011 being revealed, Cooney said she would describe herself as “hopeful as opposed to quietly confident” that the Government wouldn’t increase alcohol duty. She would therefore likely agree with Retail Ireland director Torlach Denihan’s view that, “it is very positive that excise on alcohol has not increased as this could have reignited cross-border shopping.”

Realistic market assessment   

In general, Cooney takes a realistic approach when assessing the prognosis for the drinks industry. “I do think it’s going to be quite possibly two years before we see a return to growth within the drinks trade overall. I think that’s reflected by the overall economic situation. There are still huge challenges out there for the Irish consumer and that very much will be peppering their buying decisions over the Christmas period.”

While the Budget has dispelled the industry’s worst potential fears, she believes more could be done to help those within the off-trade.  “Once again this comes back to the abolition of the groceries order. That has led to a lot of the pricing issues that are happening in the market at the moment, so I think re-addressing that division would be one of the main ways that the Government could help the independent trade.”

Confident expectations

And despite the market’s current difficulties, the company still holds high expectations. “Blossom Hill is the number one wine brand in the market, with Santa Rita in at number three. We’d obviously like to improve Santa Rita up to the number two position, and that would be very achievable for next year.” A comprehensive marketing campaign has also been planned for younger brand Yellow Tail, with all campaigns making full use of social networking sites such as Facebook and Twitter to keep the various brands fresh in customers’ minds.

The plan also involves building on the Irish heritage of the Santa Rita 120 brand; the name of which stems from the fact that Bernardo O’Higgins (of Irish descent) sheltered 120 people during the Chilean war of independence in the cellars of Santa Rita. “We sampled over 20,000 people at the Ploughing Championships in September and we currently have seven large Halo stores around the country where we have a very large Santa Rita in-store unit build and we’ll be sampling customers all the way up to Christmas”, says Cooney. “Our philosophy here is to add value and also to get the product into the consumer’s hands because we’re confident that the quality is there and they will go back and buy the product again.”

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