Waitrose News Update: Bargain Booze Benefit from Waitrose’s Ex-Boss
Waitrose news update: Bargain Booze are benefiting from former Waitrose boss Diana Hunter and the knowledge she gained during her 9 years at the company.
“The British like a drink – and increasingly, they prefer to quaff at home. Conviviality Retail intends to take advantage of this trend. The group floated on AIM on July 31 and expects to grow significantly over the next few years. At 1441⁄2p, the stock should provide solid returns for the long-term investor.
Conviviality runs cut-price off-licences, chiefly under the Bargain Booze brand. While the name is less than subtle, the concept works. The business was founded in 1981 with one shop in Sandbach, Cheshire, but today there are 611 outlets and the firm intends to open many more.
Not that long ago, the high street was dotted with off-licences such as Oddbins, Threshers, Wine Rack and Unwins. However, most have collapsed in recent years, hit by tough competition from supermarkets. Bargain Booze is a notable exception. Rather than offering selective promotions for short periods, it sells consistently cheap alcohol and claims to be 15 per cent cheaper than supermarkets.
The chain does a line in convenience foods, too, particularly products that are deemed to go well with a couple of drinks, such as pizzas, crisps and other snacks.
Conviviality does not just differentiate itself from most retailers through its cut-price approach – it also operates under a franchise model. Each store is managed by a franchisee, who take responsibility for rent, rates, wages and other bills, but buys food and drink from Conviviality.
The franchisees benefit from the group’s bulk-buying power, while the group benefits from having highly motivated store owners whose success is directly linked to their own sales efforts.
Conviviality has 461 franchisees, so some own several shops. As part of the flotation, each store owner was able to participate in a share scheme, providing them with a further incentive to do well.
The company is run by Diana Hunter, who started out at Sainsbury’s and then spent nine years with Waitrose, most recently rolling out its convenience store format.
Waitrose and its parent store group, John Lewis, may have a more upmarket image but Bargain Booze is predominantly a convenience retailer with big growth ambitions, so Hunter’s store development experience will come in handy. She is also comfortable working with franchisees as partners, having experienced the John Lewis partnership approach to its staff.
Most Bargain Booze stores are in the North-West and have traditionally been associated with beer, lager and cider. Now the group plans to expand further in the North and into the South, taking on new franchisees and allowing existing operators to run more stores.
At the same time, Hunter, who joined the firm in February, is keen to sell a wider range of foods and make more of the group’s wine offer.
Wine has been available at the shops for years. Now the company wants to promote it more and has taken on a master of wine, Susan McCraith, to help. Brokers expect profits to rise from £7.1million to £9.2 million in the year to April 2014, with growth to £11.3 million for 2015.
The group is also determined to reward investors with generous dividends, so a payout of 8.1p is expected next year, rising to 8.3p in 2015, putting the stock on a near 6 per cent yield.
Midas verdict: Cut-price alcohol is controversial, but for most consumers, a drink at home is a pleasurable experience made all the more so if prices are cheap.
Independent researchers predict retail sales of alcohol will rise from £14.3 billion in 2012 to more than £17 billion by 2017 and that convenience stores will account for a growing proportion of consumers’ weekly spend. Conviviality is well placed to benefit from both trends. Hunter is ambitious and the franchisees are motivated. Buy and hold.”
For more information on Waitrose and the offers they provide for their customers, contact their customer services department via the following link http://www.customerservicescontact.co.uk/waitrose-telephone-number/. Alternatively, you can read all about their products and services on the Waitrose website.
This article was originally sourced from This Is Money.
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