Enotria&Coe: when you have to deliver your digital ambitions three years early

Tell us about your organisation 

Enotria&Coe (E&C) is a leading premium wine and spirits wholesaler in the UK, with an expertise in premium bars, hotels, events and restaurants. The business also serves the off-trade market (e.g. Co-op, Waitrose, Tesco) and has a retail outlet in Bath with a growing ecommerce platform - Great Wine Company. E&C employs 300 people and has approximately £180m of revenues with 85% of this business coming from the on-trade (e.g. bars, restaurants, cafes, etc). 

What challenges were you trying to address? 

Hospitality is a very fragmented and competitive market, with the casual dining sector under particular pressure, with many companies having gone through company voluntary arrangements (CVAs) in recent times. On top of that, in response to COVID, the government closed most of E&C’s customers for four months. So, how does a business with large fixed costs survive this period and try to pivot to emerging opportunities?  

Some of the challenges the business faced were substantial:  

• 90% of the business’ profit contribution comes from restaurants, cafes, bars, pubs and clubs 
• Our business was heavily reliant on customers that would be impacted the longest (e.g. travel, hotels, cruises, large events) 
• Although the Coronavirus Job Retention Scheme (JRS) was helpful, many of the other support schemes did not apply to us; for example, business rates relief was only available directly to the leisure and hospitality sectors, but did not help businesses like ours who were further down the value chain  
• As a midmarket player, we found it difficult to access government-backed loans 
• Our digital platforms were unprepared for the level of automation that was needed in order to move sales online 
• The way our business is financed is based on our sales, and most of our customers shut their operations before paying amounts owed, hitting our sales and therefore limiting our finance options 
• Wine, especially from places like New Zealand or Chile, can take 90 days to arrive, so the warehouse was filled with inventory for an Easter peak and all orders on the water were still going to come in over 90 days despite the customer base shutting down 
• Inventory was already sent out to events and locations (e.g. horse racing, airport lounges) that needed to be returned; once a product leaves the warehouse, E&C is liable for the duty which is 50-70% of the product cost, so, there were significant amounts of inventory being returned which the business owed the tax on.  

The challenge was to survive the lockdown and emerge with a more balanced business, ready to overcome additional winter lockdowns while keeping employees safe, and servicing those customers that were still operating.  

What goals or outcomes did Enotria&Coe want to achieve? 

Our plan was to: 

• Improve liquidity through cost reductions, cash collections, supplier negotiations and sale of stranded inventory 
• Find the innovative customers whose model would win in this environment and support / work with them 
• Use the opportunity to grow our direct-to-consumer platform.   

What was your solution? 

People:  

We put about 85% of the business on furlough with the rest working from home. We aligned this ‘skeleton’ staff on key objectives with weekly meetings on credit, inventory, payments and general operations. There was a limited group of warehouse personnel still coming into the office supporting the retail and digital business (specifically called out by the government as essential). All ‘at-risk’ employees were put on furlough and followed all government direction on social distancing at work.  

Liquidity:  

All post-COVID surplus inventory was pushed towards other channels like retail and entrenched ecommerce operators. Every inventory supplier was engaged to agree on timing of payments. The landlord, council and any major supplier was engaged to determine how we can emerge with a leaner business model. We held discussions with banks and investors to provide emergency liquidity if needed.  

Commercial:  

E&C supports the trade and is doing everything possible to help struggling restaurateurs and those in hospitality. The business is being very accommodating to those opening so we can all balance cashflow versus risk. We provided a number of customer communications of post-COVID consumer trends and support for those able to open with social distancing.  

Digital: 

The business pushed hard to grow the ecommerce platform, which did see 500% growth during this period. As everyone moved online, our parcel carrier imploded, leaving our customers unhappy with poor service and communication. We had to switch carriers and took some drivers off furlough so that we could deliver products to consumers (this was new to drivers, who were used to delivering to restaurants). We also completed an in-progress acquisition of a spirits ecommerce platform which we integrated into the operation during lockdown. The business also completed the rebranding of the retail arm. 

Shifting the operations from B2B to B2C was quite a shift and needed to be done quickly. The customer service and warehouse operations teams worked tirelessly to deal with this shift, which had originally been envisioned as a year-long project. We implemented robust customer service software to make tracking and manging consumer requests more seamless.

How did you roll out your approach? 

With our office staff needing to work from home, we had to quickly get the equipment and technology nailed down. Before everyone was sent home, I held ‘town hall’ meetings to provide clarity on our objectives and actions during this period. The ‘skeleton’ team was selected, and individual communications were held. After the Coronavirus Job Retention Scheme (JRS) was announced, there was a formal communication and consultation to garner employee approval of all adjustments required during lockdown operations.  

We held a weekly catch up with all the ‘skeleton’ team discussing any larger issues and getting people aligned on priorities while solving any communications problems. After this meeting, I sent a newsletter update to the entire organisation. Each functional head, for the most part, was still working and would have regular ‘Teams’ catch-ups with their departments for social and supportive reasons as well as working groups. There were many creative Zoom drinks sessions, but these tapered off as time went on.  

E&C conducts employee feedback surveys on an annual basis. We used our provider to test the experience and thoughts of the employees so we could modify our approach or tailor communication if required. It was very clear that the lockdown was having a wide arrange of effects on people from complete enjoyment  to complete terror. We used this to provide some more tailored feedback and communication, but it is difficult to address everyone’s uncertainty about the UK and trade.   

We provided several training opportunities for people to develop and expand skills, such as forklift training in the warehouse, and digital training for sales and marketing. There were many enthusiastic participants, but some colleagues expressed concerns that they would be at a disadvantage if they did not have time to participate in additional training, due to personal circumstances such as balancing childcare. With the shift to becoming a more digital business accelerated as a result of the pandemic, it opened up a lot of anxiety in our workforce about the pace of change, about whether their skills are still valuable. We reassured colleagues that not being able to take part in training wouldn’t be held against them, and will certainly factor anxiety about change into our future plans.  

What have the results been? 

We have run the operations without any COVID instances, and have tried to boost morale for those at work, for example with free wine and food.  Senior colleagues have spent time with the warehouse guys picking to ensure they knew we were in this all together. The business converted £3m of inventory into cash which helps post-lockdown. The stakeholders are all clear and supportive of our direction, providing additional liquidity for any emergencies. The digital business is three years ahead of plan on performance. So, we are in the best shape possible as the pubs, restaurants and cafes begin to open.  

One of the challenges has been the unintentional internal conflict between those on furlough and those at work. Those working are doing so harder than ever, wondering why they couldn’t be at home with no alarm clocks. Those at home feel like they have no control, and some would prefer to be back. It would have been better, and fairer on our employees, had we been able to rotate between the different teams much earlier in the furlough scheme. 

What advice would you give to other businesses looking to do something similar? 

The conflict between furloughed employees and our skeleton team was a surprise, and I wish I had caught this and addressed it earlier. Despite doing our best to communicate, in this unprecedented set of circumstances, people struggled with whatever hand they were dealt. You need to think about the team coming back online – you have to emotionally prepare people returning to work and reassure them that it’s safe, as well as making sure they’re comfortable with any new processes that have been put in place. 

Now that we’re aware of the issue, we’re implementing much more robust back-to-work inductions, and have twice daily (socially distanced) huddles, so we can catch and address any issues before they arise.