Want a new marketing agency? Then why not just buy your own?
Bristol-based Matthew Clark is an interesting business. It’s one of the largest drinks wholesalers in the UK, delivering wines, beers and spirits to the nation's pubs, clubs, bars, hotels and restaurants. Although it deals with all manner of alcoholic beverages, it has a particular focus on wine. Overall, it supplies around 1,000 lines to over 16,000 outlets.
From the wine business to the marketing trade...
And it makes a very nice living from it. In the year to 26 January 2014, the wine trade declined by about 13 per cent, according to the industry analyst CGA Strategy; yet over the same period, Matthew Clark posted a sales increase of 7 per cent. It has done this, it says, by honing its vast wine list and by moving upmarket. It now concentrates on offering high-quality wines to the on-trade, and has done deals with a number of smaller, boutique agencies and producers from around the world, including Bai Gorri, Te Karainga, Herencia Altés and Britain’s own Chapel Down.
As a result, it has won a string of awards – always good for business in the wine and spirits trade – and the aforementioned boost in sales. It has also differentiated itself from rivals.
I mention this for two reasons: one, a colleague recently showed me a selection of marketing materials he picked up on a visit to one of Matthew Clark’s trade shows; and two, I noticed on the Green Square Deal Monitor that the company had bought a majority stake in a marketing agency.
The agency in question is London-based Elastic, an experiential agency, and Matthew Clark has bought a 51 per cent stake for an undisclosed sum. Elastic will continue to operate as an independent agency, and will of course get a good deal of new business from its majority shareholder (although it already has a longstanding relationship with the wholesaler), but they key here is what the acquired brings to the acquirer.
Which brings me on to the previously-mentioned marketing materials, which I have to say were impressive. The company publishes a glossy high-quality magazine, Vini, a regular In Season newsletter and a comprehensive brochure. These are well-designed and full of some excellent content. The educative material – various leaflets, an Understanding Wine booklet and a book on bar merchandising and space management – are top-notch, both in terms of presentation and the all-important content.
Its use of digital channels and social media is equally impressive. And I’m reliably informed – I can’t go myself, because I’m not in the trade – that its events are well run, comprehensive and attended by thousands of retailers, caterers, landlords and hoteliers; and producers fall over themselves to attend.
A wholesaler like Matthew Clark is in an interesting position – as a kind of B2B provider of products and services, it has its trade customers to keep happy, but it also needs to have its suppliers onside as well. Wholesalers have to demonstrate that they’re not just box-shifters, and that they really add value to the supply chain – otherwise their customers will go elsewhere, and their suppliers will do deals with other people, or get the procurement teams involved in order to cut costs for what otherwise would be seen as a commoditised service.
Clark is obviously doing a good job with its customers, if sales are anything to go by, and the extra services in supplies, as well as its marketing support. Box already ticked there, but the input that Elastic can provide could help to make its events and supporting materials even better (Elastic apparently produced Matthew Clark’s successful – attendance was 85 per cent up on the previous year - 2014 trade wine tasting event at London’s Tobacco Dock a couple of months ago).
In the retail and wholesale channels, suppliers are always willing to invest (Coca-Cola, Walkers and, in the drinks trade, Diageo, to name but three) if they can see a demonstrable return on their investment. At the retail end, this can be demonstrated by the use of sales or EPoS data. In the middle of the chain, where wholesale sits, evaluation is more difficult. Again, the Elastic connection could help there too. Matthew Clark has the data and the relationships, but Elastic can add another layer of depth, as well as creative and strategic insights.
It’s an interesting approach – a big company builds on an existing agency relationship by actually taking a stake in it. It means that Matthew Clark can effectively take event management and supporting materials and marketing in-house.
Four years ago WPP merged its agencies (O&M, Mindshare and, Wunderman and others) working on the group’s biggest account, Ford, into an entity called Blue Hive, which existed solely to service the auto giant’s marketing needs in Europe and Asia-Pacific. And many agencies have embedded their staff within their bigger clients for years.
This is slightly different – on a smaller scale, obviously, but it allows the wholesaler to offer a more complete range of services, more accurately measured. Apart from a deal a couple of years ago between news and mag distributor John Menzies and Kent-based agency Orbital, it’s a type of deal we’ve not seen too much of. It obviously doesn’t suit every kind of business relationship, but I wonder if we won’t be seeing more of them?
Barry Dudley is a partner at Green Square, corporate finance advisors to the media and marketing sector.