TWO CENTS: Jimmy Pattison Buys Everything Wine
August 10, 2011 § 2 Comments
For starters I see this as a total vertical integration play. Everything Wine has what is called a Private Wine Shop (PWS) license which gives them a 30% discount from LDB retail prices on imports and a 15% discount on domestics. The limitation is that they can not carry beer or spirits. The real value for Jimmy however is in what is not being talked about; the ability to act as their own importer.
Save On Foods has its own bonded warehouse, in-house freight forwarding and customs brokerage. They also have hundreds of containers a week coming in from all over the world including all wine regions. The costly portion of transportation is when you can not fill out a full container. If you wait to fill a container you often are left out of stock on the shelf and that means lost sales. They could easily add a palate or two of wine to fill a container and drop their transportation costs by 25%. Add in the savings of having in-house freight forwarding, warehousing and customs brokerage and you have saved yourself 35% on your shipping cost. That 35% just turned your base retail margin into 50% vs 30%. That is a significant jump.
You may be saying ‘why would a supplier sign to them being their own importer? Isn’t that limiting?” Not really. Add in their Alberta retail segment and all of a sudden you are negotiating thousands of cases with a supplier and not just 10’s or hundreds.
As for any changes in the industry, I think they more than anyone now, want stability and certainty and therefore I believe that if they lobby the BC government it will only be to keep things the way they are.