It was a decision that transformed his company. For five years Mark Bedini, chief executive of wine broking business Fine+Rare, focused solely on trading with other wholesalers for business.
Then, in 1999, after noticing a swelling roster of private clients, particularly around the release of the new vintage in Bordeaux each year, Bedini saw the potential to grow his company out of the business-to-business sphere and into the consumer environment.
He explains, ‘It wasn’t really until the turn of the millennium that we started to look at private buyers.
‘We had accumulated a number of private clients over the years and recognised that it was time that we thought of them as an asset, not just as an irritant. We began to look at dividing the sales team between trade customers and those who would specialise in private clients.
‘We thought: we have this number of private clients – let’s get people directed at contacting them and seeing what they are looking for. That sort of specialisation, that division, just really grew.’
A decade on and the results are clear. Sixty per cent of the London-headquartered business, which has 56 staff and an office in Hong Kong, is now generated from private clients, with the remaining 40 per cent from wholesalers.
Financially, the decision has paid off too. The company posted revenues of £52.8 million last year, up 89.25 per cent on the year before, and recorded an equally dramatic surge in pre-tax profits to £3.3 million, up 200 per cent.
Looking back on the decision, Bedini says that ‘it was just simple logic’. However, at the time, he didn’t believe that the shift in focus would be so dramatic.
He continues, ‘We were just looking at ways to grow the business and manage the business better, and we thought that amongst all these hundreds of client names we had there were some who were buying big. They were going to be big collectors, and we thought it would be pointless to simply continue ignoring them – we should really pay attention to them.’
As for why he didn’t consider pursuing the strategy earlier, he says, ‘It’s always a question of resources. As a nascent business we had our hands full handling the trade business, but as we grew we saw the opportunity to develop the private client side.’
Sowing the seeds
Bedini founded Fine+Rare in October 1994 with his business partner, Bud Cuchet. Already by that stage he had clocked up more than a decade in the industry, including five years as a wine broker with Richard Kihl and six years with Corney & Barrow.
He says the company came about in the ‘typical situation’ – he began to become frustrated by a ‘lack of vision’ working for a large company. At the same time, he noticed the advent of email, namely CopyServe, a program that enabled doctors to message each other, and he thought that similar software could be used in selling wine.
Scraping together whatever cash he and Cuchet could raise, the two developed software that organised supplier wine by ranking the cheapest product first. With the technology, the entrepreneurial pair could see where the best buying opportunities were, and in the first year of trading the company turned over £2.7 million.
Bedini says he launched Fine+Rare not because he wanted a better lifestyle, but to create a ‘really successful business’.
‘When I became a wine trader in the 1980s, it was like a door opening for me. It was fantastic. It became very much all-consuming. I said to myself, “I can do this, and I can do this well,” and that is when I decided that I could build my own business.’
Aside from recognising the importance of the business’s existing clients, the company’s other success has been in innovation, Bedini says. A key product has been the development of the Wine Desk, a proprietary trading platform that constantly updates prices and availability on more than 34,000 wines that can be bought and sold.
Bedini describes the trading platform, which additionally enables customers’ orders, enquiries and payments to be processed, as the ‘real heart of the business’. It also led to one of the company’s biggest developments in ‘autopricing’ in 2002.
He explains that autopricing involves a series of algorithms that are used to ‘spit out the market price’ of wines. ‘It essentially analyses our competitors and the availability in the marketplace, and through that process it establishes our selling price.’
The platform took the number of wines the business was offering for sale from about 1,500 to in excess of 6,000. It now offers more than 35,000 wines. Last year, the company sold nearly 10,000 different varieties of wine and it is on track to increase that number this year.
In gaining new business, Bedini says that, in a sense, clients target the company, rather than the other way around.
‘Private clients who have an interest in fine wines tend to make it their business to find out who the best traders are,’ he adds.
‘In the early days, it was very much word of mouth and they would come to us – we didn’t do much advertising at all.
‘When we launched, we targeted anyone in the world who was prepared to buy fine wines at the prices that were being offered. We didn’t discriminate about where they came from because, quite often, the sort of customer we were looking at in those days had residences in more than one place.’
It is this geographical spread of customers that led to the creation of an office in Hong Kong in early 2008. Bedini explains that in the decade leading up to the opening, the business had already tapped into the growing demand for fine wines in the ‘Tiger economies’ of the Far East.
He says the business had quite a strong B2B presence in America, Europe and the UK, and particularly in Taiwan, Singapore and Hong Kong. Even after the Tiger economies crash in 1997, Hong Kong remained a significant market as an entry point for the emerging Chinese economy.
‘A couple of years ago, when Hong Kong reduced its duty on wine, we debated whether we should open a fully-fledged trading centre, do nothing or take the “softly, softly approach”, which is what we did.’
In addition to expanding its Chinese presence, Fine+Rare is focusing on fine-tuning its digital strategy, in the form of launching a new online gateway for customers called Portfolio Management. Soft-launched last year, the platform enables clients to value any wines bought anywhere in the world in real time.
‘The main challenge at the moment is how we capitalise on a very significant opportunity that we have to grow our business much faster than competitors,’ Bedini says. ‘This platform is the beginning of a really big change for us. A lot of our competitors have done something similar, but no-one has our reach.’
It is this potential for future growth that Bedini hopes will lead to outside investors backing the business for the first time. At the end of last year, Bedini took on adviser Cavendish Corporate Finance to assist the company in its hunt.
He explains, ‘We still want to be very much major shareholders in the business going forward. There are lots of layers to this, but one is that with the business having become the size it is, we believe we need to bring in more brains and more resources at the top end.
‘With some heavyweight investors coming in, we think that will help us with our strategy, as well as allow Bud and myself to de-risk a little bit as we keep growing and moving forward.’