Laithwaite Wines: Tony Laithwaite
He’s spent his life embracing his passion for wine and has managed to build up a business with a £250m turnover in the process
“The whole aim for a lot of people in business is to get in, build it up, get rich and get out. It wasn't like that for us,” says Tony Laithwaite, summing up how his 36 years growing the business has been more of a life journey than gold rush. “Our views were that we'd make money as we went along, but hell, this is the wine business and it's actually really pleasant!”
And a life journey it has been. As a teenager, Laithwaite was fascinated with visions of France having been influenced by TV programmes such as Maigret and books showing “smiling happy girls picking grapes in the sunshine”. Spurred on by his father's interest in wine, on leaving school Laithwaite spent a summer in Bordeaux washing bottles and working the vineyards. “I thought it was great,” he recalls. “It was exotic, the food was fabulous and there were girls.”
Post-university, Laithwaite's inability, or reluctance, to land “what was considered a proper job” led him back to Bordeaux to further his education with a course in wine. However, other than continuing to ‘work the vineyards' his additional qualification still didn't lead to permanent employment. His continued reluctance to abandon his beloved Bordeaux but the necessity to earn a crust, led to him dipping his entrepreneurial toes – and the start of what, over many years, led to the present Laithwaites company.
“A guy at the cellar I was working at suggested I become an agent for them and sell their wine directly,” explains Laithwaite. “He gave me a few sample bottles so I came back to the UK, did a mailing by very naively taking a load of names out of the phonebook and had a couple of people ask me to come round and give them a tasting. I did and they started buying.”
With a £700 loan from his grandmother, herself an entrepreneur, he purchased a van and continued taking orders off the back of mailings until he had enough to justify a savoured trip to Bordeaux. After several years, Bordeaux Direct – named after French road signs showing the direct or roundabout route – was operating a moderately successful mail order service with a shop in Windsor.
In the early seventies the UK was becoming switched on to wine – but while Laithwaite was making a living from selling authentic Bordeaux at a premium price, the masses were far from connoisseurs and the unregulated UK market was rife with fraudsters bottling and labelling any old plonk however they saw fit. In 1973, The Sunday Times ran an exposé. Laithwaite wrote a letter congratulating them, which was printed the following week.
“It said ‘thanks very much for exposing this as I'm a poor starving wine trader living under a railway arch where it's bloody cold when I thought I'd be living in St James' Park wearing a pinstripe suit by now and the reason is that I'm competing against these guys who seem to have learnt their trade bootlegging in America and basically aren't playing straight',” he recalls.
The letter – a copy of which Laithwaite still has – prompted a response impressive enough for the then editor, Harry Roberts, to agree to run a reader offer. Again, the response was overwhelming. “We did something like 3,000 cases,” says Laithwaite. “Previously I'd been going over to France in my van and bringing back a 100.” A second offer proved just as successful and Roberts agreed that Laithwaite could run a permanent wine club for the paper. It's still running today and he acknowledges it was the point the company really took off: “It launched us and overnight we became the second largest mail order wine merchants.”
Laithwaite's promise has always been quality wine straight from the producer – and its growth, until recent years, was just as organic. With wife Barbara on board – “it's always been very much a two-person thing and she has the business head” – the couple set about establishing and expanding both sides of the business, Bordeaux Direct and The Sunday Times Wine Club. Paying themselves nothing more than a salary, they ploughed all the profits back into the business.
“In those days, top-line tax was something like 90% so there didn't seem much point taking money out of the business,” says Laithwaite. “Our attitude was that we enjoy this and we'd only end up going on holiday in France anyway, so we thought we'd just run the business in that way. I considered myself lucky to be doing what I wanted.”
But the whole truth is that they'd also been deeply scarred by a nasty separation from a business angel at the point when the company first secured the Sunday Times deal. The sudden growth in demand had presented cashflow problems, the need for new premises, additional staff and some proper entrepreneurial support. “He came in around the time of the initial publicity and was a big businessman, the MD of a publishing house. We gave him a 23% share and he gave us the confidence to think we could do it as a young company – he could pick up the phone and speak to the right people,” says Laithwaite. “He was genuinely helpful at the time, but we fell out. He seemed to be working towards owning the whole thing and we became very unhappy.”
Fortunately, the company was proving cash generative enough to buy him out relatively quickly, but the experience discouraged them from dealing with the City again and shaped the way they ran the company. The business model was never dependent on large capital investments and the company simply grew on the back of its successes and Laithwaite's desire to break new wines.
“It just gradually grew and I went further and further afield to find more and more interesting wines that other people hadn't found yet,” explains Laithwaite. “For example, most merchants in those days just did Bordeaux and Burgundy, but we were the first to take the country regions seriously. We started with Languedoc and wines of the south west such as Rhone Valley and l'Ardeche. As we built up the offering sales went up so we went to Spain where Rioja wasn't particularly well known, Italy and then Bulgaria suddenly appeared and we were the first to get wine out of there.”
Coping with growth
By the end of the seventies turnover was in the single millions, by the late eighties it had risen to £15m. However, Laithwaite's free spirited approach to business was beginning to present problems – both for the company and his health. The company had become a substantial operation but had no senior management structure other than the Laithwaites, while it was becoming increasingly difficult to find premises for warehouses, packing and dispatch – logistically, the company needed organising.
Then, in 1988, Laithwaite had a heart attack. He looks back in good fitness now and jokes: “My cardiologist said I should retire to France and walk and I said that's pretty much what I do now.” But, at the time, it made him realise it was a necessity to change the way the company was run. “Suddenly we realised ‘we can't go on like this, it's crazy',” he says. “So we set about turning ourselves into a proper business.”
Installing a layer of management became the main objective. A finance director, marketing director, sales director, IT and logistics director were appointed – and also a managing director, Greg Holder, who arrived in 1991 and only left the company earlier this year. Laithwaite credits Holder with “polishing this rough diamond of a firm and making it the company it is”. But the transformation wasn't without problems.
Letting go of absolute control is a notoriously difficult challenge for most entrepreneurs, let alone one that had been at the helm for more than 20 years. Indeed, the culture shock was so great that the relationship – and that's what Laithwaite insists it must be – almost collapsed before it had begun. “I'd been advised to cut back my hours but there was no way I was going to stop doing it all – it's what I do,” he says. “I carried on doing the travelling trips – I was going to bed a bit earlier – but I wouldn't let go.
“It was my dream, I could see clearly where the firm should go and what it should look like. Greg's a very clever progressive guy and we're very similar in a lot of ways – it was very difficult, one of the most difficult things you can do in business,” he concedes.
However, as much as it pained him, Laithwaite held confidence that Holder was the man for the job and the move to bring in a management layer was quickly vindicated by accelerated growth brought about from the added efficiencies. By 1994 turnover had grown to more than £50m and was closing in on £100m. And Laithwaite had found a way to manage his urges to interfere.
“We both knew we were good at our jobs but we had to work to a series of rules and rituals because otherwise it could become quite bloody,” he says. “We treated it like a marriage and both of us had to give up things. I couldn't just go swanning in and give £80,000 away to charity and he wasn't to do things that went against my standards – Greg's not a wine man and I simply wouldn't deal with certain suppliers offering cheap deals.”
And to prevent any frustrations lingering, just like a troubled but committed couple, they sought mediation. “In the end we had to hire a psychologist from the London Business School who would lock us in a room every couple of months and make us get it out,” he says. “The other option was to have it all burst out. The results were positive and showed we wanted it to work.”
By 2001 while the company's main business plan was still essentially the same one built up over the years by the Laithwaites, in practice, it was a far cry from the simple mail order wine trading operation of the seventies. Indeed, the only thing that hadn't been modernised was the name Bordeaux Direct.
“We decided to rebrand basically because it was a silly name to have had for more than 20 years when for most of that time we'd sold far more than wines from Bordeaux,” says Laithwaite. “We paid a company a serious amount of money and they just came up with ‘Laithwaites' because firstly it's our business, secondly people would continue to know I was connected to it and thirdly it was defendable and you can protect it.”
Business is littered with rebranding catastrophes, but for Laithwaites, the process was trouble-free and even led to a sharp increase in sales. “We put a lot of time, money and effort into making sure it went smoothly,” adds Laithwaite.
The modern day company has a turnover of £250m, employs 700 people, has headquarters near Reading, a distribution and warehouse base in Derby and a call centre in Plymouth. It has a large online presence with a customer hotline manned by experienced wine traders offering practical advice to customers; its own wine brand which it produces in the cellars Laithwaite worked at as a teenager and now accounts for 20% of the wine it sells; other wine clubs in addition to The Sunday Times through partnerships with most of the major banks and insurance companies and the likes of British Airways; plus four shops which it intends to roll out over the course of the year.
Still very much involved in the strategy of the company if not the mechanics, Laithwaite's thirst for business appears unquenchable – even at the age of 59. He has rejected the notion of ever selling the business – he hopes to pass it on to his children who are “doing their own thing in business first”, he says: “We've said we'll give it 10 more years. I love it, I just can't help myself.” However, he admits: “I'm a menace though, I don't have a proper office in Reading anymore – well I do have one, but I don't go there.”
As well as expressing a desire to see the company do more at retail level where customers can “see, touch and taste” Laithwaites' wines, Laithwaite wants to take the model abroad – even, perhaps surprisingly, back to its emotional birthplace, France. “The French customer has traditionally been trickier; they think they're born with the knowledge and so spoil it for themselves – but that is changing,” he explains, “Even France is now buying wines from around the world.”
In addition Laithwaite has several spin-off projects away from the company. Under the name Tough Developments, he's opening a wine bar in Henley-upon-Thames and has several small ‘angel type' investments in Australia.
He won't be entering any new markets, though: wine is his business. And he believes it's still a blossoming one, which the likes of Laithwaites are helping UK drinkers explore. “The beauty of wine,” he concludes, “is that the more people drink, the better quality they want. Once you've tried a £20 bottle, it's very difficult to go back to a £3.99 one. There's no snobbery there – people in the wine trade aren't snobs – it's all about professionalism and quality.”