Conviviality takes another step into wholesale

May 3 2016

Conviviality vs. Majestic: Beer, Wine, and the High Street’s decline

  • We note that Conviviality has been busy since IPO’ing at 145p in September 2013.
  • Now at c208p, via highs of just under 240p, with two significant acquisitions under its belt in the past year (Matthew Clarke for c£200m and, today, Bibendum for £60m).
  • The Bargain Booze operator represents an interesting contrast to former darling stock, Majestic Wine.

Online vs. Wholesale

  • In the red corner, we have CVR. Current market cap of c£330m,
    • FY17 forecast (ex-Bibendum): sales of £1.28bn, PBT of £37m.
    • Recent acquisitions: Matthew Clarke (c£200m), Bibendum (£60m).
  • In the blue, WINE. Current market cap of c£311m.
    • FY17 forecast: sales of £387.57m, PBT £15.24m. Recent acquisition: hitherto loss-making Naked Wines (online) for up to £70m.
  • Red has unfashionable fascia (Bargain Booze) and is diversifying away from the High Street into boring old wholesale.
  • Whereas Blue, in its Naked and Majestic glory, might catch the eye more with its move into the Brave New World of online wine retailing.
  • Both are interesting, both are trying. Where do we stand?

To paraphrase Peter Lynch: ‘Boring and Unfashionable is good’

  • Wholesale is alive and well and could be set to prosper, if pub industry changes lead to a larger number of independent pub operators looking to source their own drinks.
  • While online is exciting, we wonder as to the size of the potential market for online wine retailing. We don’t know anyone who gets their wine online.
  • Entire books have been written about being wary of hyped up growth industries, tried + tested vs. exciting + unknown. This school of thought might prove pertinent here.