The landscape for selling liquor in South Africa has changed enormously since the 1960s. The modern liquor store industry bears little resemblance to the one Nico Pitsiladi first entered, when joining the family business in 1966. Today Pitsiladi remains one of the directors of the hugely successful Preston Liquor Stores business, with the customer experience greatly changed:
“There were much more independent stores in those days but today it is a lot harder. Standards were nowhere near what they are today and back then, the customer could enter a liquor store and be hit by the smell of old liquor; today things are much different and the stores are more like supermarkets,” he exclaims. “There were lots more restrictions in the 1960s and we did no business with our main market, while there were also strict Government rules on beer.”
The business was started in 1935 by Nico’s father and a business associate, who bought 2 liquor stores. His father was a member on the board of Union Wine at the time. By the mid 1960s the partner had grown old and wanted to retire and the pair sold their initial interest, with Nico’s father deciding to purchase Dolphin Liquor Store in Commercial Road, Port Elizabeth.
“From there he bought a second store in the affluent Ring Street area of the city and in the early 1980s he acquired the Big Daddy’s store in Port Elizabeth which was really the ‘kick start’ moment for the business,” Pitsiladi recalls.
“That store was a big store – the biggest we had owned; but my father continued to acquire stores, buying another one in Walmer.”
Today the Group operates 27 stores and has what Pitsiladi describes as a “semi-national” presence. With corporate headquarters in Port Elizabeth, the company has stores in the Southern and Eastern Cape and a further store in Johannesburg.
“The Big Daddy Group is split into three arms: South African Fine Wines and Spirits and Ale Merchants (SAFWASM) – that arm of the liquor structure mainly deals with ‘on-consumption’ business and acts as a wholesaler to pubs, hotels and restaurants.
“The Big Daddy’s structure deals with bulk distribution to consumers and is similar to Macro. It is a series of stores where customers can drive up in their truck and purchase cases – there are no thrills and fancies and people just load up their truck and go.
“The third arm to the business is Prestons which is more like a normal retail store and very little bulk purchase takes place.
“Each area of the business has a specific focus and buying in bulk has become big business,” Pitsiladi explains.
One area of the business that has greatly improved since the 1960s is customer service. With over 400 employees, Pitsiladi says that the business places staff training at a premium, with special courses for lower, middle and top management and appropriate training for cashiers.
Staff retention plays its part too; of course the longer an employee stays with the business, the more they learn about the various products – and in the case of Preston’s Liquor Stores, some employees have worked for the company for over 20 years.
Pitsiladi suggests that the company’s market share is in excess of 30 per cent and that the business is still enjoying growth – a factor he attributes to three cornerstones:
“Price, service and location are key to the success of the business,” he affirms. “On the Preston side (our retail arm) the display and merchandising have changed markedly over the years and there is much better information available to customers on products, so the service has greatly improved.”
With in excess of 7,000 sku’s, that information is well organized and Pitsiladi says that the company aims to supply any customer with what they want:
“Our policy is if you are looking for a specific product at least one of this product will be in stock in one of our stores. The stores themselves carry different inventory and our Eastern Cape stores probably carry the largest number of sku’s, ranging from wines and premium brandies to premium whiskeys.”
Most of the alcohol is purchased from a distributor who imports the products, so the company is essentially buying from a South African business. Pitsiladi admits that maintaining profitable margins has become increasingly difficult, given rising electricity and fuel costs, price competition from rivals such as the supermarkets and also rising salaries.
Each individual store manager is responsible for stock levels and orders products on a stand-alone basis. Big Daddy’s Group operates a fleet of approximately 30 vehicles which ensures stock is delivered safely and on-time to each store.
The SAFWASM business was started around 1992 and has steadily built up, as Pitsiladi explains:
“We saw the need to supply on contract to businesses that couldn’t afford to buy bulk and wanted faster delivery service. With our fleet of vehicles were are able to offer day to day service and we also offer a one-stop-shop; in the past these businesses would have been dealing with several suppliers for their different alcohol orders but now they can get everything in one place.”
If SAFWASM was an opportunity too good to miss, then Pitsiladi suggests that the future of Big Daddy Group will focus on the main market:
“We operate in a highly competitive market and we are looking to make a few operational changes to adapt to the modern challenges. We will certainly focus more on our main market and there will come a time when we may have to look at streamlining the business.
“With rising electricity costs we are already looking at introducing lamps that save on power, but petrol prices are a difficult problem to solve – you can reduce the number of services by altering delivery runs but do you want a happy customer or not?
“Recently we have opened a number of bigger warehouses which are more conducive to the style of business for redistribution – they are more customer-friendly. We will be opening more warehouses this year and we might also look to open stores in new provinces to help us attain a national footprint.
“Once we have accomplished all that we want to in establishing the business nationally, we may look beyond South Africa’s borders but that is a long way off.”
Perhaps that might be a challenge for the next generation of the Pitsiladi family? The business now involves brothers, their children and their grandchildren, all keen and focused on ensuring the Big Daddy’s name will continue to thrive.