South Africa’s liquor trade has changed considerably over the past decade or so. The introduction of liquor sections in the leading supermarkets has made the retail side of the industry hugely competitive.
Within KwaZulu Natal, Liberty Liquors has continued to prosper despite the changing dynamics. Part of the solution has seen the company change some of its focus to the redistribution element, whilst good old fashioned customer service – which has served the business well for 40 years, continues to play an important role.
Liberty Liquors is proud to have been voted “KZN’s Best Liquor Store” for eight years and Chris Hensey, Managing Director, makes no secret of the reasons for that:
“We’ve always been very customer-driven and the old adage “the customer is always right” has been drilled into our employees over the last 40 years and has really become something of a benchmark for what we do.
“We’ve applied the same principles to our redistribution operations and our telesales teams at our three stores.”
The company started trading 41 years ago as Port Natal Cellars, when two gentlemen: Bill Hooper and Ken Heneke took on a small retail operation in Durban.
“They started out with a counter service business and eventually grew into 3 stores with retail, storage space, warehousing and parking facilities,” says Hensey. “Today we are still a family-run operation, Bill’s daughter Leigh became more actively involved in the management of the company in 2006 when her father passed away; Ken had passed away in 2003.
“We have 3 major operations: 2 in Durban (including our Argyle Road headquarters) and 1 site in Pietermaritzburg. Our main store covers an area of roughly 6,500 square metres, while the other 2 sites are also considerable, covering a floor space of between 4 and 5,000 square metres, making us a large scale retail and redistribution business within the province.”
Whilst the business has focused on KwaZulu Natal, this has not prevented it from gaining national recognition, as Hensey explains:
“We have been the leading liquor group here for several years but we are also one of the best known names in liquor across South Africa too. A Sunday Times Survey during 2012 placed us tenth overall for where people like to buy their liquor from, which given the level of competition we are up against from national chains, was quite an achievement. We are pretty proud of that; it is a pretty nifty feather in our cap,” he states.
The competition that Hensey eludes to is ever-growing, with supermarket giants like Makro and Shoprite entering the fray and changing the sector in double-quick time.
“Over the past 10 years we have taken the company in a slightly different direction and we are more involved in redistribution nowadays, supplying other liquor traders, restaurants, hotels and events.
“The nature of the liquor trade in South Africa has changed dramatically in that time and companies like Makro – who are a very strong entity over here, adopting a very aggressive strategy in selling liquor to the public and trade. With the major supermarkets getting involved, the retail side has become very cut throat, so we looked at other avenues and we have therefore become more involved in redistribution.
“The downside of that is that the Government has been talking for the past decade about changing the nature of the sale of liquor into a 3-tier structure whereby companies trade as a primary importer, a redistributor or a retailer. What has been discussed suggests that a business can only carry out one of these disciplines, so we are walking a tightrope somewhere, waiting to see what will happen with legislation in the future.
“In KwaZulu Natal we are still waiting for Sunday trading to be permitted; it should have started on December 1st but hasn’t yet and we are expecting this to happen in the New Year.”
As we speak, Hensey explains that Liberty Liquors is currently in one of its busiest times of the year, with the Christmas trade having a significant impact on the company’s annual finances.
“Christmas invariably means a doubling of the normal business – and we take on roughly 30 per cent more staff who are involved in deliveries, warehousing, cashiers and customer service.
“We usually have 3 busy periods during the year with Easter and the local racetrack (who we supply with liquor) busy during July, when the Durban Derby horse race takes place.”
Of course peak periods put an extra emphasis on stock control and Hensey’s team is responsible for up to 90 per cent of inventory in the group. He says that one of the biggest challenges is to meet changing demands:
“It becomes a bit of an art form after a while and you have to stay abreast of the latest trends in the country and what is selling well – and that can change overnight. Brandy for many years was the predominate spirit, while whisky was a secondary product. However the roles have reversed over the last 10 years and it is important that we keep up to date with the market.
“We have historically sales data going back to 1985 and we also track sales in collaboration with some of our key suppliers,” he explains.
Hensey says that the company recently introduced some new software to help with stock control – and at the Argyle Road store, there were 2,464 different sku’s. However he points out that the flagship store carries significantly more wine on its inventory than the other 2 stores, where there are roughly half the number of sku’s.
“Wine is not one of the biggest selling products, despite the amount that is produced in South Africa,” he muses, “the most popular wines tend to be the sweeter ones like rose. Our biggest single category is cider and Savanna Cider in particular sells 20,000 cases per month on average and is likely to be around 60,000 over the Christmas period.
“Our big challenge is of course meeting customer expectations and people expect you to deliver on time and to deliver cold at the specified time, no matter how many deliveries you have to make.
“For that reason we have invested heavily in rolling stock over the past couple of years and we have upped from 2 vehicles per store to 5 in Argyle Road and 4 each at the other 2 stores. We have also taken on more staff and added forklifts to help meet demand.”
With refurbishment of the Pietermaritzburg store in 2003 – and a recent resurfacing of the floor there – which is now polished concrete, the company’s premises are much better equipped to deal with that demand.
The company’s website is also set to play an important role in the future with Hensey stating that initial results “are looking encouraging”.
Liberty Liquors is fully prepared for the next stage of its exciting journey and will react according to whatever Government legislation is introduced: “It is entirely possible that Government changes will determine our direction and whether we have to choose between redistribution and retail but we will be ready,” Hensey affirms.