Future looks rosé for wine boss Lewis

By TAMSIN BROWN
Updated: 05:19 EST, 6 January 2011

Majestic Wine's chief Steve Lewis, who started out as a graduate trainee at its Clapham store and rose through the ranks, is interviewed by Tamsin Brown.

Steve Lewis: 'Every time I got bored someone promoted me'

Majestic Wine's 46-year-old chief executive is slim, bearded and full of energy.

There is not a ruddy cheek or paunch in sight, which is impressive for someone who has been in the wine industry for 25 years.

Rather aptly, the Hampshire home of the boss of Britain's biggest wine warehouse chain is a converted pub. But surprisingly it doesn't have a wine cellar.

'It had a cellar but the thing kept flooding so the previous owners filled it in with concrete,' explains Steve Lewis. He may be lacking a cellar but Lewis evidently has buckets of loyalty for Majestic having spent a quarter of a century with the company.

He began as a graduate trainee at its Clapham store in 1985 and climbed through the ranks, taking the top job in 2008. He says: 'The reason I stuck with it was every time I got bored someone promoted me.'

Lewis's predecessor Tim How proved canny with his timing - stepping down a month before Lehman Brothers went bust.

Lewis's first set of results as chief executive saw the company report profits down by a quarter. But they were nearly back to 2007 levels at the half-year mark and today analysts expect Majestic to tell the market that, while sales may have slowed against tough comparatives, it still had a good Christmas thanks to the spending power of its middle class customer.

Majestic generates about a third of its turnover during November and December so the festive trading numbers are crucial.

On the day we meet - ahead of the publication of the figures - the sprightly boss of Majestic, still tanned from a family holiday trekking in Majorca, is upbeat.

He says: 'I do feel optimistic about Christmas. I think what has happened during the recession has been quite good for us as it has got us to the top of our game.'

Majestic's out-of-town format has helped it to survive and arguably thrive in the downturn. Its rent bill is lower than high street off-licenses and free parking means customers can load up their cars after being wooed by its well-informed staff.

Majestic has undoubtedly benefited from the collapse of rivals. But recognition should also go to Lewis. Under his leadership, the company has widened its appeal to new customers by cutting its minimum purchase to six bottles. Previously, it only sold wine by the case, a legacy of strict Sunday licensing laws in the 1980s.

Lewis says the change, introduced in September 2009, wasn't a reaction to the recession.

He says: '49% of active customers were only coming to us once a year. They were only coming when it was a summer BBQ, Christmas, a party, a wedding and the rest of the time they were topping up in supermarkets.

'I got the idea for six bottles in our Cheam store where a lady came up with two bottles and I tried to convince her to buy 12. She walked out the door. I thought if I can't convince her how can I expect a 22-year-old trainee manager to do it.'

Customer promotions: Majestic runs seasonal tasting sessions and free two-hour wine courses

It has also helped the chain to speed up its store opening programme because new outlets have turned profitable faster. It now has 160 stores although Lewis wants to get this to at least 250.

Majestic's biggest asset is its staff. They are nearly all graduates and the company invests heavily in training them in order to keep up its customer service levels. It is a young business with an average age of 26.

Lewis says: 'One of my litmus tests for our staff is: Would I be happy to share a car journey with you and if I wouldn't then they probably shouldn't be working for us.'

In the downturn Majestic pumped more money into staff training while widening its range of wine to lure customers from supermarkets and the temptation of doing all their shopping in one place. Majestic's average bottle price is £6.67 compared with £4.52 at supermarkets.

This gives it a powerful hand in negotiations with big producers from regions such as Rioja or Bordeaux because few others in the UK sell large quantities of wine between £6 and £20.

Despite the recession, its customers are drinking more £20-plus bottles of wine than ever - partly because Majestic has been rolling out fine wine displays in stores.

But Lewis says the downturn also means more people are entertaining at home and they are happy to buy a flash bottle of wine for dinner in with friends.

He says Majestic's customers are getting more adventurous. Pushed away from bottles of Sancerre and Pouilly-Fumé by the strength of the euro three years ago, they are drinking more South African, New Zealand and South American wines.

The explosion of cookery programmes has helped feed Britain's love affair with food, and wine has gone hand-in-hand with this new-found passion for gastronomy.

Lewis says it is a far cry from his childhood when his family didn't drink a drop of wine. His father was a butcher and once worked in a shop at the back of Buckingham Palace before moving to Bournemouth where Lewis grew up.

Lewis developed his interest in wine after spending a month every year in his teens in the Loire valley in France.

He now splits his time between Marylebone in London in the week and his family home near Petersfield at the weekend and admits to having a glass of wine most days.

He says: 'I have managed to convince my wife that part of my work responsibility is that I purchase every new product that we stock. She doesn't fall for it.' Despite his passion for food and wine, our lunch interview is a decidedly dry affair.

A bottle of wine sits untouched and Lewis eats none of the sandwiches in front of us. To be fair it is a Monday and he has plenty on his metaphorical plate. He ruminates on the challenge of growing the half-a-million strong customer base at Majestic further.

He said: 'I think there is still a huge number of people who are our target market who have either never heard of Majestic or who have never been into Majestic.'

The problem for Majestic is it doesn't have the budget for national advertising and relies on word of mouth and online marketing for growth. That's why the impression it makes on existing customers is crucial.

It is working hard to engage more with customers, with mailings, seasonal tasting sessions and a free two-hour wine course in its store.

The acquisition of fine wine specialist Lay & Wheeler in 2009 gave Majestic another engine of growth with a much stronger foothold in the en primeur market.

The steps Lewis has taken to keep Majestic's sales growing has had a positive impact on shares. After hitting a low of 108.75p on Christmas Eve in 2008 they have climbed steadily to 383.5p.

But with the headwinds of Government spending cuts and stiff competition from the likes of Marks & Spencer and Waitrose, investors will be keen to find out what numbers Majestic unwraps for the market today before any champagne corks are popped.