Paragon latest victim of recession as more wine companies look set to close
March 23, 2009
By Richard Woodard
The closure of UK wine agency Paragon Vintners is unlikely to be the last high-profile casualty of the current recession, industry insiders fear.
As Paragon winds down its wine business and leading names such as Quinta do Noval and Trimbach search for new UK distribution, decanter.com understands that at least two more well-known suppliers are facing difficulties.
The companies, who cannot be named for legal reasons, may be forced to sell up to inject fresh capital into their businesses, sources suggest. 'A number of people are very nervous right now,' said one industry insider. 'I'm sure we can expect some more mergers and acquisitions this year.'
Paragon's parent company, Angostura Suisse, said that the 'controlled closure' would aim to protect the interests of the company's 28 staff, plus suppliers, customers and agencies.
The company said: 'We have made significant progress in reviving the business over the last year, despite the many legacy issues that were inherited. The economic climate, coupled with the rapid devaluation of sterling, has made the ongoing trading position of Paragon unattractive.'
Paragon, founded in 1990 by Gonzalez Byass, Veuve Clicquot and Baron Philippe de Rothschild – all of whom have since exited the business – was bought in 2004 by CL Financial, owner of spirits companies including Angostura and Burn Stewart Distillers.
CL has since been impacted by the implosion of the world's financial markets, and was the subject of a bail-out by Trinidad's central bank in January.
Paragon was also hit by the departures last year of co-founders Tony Dee and Peter 'Slim' Williamson, reportedly after the pair clashed with CL over strategy.
Dee subsequently became a non-executive director of rival agency PLB, which has aimed to build up its on-trade business, recruiting a number of ex-Paragon employees. Leading South African producer Vergelegen switched from Paragon to PLB earlier this year.
Meanwhile, two weeks after Gabriel Meffre was acquired by French wine giant Boisset, the future of another of the country's high-profile wine producers is in doubt, with at least two potential buyers waiting in the wings.
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It been reported that Paragon Vintners demise in the UK has been cause by the current economic conditions when in fact the truth is that Paragon have been in organisational trouble for a number of years. Disruptive changes to its organisation with the departure of co-founders Dee and Williamson did nothing to boast morale last year or to reassure the market that the Paragon was a viable entity. The company has struggled to fill positions and to create some level of stability as many of its key staff defected to PLB where Dee took up office as a non-executive director. Disruptive organisational change in difficult times will not only accelerate a company's demise but as is the case with Paragon it can often hide the real truth as to why companies closes in the first place.
No doubt there will be other closures in the industry as its rationalises but even with a shrinking market there are still opportunities to be had to increase market share. Medium size distributors and importers like Paragon need to think smarter and utilise their resources more efficiently if they want to compete against the shrinking marketing budgets of the larger companies and to concentrate on what took companies from being small companies to medium size ones in better times may in fact be the way forward rather than attempting any sort of price war. Competitive advantage is not about who is the cheapest, its about working to your strengths and your competitors weaknesses.
Paul Hopkins
I am not surprised to hear about this latest casualty. As a daily blogger I predicted this sometime ago.
The reason for the demise of companies operating in the Bordeaux Grand Cru markets is the lack of empathy the major Chateaux owners have with their markets. They are too product orientated and not close enough with the end customers. Having dealt in this market for a number of years now there seems to be a lack of communication with the major chateaux. Either they do not want to listen or they are being protected from hearing the truth through those whom they consult or a combination of the two.
Too many Chateaux Owners are treated with trepidation from fear of loosing allocation. Peter Ducker (one of the world's most respected thinkers on management and society) once said "The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday's logic."
I would recommend that Chateaux owners read some of his works and it wouldn't do them any harm if they started with a paper he wrote back in 1954 titled The Practice of Management. In which he covers three areas of business. 'What is our business?' Who is our Customer? and 'What does our customer consider valuable?'
Nick Stephens
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