Decanter World Wine AwardsLot18's UK arm to close
- Wednesday 18 July 2012
In a statement the Lot18, whose US operation claims to have nearly 1m members and which last year raised just under US$45m in venture capital, said it would close at the end of the week.
The power of UK supermarkets made it impossible for them to compete, the statement said.
Lot18’s business model is to source difficult-to-find parcels of wine and supply them to as limited-time offers to members.
‘UK wine lovers who came to us early on stayed with us, and continued to buy wines from Lot18. They liked that we brought something different to the UK wine scene, which remains the most competitive in the world.
‘Unfortunately, the supermarkets’ stranglehold on the UK market proved too powerful for us to compete with and we have not experienced the anticipated growth rate.’
Lot18 said the rapid closure of the UK arm, which opened at the end of February this year, was ‘to ensure that the financial and logistical expenses of UK operations don’t slow Lot18’s excellent progress in the US.’
‘There, Lot18 has just under 1 million members, and just sold its millionth bottle.’
All six UK employees will lose their jobs. Lot18 said it would ‘remain active elsewhere in Europe, South America and Australasia, sourcing truly exceptional wines for its members.’
There is also a French site, which launched two months ago after a deal with e-commerce site Vinobest, and as of February had 120,000 members.
At the time of writing it has not been possible to contact any of the Lot18 offices.
Have your say!
chris miller
July 20 13:59
Your Rowan Gormley of Virgin & Naked Wines was at a Conference in Napa recently. I believe he stated a potential reason for Lot 18's downfall in UK. Wine is much more of a Commodity in UK vs. US where it is very much a Luxury product.
Rowan mentioned this in front of a large audience of Cali winemakers and professionals. A bit scary for them when he said UK retail wine is about 3x cost of production vs. US retail wine is in range of 7-9x cost. The 3-tier system contribute to that and so less margins for Lot18 to offer great discounts in UK market vs. US market.
Antoine Bisset
July 20 11:08
While Gabriel's remarks about supermarkets are broadly correct, there are many very good independent merchants.
I have followed Lot 18s offers. The prices seem too high by about a third, compared to wine merchants. I cannot speak for the quality of the wine. I suspect that I am not alone in not wanting to risk £20 on a bottle of wine from a producer I do not know, based on a sales "puff" from their wine expert who has less wine qualifications than I have.
Steve
July 19 11:52
So, nearly a million members and just sold its millionth bottle. So the excellent progress in the US means averaging approx 1 bottle per customer. Surely that's not right.
Ian Day
July 19 09:20
I have followed the lot18 offers since they started in the UK. Their offering and pricing structure has not been exceptional and whilst I regret their demise I am not surprised.