This is a slight diversion from the normal fayre you’ll find on Retailinsider.com but the news that the venerable Balls Brothers chain in the City of London is on the ropes highlights how successful retail/leisure organisations can suffer badly from rapidly changing tastes and cultures.
I thought a close look at this situation would prove interesting. And it is a tale that is close to my heart as I spent eight years drinking in numerous pubs and bars during arguably the peak of the City wine bars during the late 1980s.
The story for me starts underneath London Bridge. Down a narrow staircase, past a smart, elderly doorman wearing a bowler hat was a candle-lit Davy’s wine bar. Packed from midday with its mainly male banker clientele it was the venue for booze-heavy lunches that would stretch long into the afternoon.
This was the late 1980s and although the wine bar still operates from its basement location, its wooden sawdust-strewn flooring has been replaced with shiny tiles, the electric lights have been turned on, and doormen were long ago deemed unnecessary. The customers have also abandoned their leisurely two-bottle lunches and instead now rush down two-courses of food with one glass of wine or even a low-strength beer.
It might only be a 25-year timeframe but such have been the cultural changes in the City of London over this time that the FOB’s owner Davy’s believe the period has had the greatest impact on its business of any time in its long history. And it is the same story at the other venerable wine merchants and wine bar operators El Vino and Balls Brothers.
Since this triumvirate have been selling wine in the City of London for over 400 years this suggests there have been some seismic changes in London’s financial district over recent years. What exactly has happened?
James Davy, executive chairman of Davy’s that was established in the 1870s and operates 35 wine bars, says: “The City began what I’d now call its merger with the West End for entertainments and this combined with a new generation of people coming through [to work there] and they wanted to do business [in bars] in the evenings.”
Wine bars had traditionally closed by 6pm prior to the 1980s and so they switched to opening until later to accommodate the incoming generation’s demands. This extension was out of financial necessity because the lunch trade had quickly dried up, literally. Davy says lunch had accounted for 70 per cent of sales before the 1990s but is now only 40 per cent.
A key prompt behind this new group of people entering the City was deregulation in 1986 with ‘Big Bang’, which opened up the markets to greater competition. Davy says: “There was a massive influx of people from around the world. It had previously been bowler hats, pin-stripe suits and homes in the Home Counties but this all changed.”
Big Bang and the 1980s boom led to what he calls the “birth of the barrow boy banker” that broadened the demographic of City workers. Richard Balls, chairman of troubled Balls Brothers that has been selling wine for 150 years, suggests there was a lot of financial product innovation that helped drive this change: “Financial disciplines were much more varied as more financial instruments were created and so we no longer just had stockbrokers and merchant bankers working in the City.”
Among the newcomers were traders of the products (often from the East End of London) who drank heavily in the evenings, which further fuelling the after-work trade in City wine bars. But it was not just male traders that appeared – the new City disciplines also attracted more women, with Balls suggesting the City of London now has 48 per cent female workers.
Not only did these people have different tastes and expectations but some of their employers – notably the US investment banks – had an institutional dislike of alcohol. When the 1992/3 recession hit, Anthony Mitchell, managing director of 131-year-old El Vino, says banks used it as an opportunity to cut company credit card spending on entertainments and demonise alcohol.
“Some of the US banks put it in the contracts of their employees that they could not drink alcohol during the working day, which meant we were trying to survive on serving mineral water and orange juice at lunchtime,” he says.
The solution for the three companies was to develop the food side of their businesses so chefs were hired, kitchens built and dedicated dining rooms added at great expense. Davy says: “We started out with cold plates of food to support the wine but we’ve now got fully-blown kitchens and the wine now supports the food, which is chef-created items. We need our customers to eat as we can then sell them wine.”
At the El Vino bar on Fleet Street the kitchens now churn out a tapas selection including zucchini and pine nut bruschettas and chorizo e Fabadas, to cater for its well-travelled clientele. Although these dishes sit rather incongruously with old stalwarts like steak and kidney pudding, such change has been necessary but not wholly successful.
The extra overheads from adding a catering proposition that serves through the day and into the evening until 9pm caused headaches for El Vino and it was forced to close its three basement restaurants. Food is now only served at ground floor level: “They were very busy in the days of long lunches but we had to close them through lack of demand in Christmas 2008.”
This highlights the problem the established wine bars have had with historically operating out of basements. “They were cheap [to operate from] and became synonymous with wine bars but then the competition came along and opened wine bars, coffee bars and shops on the ground floor.”
With younger City workers demanding something different, and the incoming overseas bankers preferring a more Mediterranean-influenced environment, the basement inevitably lost its appeal. This coincided with a massive amount of City property development that included, for the first time, leisure units built into the ground floors of new office blocks.
Balls states that as a “general rule we’re not interested in opening any more basements” and new Balls Brothers bars opened during recent years have been located above ground, which has taken the non-basement split to 50 per cent of its portfolio. The brightening-up of the City FOB has been part of the attempt by Davy’s to make some of its bars less basement-like.
The most drastic move of any of the wine bar chains came from Balls Brothers that bought seven-site gastro bar group Lewis & Clarke in 2006 but it has been a big problem for the company and has undoubtedly contributed to its sad downfall.