Duff & Phelps appointed to administration of Oddbins

06 February 2019 Consultancy.uk 2 min. read

The business behind a chain of UK off licences has fallen into administration, appointing consulting firm Duff & Phelps to oversee proceedings. The chain is the latest in a succession of high street casualties which has spilled into 2019, putting around 500 jobs at risk.

While the UK economy continues to languish in a sustained period of slow growth, the alcohol industry is one of the few consumer sectors in the country that could genuinely be said to be booming. Despite a succession of high-street closures and a floundering casual dining scene, adult beverage sales are at historic highs. With levels of excessive drinking having risen in Britain amid a sustained period of economic and social uncertainty, off licenses in particular have enjoyed boosted balance sheets. Excessive drinking alone adds £7 billion to their collective revenues, but with fewer of the overheads of a traditional pub.

In spite of this the UK alcohol industry has seen a number of its own collapses in recent months. In mid-2018, rising costs and accounting discrepancies led to the downfall of UK off licence owner Conviviality. A string of profit warnings and the revelation of a massive multi-million tax bill were ultimately what did for the firm – forcing the resignation of Chief Executive Dianna Hunter, while shareholders rapidly lost faith in the owner of Bargain Booze, Select Convenience, WS Retail and Wine Rack.Duff & Phelps appointed to administration of Oddbins

Now, the group which owns UK off licence chain Oddbins has gone into administration, putting at risk 500 jobs. The company trades under a number of other names: Oddies, Simply Drinks, Simply Food & Drinks, Shop2Go and Booze Buster; this is the second administration which the group has faced in eight years. European Food Brokers, a West Midlands-based company owned by entrepreneur Raj Chatha and his family, has owned Oddbins since its previous administration in 2011.

Due to the recurrence of the company’s financial challenges, if a buyer cannot be found it is therefore likely the jobs will be lost in a liquidation of the company’s assets, which include 101 stores across Britain. Restructuring specialist Duff & Phelps has been appointed to look for a new owner, citing weak consumer confidence as the main cause of Oddbins’ collapse.

Joint administrator Phil Duffy remarked, “The continued decline in consumer spending, pointing to a squeeze on household finances, combined with rising living and national wages have put increased pressure on retailers’ bottom lines. As wages struggle to keep up with the pace of inflation, and continued, deepening unease and uncertainty over Brexit, means consumers are cutting back on spending. Add into that mix rising business rates and rents, and traditional bricks-and-mortar retailers are undoubtedly feeling the strain.”

A number of other alcohol-related businesses have fallen into administration in the last year. GinFestival.com was unable to successfully harness the power of the gin boom in the UK, as was the Belfast-based Botl.