Last reviewed 15 February 2012
A British businessman is hoping to gain a lucrative 1% of the UK champagne market after gaining the exclusive distribution rights to a brand that had hitherto not been available in the UK. Sue Fenton reports.
Tom Ellis's company, First Class Products, won in November the rights to import and distribute Chassenay d'Arce in the UK and aims to gain a foothold in the restaurant and bar trade with the little-known brand.
“Breaking into the trade is difficult but we have a huge amount of leads from the independent on-trade, restaurants, champagne bars, so we’ve made a good start,” he says.
Mr Ellis has gained high-profile accounts at the Malmaison Hotel in Oxford, where Chassenay sits alongside the likes of Bollinger and Krug, and at the online retailer Gifts International, and hopes that as he adds more new accounts the business will start to snowball.
This is the second champagne brand that Mr Ellis has launched in the UK. In 2007 he struck a distribution deal for Leroux-Mineau champagne, which he has since been selling online direct to consumers.
Being a two-brand business is ideal, says Mr Ellis, as it means he can target the separate brands at different market segments. Chassenay is trade only and Leroux retail only, so there is none of the conflict over brand image and pricing that can potentially arise where the same product is being sold on both a wholesale and retail basis.
Yet the arrangement gives Mr Ellis a specialism. “There are not many specialist champagne importers and we’ve been well received for that reason. Often when you have multiple products it’s hard to have specific knowledge.”
Mr Ellis says his knowledge of - and interest in - champagne has grown as the business has developed. “It’s a fabulous product; the more you learn about it, the more you love about it. People often think that good champagnes all taste the same (fizzy and acidic) but in truth the taste is very diverse, given the different compositions of grape varieties, different aging periods and variations in complexity.”
The current mix of sales is about half retail and half wholesale, but Mr Ellis is gradually moving the focus towards trade following the deal with Chassenay. This deal gives First Class Products the opportunity for growth that would not have been possible with Leroux alone, since Mr Ellis was already taking that brand’s entire production. While looking for a second product, he met one of Chassenay representatives at a trade show in London and signed the distribution deal after a visit to the company in France.
“Chassenay is one of the main producers in their area, they have an incredible production facility that’s producing a million bottles a year, so they are not limited in terms of volume of production. And they have won Bronze, Silver and Gold medals at international wine fairs, so the brand is powerful. This is hugely exciting – it means we can really drive sales and try to build a market share.”
Mr Ellis has set himself a “huge but achievable” aim of selling 1% of the 35 million bottles that are imported annually into the UK.
“Chassenay has a lot of mileage, and as we get volumes growing, it will really help build the brand. Our warehouse in Oxford can hold 3,000 bottles but that capacity can be doubled if necessary.”
Mr Ellis concedes that the market environment is “very challenging and competitive” – partly because of the economic situation and partly because Cava and Prosecco have increasingly emerged as lower-cost competitors to champagne.
But he says this very willingness on the part of consumers to try alternatives to traditional champagne is likely to help First Class Products.
“Launching a new brand in a luxury sector is a challenge but there are always people at the top end who are not as affected as the middle market. And the high end champagne bars catering for them are looking for new and unique own label champagnes. Ten years ago all you saw was Moet and Lanson but now people are more educated and open-minded about fine wines and there are lots of fantastic lesser known brands. People are willing to try new things – it’s a really exciting time.”
Mr Ellis began his career in business while he was just 16, when he spent £500 on tennis balls, which he then sold to schoolfriends and later to clubs and schools.
It was his desire to find a product that could give him an income during the winter, when the tennis balls were not in demand, that led him to the wine trade at the age of 18. After a family friend brought back a bottle from a small champagne producer, Mr Ellis realised the brand was not available in the UK and set about becoming the company’s first British distributor, using his A level French to negotiate the deal. He then set up a website to sell the product to consumers.
Meanwhile, Mr Ellis was studying geography at Exeter University. With hindsight, would he have opted for a degree in business? No, he says. “Business courses are very theoretical: what you read about in a book can be interesting but you really need to do it yourself. I learned what I know through practice and learning from my mistakes. Mistakes can cause big problems, so you don’t make them twice. There’s no better way to learn. I think if I had studied business I would have been really annoying in lectures, arguing with the tutors and saying ‘that doesn’t work!’”
The geography course was anyway of direct practical use. Mr Ellis’s final year dissertation was about sustainable agriculture in the Champagne region of France, a project that gained him useful contacts in the industry.
He also found it useful to have A level French. “I would feel embarrassed if I couldn’t speak French. You can get by — the suppliers are selling a product so they will try to help by speaking English — but if you’re serious you need to be able to negotiate in their language. It puts you on a level playing field so they don’t get the upper hand. Some small producers don’t speak English and I want to be able to deal with those smaller ones.”
Mr Ellis’s youth brought him a lot of attention and media coverage – including appearances on Chris Evans’ Radio 2 show and on ITV's Alan Titchmarsh show. He has also been featured in OK! Magazine, the Metro, The Guardian, the Telegraph and on local radio.
Now still only 22, Mr Ellis is aware that the “young entrepreneur” angle will have a limited lifespan in terms of gaining him publicity. “When I met Sir Alan Sugar, he told me ‘you won’t be young forever’. He told me I needed to develop the story behind the brand. I want to move into the position where the product is more powerful than my story.”
Mr Ellis thinks his brands’ potential can only be helped by the way supermarkets discount the big-name champagnes.
“Champagne is not as price sensitive as some products. The own labels at Tesco and Sainsbury’s, which are often aged for just the legal minimum of 15 months, are selling well - own brand product suits a cost-sensitive market.
“But there are people who don’t want a supermarket name on a champagne label. They won’t pay £25 because they don’t believe it will be any good. It has to be top end to be taken seriously.”
For this reason, he thinks that discounting in the supermarkets “is devaluing the big brands in a way that I can’t see as beneficial. A bottle won’t sell in a restaurant menu for £60 if customers know they can buy it in the supermarket for £15”.
That, he believes, has given First Class Products a stronger foothold than ever before, because the product is aged for three for four years but is not priced significantly higher than supermarket brands. “Smaller producers can make outstanding champagne that’s often, if not cheaper, at least better value than the supermarkets. You pay a little more but you get a lot more in terms of quality.”
Mr Ellis took on his first member of staff – a salesman to cover London - just before Christmas. “I recognised that I can’t do everything. You can’t build a brand without having someone help with sales. You can get so much further if you employ someone to take things off your hands.”
The initial £500 he invested in the tennis balls has grown organically, with profits invested back in the business, enabling Mr Ellis to buy ever-increasing amounts of stock. “This approach enabled me to get to the point where I could buy a pallet (40 cases) of champagne, then two pallets and so on, without needing external funding.”
Meanwhile, turnover — which was £10,000 in 2007 — has grown rapidly since Mr Ellis left university and has had time to spend on the business. It is now about £100,000 and the aim is to push it up to £150,000 by Christmas.
Mr Ellis’s top tip for other would-be importers is to start small and grow the business organically. “If the business model works, it will grow on its own. And if you have everything in place – spreadsheets, distribution… the systems can all be scaled up for use in a bigger business.”
First Class Products can be contacted as follows: tel: 07919 133 476; e-mail: email@example.com. The company’s website is at: www.firstclassproducts.biz.