September 23, 2008

SME Focus Always Looking for the Best Vintage

By Mark Williamson

WITH the banking sector and capital markets in turmoil many may have felt that the cut-price sale of Halifax Bank of Scotland to an English bidder was a price worth paying for the prospect of some stability returning to the market. Should Lloyds TSB complete the acquisition of HBOS, owners of small and medium-sized enterprise will be hoping that claims by the bidder that the deal would allow it to do more business with business prove to be justified. In this week's SME Focus, a veteran of the drinks business notes that with consumers tightening their belts, cash is becoming an increasingly precious commodity. However, after helping one of Scotland's best- known wholesalers overcome what looked like becoming a terminal cashflow crisis in a past life, Nick Harvey-Miller's relish for business appears to be undimmed.

Name: Nick Harvey-Miller Age: 54 What is your business called:

Harvey Miller Wine & Spirit Agencies (HMWSA), Recycled Energy Solutions (RES). I am also a sheep farmer and I manage quite a large acreage of the uplands in Stirlingshire called Craigton.

Where is it based:

Dunfermline and Stirlingshire.

What does it produce, what services does it offer:

HMWSA is an agency house, which means it ships and distributes specific wines and brands of spirits from all around the world. We represent these on a UK exclusive basis and we act as their UK marketing arm. These products range from Jose Maria da Fonseca's Portuguese wine, to Indage vineyards in India and Ian Macleod Distillers' brands such as Isle of Skye.

RES sells boilers that run on recycled waste oil from cars and ships. Some 65 million gallons of ex-engine oil were being buried every year and we recognised that there was a market for this in the UK. Recycled oil can be collected and delivered for about a third of the price of kerosene.

We rear around 650 sheep on the estate. They are basically a "management tool" - they help keep grasses back on the moorland and help maintain the heather for the plovers, black game, curlew and red grouse. Sheep are also very useful in the control of ticks in the heather . Lyme disease, from ticks, is on the increase.

Who does it sell to:

HMWSA's target market is regional wholesalers, specialist retailers, cash and carrys and the supermarkets. We are also developing the website to give us another route to market. RES sells to large houses and companies that run kerosene boilers.

What is its turnover:

HMWSA turnover is around GBP6m. RES turnover - the business is only a year old and we are just starting to market the boilers. We project turnover of around GBP500,000 next year.

How many employees:

HMWSA: 15. RES: 3.

When was it formed:

HMWSA in 2004. RES in 2007.

Why did you take the plunge: Damn good question! I started working initially in London with JR Phillips (an agency house owned by Whitbread & Allied Breweries representing brands such as Courvoisier) and came to Scotland in 1979 when I was 24 years old to run that business. I was the youngest in the company at that time and it was a terrific grounding in management.

I went to London in 1982 to run the London office of JRP which had merged with William Grant. Some time later they wanted a sales director back in William Grant's office in Glasgow - they almost apologised for asking me but I was delighted - I was miserable in London. I was with them for four years, then in 1987 Grants of St James (the wine side of Allied) asked me to run the Scottish office of Samuel Dow, which I did until 1990 when I put together the "reincarnation" of Forth Wines.

At this time, Forth Wines had a seriously bad debt and the existing directors wanted to put in place the right management team to reconstruct the business, and approached me. I put in my own team and changed the business's emphasis on spirits to wine - the wine market was increasing and the spirits business declining. We used venture capital money and private money to replace the debt, building up Forth Wines to become Scotland's largest independent wine and spirit wholesaler.

I was at Forth Wines for the next 10 years then we sold to Constellation Brands; the venture capitalists wanted to get their cash out. I was on the board and ran it for Matthew Clark for the next two years. I then joined William Morton & Co in Glasgow, as a consultant, to develop their business and out of that came the birth of Harvey Miller Wine Agencies.

After 30 years in the trade you would have thought I had learned my lesson - even my mother asked "don't you think it is time to get a proper job, dear"! However it is the best of fun as it attracts wonderful people with a great passion for their products and most of the folk we trade with are old friends.

In 2005-06 we expanded the business, appointing a new managing director and sales director, landed Ian Macleod brands and added more brands, including the spirits brands. I got involved in sheep farming about 12 years ago and with three partners we increased the size of the farm to enable us to develop the grouse moor in 1998. I have a huge interest in all things to do with the countryside so it was also an opportunity to put into practice things I was keen about.

With RES, I was approached by a friend, Paddy Lindsay, who had been in the business and had been working with one of these boiler companies. He had found these Energy Logic boilers in the US that really do work. I thought it such a brilliant idea that I suggested we get the agency for these boilers and get out there and market them. We created RES last year to market these boilers.

What were you doing before you took the plunge:

Managing director and shareholder of Scotland's largest independent wholesaler, Forth Wines.

How did you raise the start-up funding:

Personally and through the Royal Bank of Scotland, which has been very supportive.

What was your biggest break:

Getting the distribution agreement in the UK for The Wine Group from California and getting Periquita from Jose Maria Da Fonseca into Waitrose and landing the UK agency for Ian Macleod Distillers.

What was your worst moment:

Making difficult personnel management decisions at senior level, which changed the shape of the business radically, for the good but it was difficult at the time.

What do you most enjoy about running the business:

The wine trade tends to attract fun and innovative people. I like catching up with friends in the business and working alongside people who have a similar modus operandi - people with a zest for life, even in a difficult marketplace. With RES and Craigton estate, working in and for the countryside.

What do you least enjoy: Not hitting the numbers! We are pretty weather dependent; wine is the last thing to go in terms of recession but also the first thing to come back. Right now we are in the middle of a slower period where people who bought a bottle of wine at GBP10 will now spend GBP6, while regular malt whisky drinkers are often turning to blended whisky. We see the wholesale trade using their available cash to sell the bigger brands as they are a bigger share of the market.

What is your biggest bugbear:

The bureaucracy that has been introduced into business in general and the booze trade specifically. For example, Scottish licensing laws have been changed again and are archaic, the tax strip is a complete waste of time and the anti-smoking campaign, which offers no choice, is ridiculous. I also object to paying national insurance tax to the tune of 12.8per cent employers' contribution. We need more folk in our business and taxes like this just make it all the more difficult.

What are your ambitions for the firm:

For the people that I work with to be wealthy and happy; for our customers to be well looked after; and to grow the business over the next five years to being a real force within the UK trade.

What are your top priorities:

To increase sales; to gain larger market share for our brands; to employ more sales people and to bring in and encourage young people into the business; to keep the cashflow healthy so I can sleep at night; to decrease reliability on the bank.

What could the Westminster Government and/or the Scottish Government do that would most help:

Reduce duty levels to equal our European partners. 47per cent of our duty-paid turnover goes straight to the government. After 10 years of good UK growth you would have thought that any government could have kept a few quid back to help the struggling commuter with lower tax on fuel today. Lessen the bureaucracy in terms of customs and excise. We have to employ more people just to cope with the bureaucracy.

What was the most valuable lesson you learned:

To budget, both sales and overheads, and to look for the flashpoints during the year in terms of cashflow. To acknowledge that there are marketing trends and have contingencies in place to cope with the downtimes and not to blow the profit in the good times. To move the company and more of its brands and products to the recessionary-proof market, that is, to the top of the market which is not affected by the downturn.

How do you relax:

I just love this country of ours and its people. I am lucky to have lots of interests, particularly to do with the countryside and ecology. When I get tired there is always a good glass of wine or malt and a spaniel or five to return my affection in front of a good fire when its dreich outside.

Originally published by Newsquest Media Group.

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