What happened to Waverley - and can a buyer be found?

WaverleyTBS became the third wholesaler this year to exit The Grocer’s Big 30 last week, in another sign of the duress within the sector.

The on-trade drinks wholesaler, 16th on the ranking, ceased trading this week, with the immediate loss of 685 jobs, after administrators Deloitte failed to find a buyer.

So what went wrong? And what happens now?

Starting out as a wine & spirits distributor, Scottish & Newcastle merged Waverley with The Beer Seller in 2003. But it was already loss-making when Heineken acquired S&N in 2008: accounts show it made a pre-tax loss of £21m that year.

In February 2010, The Grocer revealed the wholesaler had launched a major restructuring - closing 12 depots and axing 220 jobs. But four months later, the business was sold to private equity firm Mansfield Partners, and - with former S&N boss Jeremy Blood at the helm - returned to profit in 2010 and, according to the most recent accounts available, doubled profits to £3.6m in the year to 31 December 2011, on sales down 11.6% to £309.4m.

However, trading is understood to have rapidly deteriorated over the past few months as the wet summer depressed trade further in the on-trade.

In a statement, Mansfield Partners confirms: “Waverley has increasingly had to contend with very tough trading conditions in the UK on-trade, pressures on consumer spending and tightening credit terms. Despite all the efforts of the board to find a buyer or strong financial partner for the business over the past two months, it has been unable to do so.”

Deloitte confirmed to The Grocer that Waverley had been hit by “a reduction in trade credit available from a number of suppliers”, with some understood to have reduced terms from 42 days to 28, and others pulling the plug completely. As one leading wholesaler succinctly puts it:”Why did Waverley fail? In a word: cashflow - not enough of it.”

Another senior wholesale figure agrees: “When you’re a delivered wholesaler operating on credit you need to be generating enough cash. They weren’t. And we knew they were in trouble towards the end, when the deals just got stupid. They were desperate.”

Despite Waverley being the number two player in the market and boasting about 8,000 customers, including Merlin Entertainments, Enterprise Inns and Hilton Hotels, no buyer is expected to step forward. Booker’s acquisition of Makro has yet to receive OFT approval, and a Booker source dismissed rumours it had pulled out of a deal at the last minute. It was “never in the running, even if we had wanted to,” the source added.

That leaves Matthew Clark as not only the biggest player but the only specialist, and it is expected, initially, to pick up the lion’s share of the business.

“There’s a surprising degree of apathy,” one senior wholesale figure claims. “Three years ago someone would have bought it, but there’s no appetite for these deals any more. It’s a re-run of DBC Foodservice.”