The man with a lot of bottle: Majestic boss Steve Lewis

Steve Lewis is not shy of making big decisions.

Within months of his promotion to CEO, in March 2008, the credit crunch was eating into Majestic Wine’s sales and profits. Lewis made a big call. He detected that the company’s long-established minimum purchase limit of 12 bottles was too much for some customers and was deterring them from shopping at the company’s stores. So he ordered a trial lowering the minimum order size to six bottles.

His hunch proved bang on the money. The response to the trial was so overwhelmingly positive that in September 2009 it was rolled out across the entire Majestic estate. Its impact on the business has been transformative.

While rivals like First Quench and Oddbins went under, Majestic’s sales figures have gone from strength-to-strength. At last month’s annual trading update Lewis revealed that group sales were up 8.9% to £280.3m, with pre-tax profits increasing by 14.5% to £280.3m. So what’s next?

Much has changed since Lewis joined Majestic’s Clapham South store as a trainee manager in 1985. Then, the company had just five stores. Today, as chairman Phil Wrigley warns of a “death spiral” on the high street, Majestic has 181, all located in cheaper locations, and with plentiful parking. And Lewis plans to increase that number to 330 new stores, in the next decade, at a rate of 16 per year.

At the same time, he’s making big calls online. Echoing his earlier move, last month Majestic announced it was lowering the minimum order required for free online delivery from 12 to six bottles. Around 40% of Majestic sales are delivered, including 10% from orders placed online - which are fulfilled from the nearest store.

“We’re trying to employ people who look and sound like the sons and daughters of our customers”

With the extra costs involved, if anything it’s an even bigger gamble, but early indications for the new online strategy are good, perhaps because the average bottle price for six bottles for delivery is £12 compared with £8.10 for 12.

“People are choosing six bottles they really want,” Lewis says. “It’s not necessarily a margin play. It’s allowing customers to do what they want. We don’t run the business to put average bottle prices up - the metric I’m really interested in is the number of active customers.”

Online isn’t the only focus for future growth. On-trade wholesalers should watch out, too. Total sales to businesses grew 6.9% representing 24% of UK sales in the last year. Within that, sales to Majestic Commercial customers - who spend at least £1,000 a month - grew by 26.5%.

“The reason we’re winning their business is partly because of our range and pricing and also our level of customer service,” says Lewis. “We can deliver seven days a week and go into their gastro pubs to talk about food and wine matching and train their staff how to talk about wine.”

While product knowledge and customer service is engrained in Majestic’s DNA, under Lewis, so too is attention to detail. For example, the company is forensic about measuring how much each store spends on petrol for delivery vans. It publishes the price per litre paid for fuel in the company every month, placing stores in a red, amber or green zone. “If you’re in the red zone, you need to get out of it,” he says. “We discovered one London store was filling up in Park Lane.” They’re not doing that anymore.

Lewis is still actively involved in the company’s purchasing decisions. He chairs the planning meeting in which buyers pitch every bottle they want the business to sell. He admits he doesn’t always get it right.

“I do get overruled,” says Lewis. “A year ago the buyer wanted to list magnums of Provence rosé at £20 per magnum for the Royal Wedding. I couldn’t see why anyone would want to buy it but the entire stock sold over two days.”

Partly as a result of his own stratospheric career path, Majestic has a strong culture of promotion from within. “I’ve personally got this really strong sense of a customer service culture, a very positive, can-do, yes culture within the business. Creating that is quite difficult,” he says. “One of the tools I deployed to do that is to ensure that everyone starts at the bottom, so every store manager remembers what it’s like to start as a trainee manage.”

He’s also keen on employing graduates. “We want charming, articulate, motivated team players who are keen to learn. If you take that description, that’s graduates for you. We’re trying to employ people who look and sound like the sons and daughters of our customers.”

They also need to look and sound knowledgeable about the company’s stock. To this end staff are required to sit testing diplomas in wine and attend wine masterclasses hosted by suppliers. It’s this point of difference that sets Majestic apart from the mults, believes Lewis. Although its bestselling wines are more expensive than the mults, Majestic’s range is clearly finding favour with middle class buyers with the number of customers who made purchases in the last financial year up 11.1% to 568,000.

Majestic owes much of its success to the mults, says Lewis. “When I was growing up in the 1970s, my family didn’t drink wine at all. supermarkets over the last 30 years have taken the snobbery out of wine and made it so much more accessible.” But the supermarket bosses are so preoccupied with what their rivals are doing, he adds, they’ve allowed his company to become a thriving business by taking just a “tiny amount of market share” from them.

That market share stands at 4%, and has grown by 0.4% over the last 12 months. But Lewis doesn’t have time to toast his success - he’s too busy plotting Majestic’s next phase of growth.