Context: Laithwaite’s Wine

Laithwaite’s Wine is a leading UK wine retailer known best for importing private selection wines from Europe and all over the world. The UK wine retailer was one of the first to purchase wines bottled abroad, not in the UK, and it was the first to sell fine French wines in the UK.

For over 50 years, Laithwaite’s had grown consistently. Its initial mail-order and then Internet-based business models allowed it to compete across the UK while keeping costs low. When the UK joined the European Union, this drove prices down even further.

Brexit, however, disrupted the business significantly. A sudden 20% increase in the cost of importing wines from Europe to the UK followed the referendum vote, and costs were expected to remain volatile in subsequent years.

Additional, critical problems stood in his way:

1. Complex market: Wine is a complex product with a diverse customer base. It wasn’t clear that a machine could accurately assess customer response to price changes in such a nuanced market.
2. Potential customer pushback: Thatcher feared that passing on increased costs to customers would shrink sales. New prices would need to lead to greater customer relevance without growing promotional pressure.
3. Wine buyer buy-in: Experienced wine buyers were critical to building the Laithwaite’s brand, and for years, they had made not just product but also pricing recommendations. Their buy-in was crucial to success.

Laithwaite’s partnered with Evo to implement Evo Pricing and Market Tracker as an integrated responsive pricing solution. Prescriptive Artificial Intelligence made recommendations based on real-time competitor prices and evolving costs, allowing Laithwaite’s to remain competitive amidst Brexit uncertainty.

Evo showed us the agility of their model, and I was intrigued to see how quickly it can have a positive impact on our KPIs despite market turmoil.

Evo created a responsive pricing system, differentiating by product over time.

This approach relied on:

Evo monitored not only sales, but also market and competitor data. The system maximised the impact by tracking extensive external data sets, including over one million market prices, 10 competitors, and the consumer behaviour of 27% of the UK population.

Market Tracker collected daily pricing and product-range data from the Internet. Evo Pricing then analysed the data to identify priority products for direct price matching and other pricing opportunities.

Evo delivered a CEO-level monthly pricing review pack and initiated a quarterly price review cycle. This combination allowed Thatcher to re-assess the overall strategy regularly and accelerate margin growth.

After the first 2 waves of price changes, Evo recommendations generated an additional +£5.5 million incremental margin. During that time, revenues increased by +3% and margin increased by +6%.

I was surprised by how rapidly the Evo system could impact revenues. We had expected there would be a greater learning curve, but their technology easily adapted to market volatility.

The Evo system was able to deliver an overall +3.1 extra margin points of shareholder value over time by analysing over one million price points every week. By carefully calibrating price increases, Evo actually increased sales of those higher-cost items by +6%.

This pricing strategy calmed shareholder worries and increased margins at a time when the industry was struggling.

After Laithwaite’s success with the initial post-Brexit market tracking, Thatcher decided to expand their use of data-driven pricing-support technology. Evo tools were tasked with comprehensively reviewing all pricing and promotion strategy.

The UK impact was so significant that Thatcher wanted to scale the results across the organisation. He expanded the geographical scope to also include the United States and Australia.

Evo conducted a review of Laithwaite’s relative position in those wine markets and recommended a pricing strategy to make the company more competitive globally.