Laithwaite’s is a leading UK wine retailer known for importing European wines. The rapid impact of fluctuations in exchange rates and import costs caused by Brexit hit the company hard. Could automated market monitoring support a more effective post-Brexit pricing strategy?
Laithwaite’s implemented a responsive pricing system designed to monitor and compete directly with other wine retailers. Evo Pricing and Market Tracker differentiated prices by product and over time to capture additional value.
The result: +3.1 extra margin points of shareholder value. Laithwaite’s UK pricing strategy had such success in the tumultuous post-Brexit UK market that it was expanded internationally to other markets.
Responsive pricing: +3.1 extra margin points
amidst post-Brexit market disruption
Laithwaite's Wine Case Study
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.
The challenge: unpredictable impact of Brexit-related fluctuations in exchange rates and import costs on the wine market
David Thatcher, CEO of Laithwaite’s, was facing an unprecedented pricing challenge. He needed to adapt quickly to fluctuating exchange rates and import costs and believed that automated market monitoring could inform a more responsive and effective pricing strategy.
Brexit upended our business model. We needed to quickly understand how our competitors were responding to the disruption to adjust our own strategy in response.
I was looking for a system that could collect all the relevant data from the wine market, analyse its impact and optimise our prices based on that information without negatively impacting sales.
-David Thatcher, Laithwaite's CEO
Additional, critical problems stood in his way:
- 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.
- 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.
- 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.
The solution: responsive prices, differentiating by product over time
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:
1. Tracking historical sales and market prices
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.
2. Identifying daily pricing opportunities
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.
3. Reviewing pricing strategy every quarter
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.
As an executive team, we wanted to engage actively with the pricing strategy. The Evo team was happy to partner with us, while the system worked autonomously to support critical decisions, never neglecting the human element.
Initial impact: +3.1 extra margin points of shareholder value
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.
Expanding results: comprehensive pricing strategy
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.
I can’t recommend a better partner with
whom to weather a market crisis.
Evo helped at a critical time. Together we successfully navigated the impact of Brexit with a positive
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