A lot of bottle
Visiting the offices of Berry Bros & Rudd (BBR) ticks all the boxes that would be expected of a wine merchant that’s been trading from the same illustrious London address at 3 St James’s Street since 1698: the dark wood of the fixtures and fittings; the glass cabinet beneath the receptionist’s desk displaying famous bottles; and the narrow winding staircases leading up to a plush sitting room, complete with ornate fireplace and more prized labels.
That’s where the old-world feeling ends though. Stepping through other doorways reveals a whole other side to the drinks business. Beneath No 3 – as the head office is affectionately known by its staff – three 18th century cellars, named “Napoleon”, “Pickering” and “Sussex”, have been refitted to include modern lighting and glass and blond wood staircases, while still maintaining their exposed-brick charm.
Around the corner, the newly-opened shop at 63 Pall Mall could be a case study in modern retailing, with bottles priced “from £10 to £10,000” arranged in clear and user-friendly displays. Opening the shop has triggered a major refurbishment of the existing premises at No 3, returning it to its previous use as a place where the company’s clients can meet their wine buyers and discuss bottles for their cellars. Judging by the craftsmanship being exhibited by the construction team on site, the new facility will be far from old fashioned.
And “old fashioned” is a phrase that certainly doesn’t apply to BBR chief executive Dan Jago either. Striding into the firm’s sitting room in an open-necked shirt and smart dark suit, he’s bursting with energy and enthusiasm for the role he took up in October 2015, telling stories of his trip earlier in the week to Burgundy in France with wine buyer Jasper Morris, one of seven masters of wine employed by the business, and of his forthcoming weekend in Portugal.
When he joined the company, he described his post as “perhaps the ultimate job” in wine. Nearly two years later, has it lived up to his expectations? “It’s exceeded them – and I’m not just saying that because I’m sitting here,” laughs Jago, 56. “There was a hell of a lot more to do than I had expected once I understood the challenges the business had faced over the previous few years and I knew it wasn’t going to be easy.
“But I also knew the opportunities would be enormous. Not just scale, but I knew this was a business that externally was an adored brand, both in the trade and with customers, but internally it was a little bit rusty.”
The family-owned business had posted a loss in each of the four years prior to Jago joining the company. Accounts for the year to 31 March 2016 saw the firm’s retail arm back in the black, with the parent group stemming its deficit to £600,000 from £6.1m in the previous 12 months.
“We broke even in my first six months – that was about stopping the rot and doing sensible things,” he says. “That provided us with a sense that we could make progress and sort things out.
“The first full year I had here was about moving people into a more proactive culture – let’s go and talk to customers and approach them rather than wait for them to come to us. Let’s show them what we have and how proud we are of it. That worked very well.
“We’ve created the cash we need from the business to help clear up legacy challenges, which is great, rather than tapping the shareholders for investment. That’s what profit is for – to reward the owners and to allow you to do the things you want to do – ‘free’ cash flow or profitability is there to allow you to do the things you want to do, be they infrastructure, development plans, acquisitions or to have the ability to say ‘That wasn’t such a good idea, let’s write that down’, which we’ve done a lot of in the past year and which was a good thing to do.”
Jago’s strategy to turn around the performance of the business included bringing together the five disparate parts of the company – fine wines, spirits, international, retail and events – so that they work more closely together. “Each was very separate and had their own management, finance and marketing functions – it was surprising how few people knew other people in the business,” he remembers.
Restructuring involved some jobs losses, but the company’s total headcount has risen from around 315 when Jago joined to about 360 now, defying expectations in some quarters that the new boss would need to trim the wage bill. Jago’s desire to have a single computer system for the whole business has meant many of the jobs were created in information technology (IT).
“When I got here, it was very clear there were a number of infrastructure challenges,” he says. “There was virtually no IT in the business and the computers it did have were still operating on green screens.
“Almost every part of the business had a different system. Somewhere in the bowels of the building there must have been a boiler room supplying the steam to keep the computers running,” Jago jokes.
As well as restructuring the business’ operations, Jago tackled corporate governance – one of the major issues facing so many family-owned companies. Along with deputy chair Lizzie Rudd and creative director Geordie Willis, an eighth-generation member of the Berry family, he went on the “families in business” course at Harvard Business School in the United States, which he describes as “brilliant” and “helped us to understand there were other ways of doing things other than pure executive management”.
BBR now has a main board – made up of executive, non-executive and family directors – as well as an executive board and a family board, helping to draw the distinctions between the family setting the vision for the business and then the executive team implementing that strategy.
The new shop at 63 Pall Mall is the latest step in Jago’s plans. And it’s certainly turning heads – in the week it opened, nearby wine-focused private members’ club 67 Pall Mall tweeted: “Hard to call @berrybrosrudd our ‘new’ neighbour as they have been here for 319 years, but check out their beautiful new shop on Pall Mall.”
He’s also clearly proud of the firm’s events business, which hosts 1,000 lunches, dinners and other soirees in its cellars, from corporate hospitality through to public events with celebrities such as the hosts of ITV’s The Wine Shop, Amelia Singer and Joe Fattorini. “It’s a really important part of what we do and it meant 24,000 people last year got to see a bit of BBR,” he nods.
Looking at Jago’s pedigree, it’s easy to think he was born to enter the drinks industry. His father, Tom, alongside long-time collaborator James Espey, launched brands including Baileys Irish cream liqueur, Johnnie Walker Blue Label blended Scotch whisky and Le Piat d’Or wines. Last year, Tom and Espey sold their latest venture, The Last Drop Distillers, to New Orleans-based spirits company Sazerac.
Jago’s sister, Rebecca, and Espey’s daughter, Beanie, continue to work with the business. “If I can be 92 and still involved in a business that stimulates my brain then I’ll have it all, thanks very much,” laughs Jago. “That’s typical of my dad – he takes something that everybody thinks has already been done and then does it again in a slightly different and better way.
“What they’ve done isn’t rocket science, it’s something other people have done before, finding tiny quantities of very rare and old spirits and then bringing them to the market. But they did it in such a beautiful and precise way.”
Yet, despite the creation of the family drinks dynasty, Jago left school with a completely different career in mind. After his Cornish sea-loving father had taken him to open days in Portsmouth as a child, Jago joined the Royal Navy in 1979 and spent the next nine years in the senior service.
“I was going to make it a career, but I went short-sighted and at the time that was an issue because you couldn’t be short-sighted and be an officer at sea,” he recalls. “I left the navy after a year in Hong Kong and came back to London and thought, what am I going to do now?
“I wandered around for a week and met four or five chairmen of companies who I’d been introduced to, all of whom said, ‘You’re completely unsuited for this particular career’.”
That’s when wine came into the story. Jago had delivered bottles for Andre Simon Wines while he was still at school and so he approached the company’s new owner, Laytons, looking for a job. It didn’t need any delivery drivers but instead offered him a trial as a salesman.
“In a slightly naïve way, I asked what a salesman did and they said all I needed was an ego and a pair of shoes,” Jago chuckles. “I had both of those.”
After two years with Laytons, Jago was poached by wine merchant Bibendum, rising over the course of 19 years through the ranks from the sales team to running its buying and marketing operations before spending six years as joint managing director. It was the role that put him on the map in the wine trade.
“I learned an enormous amount about a fast-growing business, which had no clear plan of what it wanted to be, other than it wanted to remain independent and organic in its growth,” he says. “We were very ambitious – when I joined, I was the eleventh person to work for the company and we were turning over £3m, when I left, it was employing 125 people and turning over £130m.”
Tesco was one of Bibendum’s biggest clients, and so when Jago received a call summoning him to the supermarket giant’s head office, he thought he was in trouble. Instead, Britain’s biggest grocer offered him a job as its category director for beer, wine and spirits.
“It was completely and totally out-of-the-blue,” he confesses. “On one hand, it was an enormous compliment, but on the other hand it created a huge stir in my mind about what I wanted to do.
“When I sat down in the cold light of home, I asked, ‘Have I taken Bibendum as far as I can?’ and the answer was ‘No’ because there’s always room for growth, there’s always room to do more, but it’ll be more of what we’ve already done, it won’t be anything different. If I turn down the biggest buying job in the world for alcohol, I’d always have wondered whether I could have done it.
“The reason I took the job was that I felt it was time to challenge myself and do something I wasn’t sure I could do, something completely alien. It was nothing to do with it being Tesco.
“This was a job in which there were a lot of preconceptions about how it should be done and they wouldn’t have been asking me to join them if they wanted it done in the same way it had always been done. That was made very clear to me – Richard Brasher, who was the commercial sales and marketing director at Tesco at the time, and Terry Leahy said that they didn’t want me to do what everybody else does, they wanted me to be an even better version of what I’d become renowned for and bring that to Tesco.
“It was terrific and was absolutely the right decision for me at the time. And, to be fair, I think Bibendum had got to the stage where two managing directors was probably one too many,” he jokes. “It was definitely different to start with, but what it did bring home really quickly was that the basic principles of running a business are exactly the same, no matter what business you’re in. Talk to people, find out what makes them tick and what they want, challenge them to do more than they can do on their own, help them, and be really clear about where you want to go, and if you do all that then a business is a business, it doesn’t matter whether it’s Tesco or BBR or a small independent merchant – the principles are all the same.
“It’s a cliché but you are only as good as the people you work with. No one is brilliant on their own. They’re only good if they’re working with other people.”
October 2014 marked a turning point in Jago’s time at Tesco. He was asked to step aside while the Serious Fraud Office (SFO) carried out an investigation into allegations that the supermarket had overstated its profits by £326m, while eight other directors were suspended.
“All of us who were involved at the time were told that we needed to go home, there is an investigation, and we’ll contact you,” he explains. “That was on a Monday afternoon and I went home. A week later they started telling me what was going on.
“It became quite clear quite quickly that I had got mixed up in a corporate issue and it wasn’t me, it was the company, that had got mixed up in it. I think we all realised quite quickly that we had to go through the process but we all knew where it would end up.
“I’ve always been quite sanguine about things. It never crossed my mind for a minute that it wouldn’t end up as it did – I realised it wasn’t necessary and that I would go back. And I did and I have to say Tesco behaved impeccably throughout – it was supportive, it was professional.
“Once they’d been through the process, they were very clear that they wanted me back. I went back, but by then someone else had been doing the job I had been doing for three or four months and the momentum had slowed down a bit in the business and the business was reinventing itself.
“It’s all about how you deal with it yourself. I’ve always had a core principle not to worry about things you can’t affect. If you can’t change something then don’t worry about it, move on to things you can fix or change.
“It was very clear from day one that this wasn’t anything to do with anything that I’d done, it was just a thing that had happened. I couldn’t change it, I couldn’t affect it, so therefore I just had to get on with it. So, I did – I had three-and-a-half months off and went back again afterwards.”
In March, Tesco agreed to pay a £129m fine and £85m compensation to shareholders to settle the SFO probe. Former UK managing director Chris Bush, former UK finance director Carl Rogberg and former food commercial director John Scouler are due to go on trial at Southwark Crown Court in September.
While Jago speaks candidly about the episode, it’s clear that the incident cast a shadow over an important part of his career. He adds: “It wasn’t a question of bouncing back, but when I went back it made me ask ‘Is this the same Tesco that it was when I left?’ and the answer was ‘No, it wasn’t’ and ‘Do I want to be part of this Tesco?’ – I wouldn’t have minded being part of the new Tesco and would have been quite happy, I think [chief executive] Dave Lewis is a terrific operator, I liked the team that was now in charge of Tesco and I had sat on boards with them for some time, like Jason Tarry, who is still a good mate, but I said, ‘You know what, it’s probably time to have a think’.
“Inevitably, almost exactly the same as leaving Bibendum and going to Tesco, the phone rang and someone said ‘Berry Bros & Rudd’ and I said ‘What?’ and they asked if I wanted to have a chat. The minute I put the phone down, I thought ‘I want that job’. I actually knew very little about the inner workings of the business, although obviously I knew a lot about its history and reputation.”
Now, as custodian of a 319-year-old company, it’s Jago’s job to steer a course through Brexit, foreign currency fluctuations and any other challenges looming on the horizon. It looks like the former navigation officer is up for the challenge.
Published: 03 October 2017