Red & White Cellar has come a long way since starting out of founder Blair Duncan’s garage in 2000.
Today, they are a major player in New Zealand’s wine, beer and water distribution industry, representing top local and international brands.
I sat down with Red & White Cellar’s CFO Jonathan (Jonno) Tuohey to learn more about the company’s growth and success.
The Humble Beginnings of Red & White Cellar
Red & White Cellar first started when Blair Duncan leveraged his industry connections to become the exclusive distributor for Spy Valley Wines in 2000. The company grew slowly but steadily for the first 7 years, adding more exclusive brands along the way.
In 2007, Duncan merged his company, then called Cellar Ltd, with a similar Australian distribution firm named Red & White. According to Jonno, this merger gave the new company “a bit more scale” with established brands like Dog Point joining the portfolio.
The newly merged Red & White Cellar Ltd saw accelerated growth that averaged around a 10% compound annual growth rate over the next decade. Jonno credits their “strength of culture and strength of brands” for this impressive expansion.
The Power of Casual Excellence
When I asked Jonno to elaborate on the culture at Red & White Cellar, he shared their motto of “casual excellence.” As he explains…
“We’re not suit and tie, we’re not too corporate. But we like to think that we give customers what they want.”
This blend of professional service with a down-to-earth style defines their approach. For example, their metro reps provide same-day delivery to restaurant clients – critical for venues with limited storage. However, they deliver this high-touch service with no “unreasonable demands or what have you.”
A Creative Response to Covid Lockdown
Jonno points to how Red & White Cellar responded to the 2020 lockdown as a prime example of their culture in action. With restaurants forced to close, Jonno says they took an empathetic stance…
“We had a lot of unpaid bills and we weren’t sure if they were going to get paid. But instead of chasing them we saw that we were all in the same boat so we rang our customers and said, would you like an opportunity to try and make some money? That wasn’t the kind of call that most of them were getting.
“We said if you’ve got a database why don’t you give them a wine offer? Your customers are all stuck at home and they might be interested in buying some wine to drink at home. We’ll deliver it to them and give you the retail margin that a retailer would otherwise get.
“Some of our restaurant customers not only made a lot of money, they were able to pay off all their bills because they were facilitating sales to their customers.”
By pivoting to direct-to-consumer sales, Red & White Cellar helped struggling clients not just survive financially but even thrive during an impossibly hard time. As Jonno notes, this exemplifies their people-focused ethos…
“It really was a different way of thinking about what they were doing and what their needs were. And they were in many cases in shock, they had to close their doors without a lot of notice and they really didn’t know whether they were going to survive or not. So it was quite inspiring being able to do that for them.”
Driving Growth with the Right Vehicle Fleet
With reps located across New Zealand, vehicles are a crucial aspect of business for Red & White Cellar. Jonno emphasises the importance of providing reps with cars that represent the brand well and meet the reps’ individual needs.
After allowing their reps to use their personal vehicles in the early days, funded by a car allowance, Red & White Cellar switched to leasing for consistency and image control. Around 2015, they selected Driveline to manage their fleet after being impressed by their transparency around pricing and flexibility on lease terms.
“For instance, a lot of our previous lease deals had arrangements that seemed to cost us a lot of money when we got to the end of term. We weren’t being shown a lot of flexibility in the type of lease deal that we could do, and we were finding that as we rolled out of these deals we were getting exorbitant charges. So that prompted us to go to market and we felt that Driveline was very transparent in terms of pricing and the nature of the deal.”
Today, Red & White Cellar’s 14 Skoda wagons and SUVs perfectly fit their “premium but modest” strategy. Top reps get upgraded models, while special requests like a 7-seater for an expecting mother are seamlessly accommodated.
Big Distances and Challenging Terrain
Due to New Zealand’s geography, some of Red & White Cellar’s reps must cover impressive distances to serve their clients. For example, the rep based in Tauranga looks after accounts as far away as Raglan, while the Queenstown rep’s territory stretches as far south as Dunedin, and Christchurch reps go as far north as Kaikoura. They easily log tens of thousands of kilometres each year.
All-wheel drive cars are a must for South Island reps to safely navigate the southern snow and ice of winter months. Reps traversing those hazardous roads to reach their customers appreciate the stability and control offered by AWD vehicles like the Skoda Kodiaq.
Consultative Partnership
Jonno highlights Driveline’s consultative partnership, like advising shorter leases for high mileage drivers, as a key benefit. Thanks in part to Driveline’s fleet expertise, Red & White Cellar has moved from dated models like the Holden Commodore to their current modern lineup.
A Stab In The Dark
When it comes to estimating the expected value of a vehicle at the end of the lease term, Jonno says it would be a bit of a stab in the dark for them to make that calculation…
“Because you’re predicting a market price in the future. Who knows what’s that’s going to be? But clearly Driveline have a lot more data and a lot more contacts in the industry to assess what those prices might be, and I think they’ve done a cracking job.”
Making the Switch to EVs
With sustainability initiatives growing, I asked Jonno about any plans to electrify their fleet. He shared that they will likely transition to a mix of EVs and hybrids, starting with their metro Auckland vehicles first due to distance limitations.
Jonno expects this shift to offer cost and environmental benefits despite initial range and charging challenges. The Tesla Model 3 and Hyundai Ioniq 5 are top contenders for their future EV fleet.
Relationships Matter
Throughout our conversation, Jonno emphasised the importance of shared values and relationship fit – with vendors like Driveline as well as with the brands they represent.
He explains that “It’s more about how you want to live your life almost, and who do you want to be in business with?”
For Jonno, Driveline embodies the same casual excellence approach that defines Red & White Cellar’s culture.
Ultimately, Red & White Cellar’s impressive growth stems from delivering “great service” with integrity across all business relationships. Jonno credits this principle for their continued expansion, even through major disruptions like the pandemic.
Their unique blend of friendliness and professionalism appears to be a winning formula for standing out in the distribution business.
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