Benoit Beauvois & Christian Guillaume
General Director Covivins
Financial Director Covivins
Created in 1996, Covivins has gone from being a wine retailer to supplying wholesalers. This change has, among other things, resulted in a tenfold increase in turnover in the space of a few years. And the main challenge faced by Covivins today? Finding the means to finance this growth.
A visit to the Covivins warehouse in Ciney gives some idea of the size to which the company has grown in recent years. In the storage area, ten-metre high shelving in a completely automated environment is filled with palettes of crated wine and spirits. In the preparation area, warehouse workers are busy getting the day’s orders ready and then moving them to the loading bays. Visitors today will find themselves a long way from the little family wine vault where Benoît Beauvois, his wife and parents-in-law once introduced knowledgeable wine lovers to a fine selection of wines.
From wine vault to warehouse
“My father-in-law has been in the wine trade since the late 1960s”, Benoît explains. “My wife and her mother were already helping him when I met her, so I’d often go along with them when they were running a stand at a trade fair. And as I like to keep busy, I’d start talking with the customers too, and got a taste for it. One thing led to another and we eventually decided to go into business together. In 1996, we took over a warehouse in Nannine. Our original idea was to create a kind of “vault” like those already found in France: a place aimed at private customers with an area set aside for tasting and discovering wines. It proved so successful that we ordered more and more bottles and got them at better and better prices. By 1999 we had decided to look for new growth areas in the catering industry.”
A daring gamble
As time went on, Covivins’ customer base grew. In 2002 the company added spirits to its range, and with continuing growth it was able to take things to a new level by becoming a wholesaler itself. By 2006, Covivins’ founders were feeling a bit cramped in their Nannine warehouse and decided to invest in a new building with a significantly larger capacity (the old warehouse could, in a pinch, accommodate 300 palettes whereas the new one can take ten times that number). “I must admit that I didn’t fully realise quite how bold this gamble was when we moved here in 2007”, Benoît remembers with a smile. “But we took a very positive and dynamic approach and our sales grew very rapidly, to the point where we were soon using our new capacity to the full.”
“You never know”
Looking back, Benoît is very happy about the decision taken at that time to purchase a plot of land that was significantly larger than their immediate requirements. “At the time, I had serious doubts about this being the right decision. We were already going to be increasing our storage area tenfold and it was difficult to imagine that we might need any more than that”, he recalls. “But my father-in-law said ‘you never know’, and that incorporating this extra space now would mean that we wouldn’t be forced to move again if we were to grow larger than we originally expected. I took his argument on board and thanks to this we were able to build loading and unloading bays in 2011. We are also going to start construction to extend our storage capacity to 9,000 palettes, which is three times our current capacity.”
The funding challenge
When it came to supporting Covivins’ extraordinary growth financially, the partnership of trust that had been formed between the company and ING proved crucial as well. “While it’s not possible to grow without storage space, growth also requires substantial funding since you also have to finance your stock, of course”, Benoît points out. “In fact, as long as business remains stable, there are no cash-flow problems as stock rotation brings in the income needed to fund new purchases. During the growth phase, however, we had to prefund our stock increases since the payment deadlines of our suppliers are shorter than those of our customers.” So, in 2010, Benoît had no hesitation in appointing a financial director to deal with this delicate task. With many years’ experience in the drinks industry, Christian Guillaume was very familiar with the particular funding cycle that applies in this sector.
A frank and open relationship
At every stage, Covivins was able to count on the support of ING. “ING was always there to support us and provide the financing we needed. Initially it was mainly a question of fixed-term advances, but our growing requirements led ING to offer us a factoring solution”, Christian Guillaume continues. “Having very quick access to a percentage, agreed in advance, of our sales invoices allowed us to fund our purchasing. And each increase in turnover was reflected mathematically in an increase in our financing capacity.” Anne-Sophie Toussaint, Relationship Manager with ING, underlines the quality of the relationship between Covivins and ING. “We are the only banker Covivins has used since it was formed. We have always enjoyed a constructive and open dialogue with them - they have shown themselves to be transparent and very willing to provide information - and this has helped us find the right solution for their needs, whether for short-term loans, factoring, or financing for their real estate projects.”
Bidding farewell to private customers and restaurants
So, with the active support of ING, Covivins is continuing to expand its operations and now occupies a special place on the Belgian market. “Our volumes have reached sufficient critical mass to enable us to obtain excellent prices from our suppliers. As a result, we have gradually become the preferred suppliers of regional wholesalers. We also stopped catering to private customers in 2007 and restaurants in 2008”, Benoît explains. “This was essential in order to clarify our market position. We can’t on the one hand supply wholesalers and, on the other, compete with them on their own market. By concentrating on selling to wholesalers we have been able to act as genuine partners, something which is essential to attaining our growth objectives.”
Turning advice into a business tool
Rather than simply stopping their supply to restaurants, Covivins was quick to advise these businesses to turn to its own wholesale customers when placing orders. “If our wholesalers increase their volume, we are winners too because we’re their suppliers. So, it’s a win-win situation, Benoît explains. In fact, we decided to go even further and appoint a sales manager to set up a special advisory service to provide our wholesalers with business support. Our experts help them improve their sales, particularly through advice given to restaurant owners in drawing up their wine lists. The philosophy behind this new approach is simple: by helping our customers grow, we are ensuring our own growth as well.”
Two pillars of growth
But this focus on providing advice is also the product of the very realistic vision that Covivins has of its market and its future prospects. “We already enjoy a very good level of penetration on the Belgian market, so it seems opportune to look for new areas of growth by developing the customer base of our own customers.” Alongside this first pillar, Covivins is also working to develop its export operations. “We have been working in export for several years now. We began with neighbouring countries, but now supply much further afield: we have customers in Australia, the United States and in several countries in Africa and Asia. We are planning to further develop these export activities over the coming years.”
The successive strategic orientations selected by Covivins have proved extremely profitable. From turnover of EUR 500,000 in the year it was formed, Covivins generated turnover of EUR 4 million in 2006 by focusing its efforts on the restaurant trade. Taking a new approach to the wholesale market then resulted in exponential growth, with Covivins ending the 2013 financial year with turnover exceeding EUR 53 million. Benoît remains confident about their future prospects, believing that 2014 and 2015 will most definitely be vintage years.
Surround yourself with the right people
An agronomist by training, Benoît Beauvois has built his career on a very evident dynamism, but he is also capable of recognising when there’s a need to delegate responsibility. “When I realised that our cash management was becoming too complex and was beginning to take up too much of my time, I decided to appoint a financial director. It’s a decision I’m very happy about. Christian Guillaume is extremely competent in his field. In fact, we’re applying the same logic throughout the different areas of the company. Whenever the need has arisen, we have created a position and recruited someone with the right motivation and proven abilities. But I must admit, I’ve never had too much of a problem delegating responsibility. I believe that in order to manage a company well, it’s important to be able to surround yourself with competent people and allow them to take up the responsibilities you’ve delegated to them.”