Troy Christensen, chief executive of Enotria & Coe, and Gary Edwards, growth and acquisition finance at Investec, explain the background, challenges, and motivation behind premium wine supplier Enotria’s acquisition of Coe Vintners.
Why did Enotria decide to acquire Coe Vintners?
Troy Christensen: Enotria was founded in the 1970s with the intention of bringing the best Italian premium wine to restaurants. It expanded into other old world origins and then new world wine, and now supplies almost 5,000 premium regional outlets as well as large national accounts, including restaurant chains like Mitchells & Butlers, Prezzo and Cote. I came on board about 18 months ago to introduce an aggressive growth strategy while building a scalable business platform to accommodate that objective. Enotria was already growing rapidly (it has tripled in size over the past decade) but there was little scalability. So we invested in a larger state-of-the-art warehouse facility and office, upgraded the systems, and also looked at how we could move beyond premium wine.
The market has shifted: cocktails and premium spirits are very positive from a trend standpoint, but starting from scratch was not something we thought would help. So we engaged with Coe Vintners. At the point of acquisition, Coe was about half our size, a family-run business, and was traditionally known more for spirits. Its history has been in London and the East, with a solid market share in independent premium bars, and when we looked under the covers it became clear that there was little overlap in terms of customers. Working together was interesting for both of us.
Why did Investec view this as an acquisition worth supporting?
Gary Edwards: We originally backed Enotria as a wine business – we saw it as second to none in terms of supply to the restaurant trade. Our first question is always who we are backing. Troy is a proven individual in this industry and he has had the foresight to invest in state-of-the-art offices and warehouses. Second, the acquisition was more than compelling. We thought adding Coe would create a business that was truly unique, with a management team we thought would outshine anyone in the sector. Enotria’s acquisition of Coe is probably the envy of the industry right now.
What challenges did you face in completing the acquisition?
TC: The chief executive of Coe was very entrepreneurial and a bit of a maverick, so a lot of the transaction was unique in the sense that things weren’t clear-cut. A guy who was used to doing business by handshake suddenly had to get into a lot of contracts. He needed to feel comfortable, so I committed to make an offer to anyone from Coe who wanted to come over, and to keep his family name in the company. We did that – and we’ve now relaunched as Enotria & Coe. Investec has been a very good partner in that they were willing to really understand the business aspect of the transaction but also to recognise that a tick-box approach would have been inappropriate. A lot of vanilla bankers and private equity groups would have struggled to land the deal.
GE: Enotria acquired a business from a founder owner who ran the business in his own style. We were backing Troy’s view of what Coe could add to Enotria’s business strategically in terms of being on trend with spirits, complementary, and not having overlapping customer bases. I think a lot of sponsors and trade buyers look for things that look like them, feel like them, but Troy recognised where the value was. Entrepreneurial founder-owners don’t necessarily fit with conventions, but this is exactly what we were backing. This wasn’t just an exit for the founder in monetary terms; he had to trust Troy that he would take on Coe and nourish it.