Educating Sommeliers Worldwide.
By Beverage Trade Network
67 Pall Mall has followed a notable growth strategy defined by a unique business model designed to ensure fine wine reaches the mouths of consumers at an affordable price. In December 2023, it announced the opening of its first member’s club in the southern hemisphere with a $35 million AUD deal, leasing three floors in Melbourne’s East CBD. This comes after recently opening clubs in Bordeaux, Beaune, Verbier, and Singapore. Another sign of bigger is better: Melbourne will be the largest property in the 67 Pall Mall portfolio thus far, with nearly 21,500 sq. ft. of guest space and a wine list of 5,000 selections, 1,000 of those by the glass. Wine lovers will also soon find an outpost in Cape Town, South Africa.
The original club is located at 67 Pall Mall in a historic central London building. All the worldwide clubs offer extensive lists of wines from across the world and an extraordinary number by the glass, accomplished using the Coravin system. Grant Ashton, Founder and CEO of 67 Pall Mall, keeps the markups on wine low, reflecting retail prices as much as possible. How, then, does this business model work and how does it finance such rapid expansion?
Is this a model others could adopt to address current wine market issues, such as declining wine consumption and premiumization to the point where some fine wine has become unaffordable?
Founded in London in 2015, 67 Pall Mall has rapidly evolved into a global members' club dedicated to the world of fine wine. With clubs now spanning London, Singapore, Beaune, Bordeaux, and Verbier, and an upcoming establishment in Cape Town, South Africa, the club's founder, Grant Ashton, has strategically expanded its reach, incorporating unique elements into each location.
In the heart of central London, a bastion of exclusivity and innovation in the wine world, 67 Pall Mall has not only weathered the challenges presented by the pandemic but has emerged as a transformative force. This case study delves into the nuanced details of 67 Pall Mall's business model, exploring its unique revenue streams, rapid global expansion, and the pivotal pivot during the COVID-19 pandemic.
Founded by Grant Ashton, 67 Pall Mall started as a central London members' club with an unapologetic focus on wine. The club's business model centered around attracting members to revel in a world-class wine experience. The premise of low wine markups compensated by membership income aligns with the broader trend in the private members' club sector. By prioritizing member experience and affordability, 67 Pall Mall fosters a loyal community, making the membership-centric model a reasonable and sensible approach. This strategy not only attracts discerning wine enthusiasts but also positions the club as an inclusive space, appealing to a broader audience.
Image - The Pandemic Pivot: Wine Television Source: 67 Pall Mall
However, the onset of the pandemic posed a formidable threat. With a significant portion of revenue tied to in-person dining and the uncertainty of Surrey commuters renewing memberships amidst economic turbulence, the situation appeared dire.
- Pandemic Pivot: The Turning Point: Amidst the uncertainty, 67 Pall Mall showcased remarkable resilience and innovation. In a move that would become a case study in itself, the club pivoted with agility. Recognizing the potential of online engagement, the club organized over 1,000 online tastings during lockdown. Wine experts and producers presented webinars, reaching an engaged global audience. The club not only gained 600 'virtual members' but also generated revenue through ticket sales, adding a new dimension to its business model.
- 67TV: Elevating the Online Experience: The success of the online tastings laid the foundation for a bold expansion into online content creation. Enter 67TV, an online TV channel originally designed to offer six hours of fresh programming daily. Filmed in 4K with a two-camera setup, including drone cameras, the channel sought to provide a more immersive and engaging experience for viewers. Ashton's confidence to embark on this ambitious endeavor stems from the positive reception of the Zoom tastings during the pandemic.
67 Pall Mall's resilience is not merely about weathering storms but diversifying revenue streams. The club's business model incorporates a careful balance of membership income, low wine markups, and a foray into online content creation funded by advertising. The success of 67TV is evident in its partnerships with luxury lifestyle brands, including yachts, private jets, and fashion, amplifying the revenue potential beyond traditional avenues. Income also comes from food service in each club. Still, fixed expenses and labor costs must be relatively high. Ashton has hired a slew of well-trained sommeliers in each location as well as cooks, waiters, and support and operations staff.
- Low Wine Markups and Membership Income: A Strategic Pairing: At the heart of 67 Pall Mall's approach is a deliberate choice to keep wine markups low, creating a unique proposition for members. This strategy is underpinned by the belief that the perceived value of the club lies not just in access to fine wines but also in affordability and inclusivity. To compensate for the reduced margins on wine sales, the club relies on a steady income stream from memberships, fostering a sense of community and loyalty among its discerning members.
- Membership Income as a Stabilizing Force: The stability provided by membership income forms a robust backbone for 67 Pall Mall. Beyond compensating for low wine markups, this revenue stream allows the club to invest in curated wine lists, exclusive events, and global expansion. It also nurtures a sense of belonging among members, creating a community that extends beyond a transactional relationship. Membership benefits extend globally, fostering a sense of connectivity among members. Each new club adds new value to the existing membership.
- Global Expansion: From London to the World: While rooted in London, 67 Pall Mall's business model extends far beyond the city's limits. The club's massive global expansion plans include the new Melbourne outpost, marking its first foray into the southern hemisphere. The choice of Melbourne is strategic, tapping into a passionate wine culture and a knowledgeable collector community. This expansion, coupled with plans for other cities worldwide, underscores the adaptability and scalability of the 67 Pall Mall model.
As the club expands globally, it remains adept at local adaptation. The Verbier club, set in the Swiss Alps, showcases the business’ ability to tailor its offerings to diverse locations. The introduction of a public bar all year round, open to non-members, reflects a nuanced approach, enhancing engagement with both tourists and the local community, without compromising the core membership-driven revenue model.
Image: 67 Pall Mall Verbier
Verbier, known for its international appeal and perched above the Valais regions, where 80% of Swiss wine grows, became a fitting choice for 67 Pall Mall. Grant Ashton highlights the allure of Verbier's international community and the prominence of Swiss wine, positioning it as an ideal setting for a wine-focused members' club.
Ashton discusses the interior design of the Verbier club, emphasizing an alpine theme without resorting to a clichéd ski lodge ambiance. The upcoming refit aims to incorporate old photos of Verbier, creating a classic yet familiar atmosphere. The members' space, complete with a restaurant and terrace, focuses on exclusivity, allowing members to savor fine wine and delicious cuisine in a comfortable setting.
- Melbourne: A Strategic Expansion: The recent announcement of 67 Pall Mall's Melbourne club thus further underscores the strategic expansion of the business model. Choosing Melbourne as the site for its first southern hemisphere outpost, Grant Ashton aims to tap into a passionate wine culture and a knowledgeable collector community. By blending the allure of an exclusive private members' club with Melbourne's status as an international hub, 67 Pall Mall seeks to replicate its success while adapting to the unique dynamics of the Australian market.
67 Pall Mall's journey is more than a tale of survival; it's a case study of business model innovation and adaptability. The club's ability to pivot during the pandemic, diversify revenue streams, and embark on a global expansion speaks to the visionary leadership of Grant Ashton. As 67 Pall Mall continues to redefine the landscape of wine appreciation, its journey serves as an inspiration for the wine industry, showcasing the limitless possibilities when innovation and resilience converge in the pursuit of excellence.
Note: Header Image - 67 Pall Mall London; Source: 67 Pall Mall