How The Whisky Exchange Became the World’s Largest Online Alcohol Retailer
In the late 1990s when Jeff Bezos was expanding his fledgeling online book-selling site called Amazon into household products, Sukhinder and Rajbir Singh had the idea of doing something similar with their family business of selling alcohol. They were the sons of first-generation immigrants who ran a liquor shop in Hanwell, a town in West London’s Borough of Ealing. And thus, was born The Whisky Exchange.
While Bezos was a successful New York banker before moving to Seattle to set up his online operations, the Singhs got into selling liquor because they were forced to work with their parents because of the state of the UK economy in the 1990s. Little over two decades later, Bezos’ Amazon is the world’s largest online retailer, while TWE is the world’s largest online liquor retailer.
The Bezos story is the stuff of legend, the subject of media adulation and management institute case studies, but the impressive tale behind Whisky Exchange’s massive success, has largely flown under the radar. Within the whisky circles though (and now increasingly in the wider world of alcohol), TWE is among the most prestigious global names in retailing. With over 6,000 varieties of whisky, single malt, and bourbons from around the world, including India, their product bouquet is staggering and unmatched. And add to it more than 500 varieties of rum, 400 vodkas, 550 Cognacs/Armagnacs, 400 gins, 150 Tequilas, and 1,000 specialist liqueurs, the number of products on offer on their site now number over 10,000. No alcohol manufacturer with global ambition cannot afford not to be on TWE. It sells more than 50,000 bottles a month to customers in over 55 countries around the world.
TWE story starts in 1971 when Narinder and Bhupinder Singh, like many other Indians and Pakistanis first generation immigrants, sought to make a living by setting up their own retail shop. They became the first Asians in the UK to be given a license to sell alcohol. Called The Nest, their shop became quite popular among the locals in the area. And like other Asian shop owning families, the two young sons also became an integral part of the operation, helping their parents’ man the shop whenever they were not at school or on holiday. Though Sukhinder did develop a passion for liquor along the way, building a personal collection of over 7,000 miniature bottles, neither he nor Rajbir saw themselves getting into their parents’ business. Like any other children of immigrants, they were expected to study and join professions of higher status and prestige than shopkeeping. Sukhinder set out to be a chartered surveyor, while Rajbir studied computing.
Sukhinder finished university in 1990 around the time when UK was going through a major housing slump because of which jobs were tough to come by. He decided to help his parents in their business for a year, by which time he hoped the economy would pick up. But soon he realised the growing potential of the alcohol business. Over the next few years, he restructured the product line, rejigged the display etc., and turned The Nest into one of the finest retail liquor destinations in England, winning a string of awards along the way. He also broadened his interest in miniatures into a passion for whisky and became part of a worldwide network of whisky collectors. Sukhinder’s personal collection currently stretches to about 12,000 bottles of the best whiskies from around the globe. It also makes him one of the largest whisky collectors in the world.
But by the late 1990s, the retail liquor business in the UK was increasingly moving towards supermarkets. Besides, a large number of Britons were now travelling to Europe on holiday and buying cheaper alcohol on the continent on their way back. All this had a telling effect on sales at The Nest. This was also the time that Sukhinder’s parents wanted to retire from the business. So, the family decided to sell The Nest in 1999. Following this, Sukhinder toyed with the idea of setting up his own liquor shop for some time but decided against it because of the rising cost of property. It was also the time when the expanding world of the internet was opening up new avenues for businesses around the world, especially for those looking to reach their consumers directly, without the restriction of geographical boundaries of a brick and mortar store. E-commerce was a term that was increasingly bandied about, and early visionaries like Bezos and Pierre Omidyar of eBay were already beginning to make their mark in this area.
For Sukhinder, this seemed like a good time to explore this new and exciting platform to sell alcohol. And unlike many of the early e-commerce pioneers he had the distinct advantage of being an experienced retailer at a young age. Rajbir had studied computers at university and knew someone who could create a website. They called it The Whisky Exchange. Not long after they sold The Nest the brothers set up a warehouse around the corner from their shop, and The Whisky Exchange was up and running, with whisky borrowed from their father. They had to wait for a few days after the site went live to get their first order, from a whisky collector in Germany. Sukhinder’s connections with whisky collectors around the world came in handy, as they became the first customers of TWE.
Things picked up pace quite fast. Within a year, they were required to recruit new employees to help meet the growing demand. Five years later with more than 3,000 products in their portfolio, they had to move to larger warehouse and a new office in north west London. They also decided to supplement the online sales with an offline whisky experience by opening the first The Whisky Exchange shop at London’s Vinopolis commercial complex. When Vinopolis shut down in 2015, the shop was shifted to a larger property at Covent Garden. There are now three TWE shops in London.
Along the way, the company also got into bottling its own whiskies and rum under the name of Elixir Distillers. Its three core whisky brands include Elements of Islay, Port Askaig, and The Single Malts of Scotland, the rum is bottled under the name of Black Tot. These are now exported to more than 20 countries. Earlier this year, the company received permission to set up its own distillery on the island of Islay off the west coast of Scotland famous for its Islay whiskies.
For more than a decade, the company has also run many prestigious annual alcohol shows in the UK. The weeklong Whisky Show in London is rated as the country’s finest whisky event. The Whisky Show: Old & Rare held in Glasgow, Scotland, is UK’s biggest show for old and rare whiskies. There are also separate shows annually devoted to Champagne and Cognac, reflecting the company’s expanding interests. The Whisky Exchange now employs more than 250 people. But their massive portfolio and an almost unassailable position as an online liquor online retailer notwithstanding, the company continues to grow adding more and more products to their portfolio every year.
The Singh brothers are quite keen to expand their operations into India but have not been successful as yet because of government-imposed restrictions. In a wide-ranging interview with MW, Sukhinder Singh, Managing Director of The Whisky Exchange, spoke about this, and a variety of other topics including his favourite whiskies, and his opinion of Indian branded alcohol.
MW: Though you have spoken about this numerous times, can you tell us about the origins of The Whisky Exchange and your background in the alcohol trade?
Sukhinder Singh: My parents were the first Indians in the UK to open a drink shop back in 1971/72, so around 50 years ago. My brother and I grew up in the business from very young ages and helped out on the weekends, and during holidays. We were both intrigued by the variety of products, be it spirits, wine or beer. After university, I could not find a job, so decided to join the business.
I increased the range, improved margins, and expanded the shop to double its size. Then in 1991, we went on to win the best drinks shop in the UK. In 1999, my parents sold the business and retired. Over the years I developed a passion for whisky and started collecting it avidly. After our parents sold the shop, we decided to open The Whisky Exchange.
The initial idea was to find a shop in London, but after some research, we decided to get a website built and go online instead. It was the best decision that we could have made, the single malt whisky revolution was starting, we were at the forefront and the web gave us access to customers all over the world.
MW: What are the significant contributions that The Whisky Exchange has made towards liquor retailing in the UK? What were your significant firsts?
SS: We have been behind a lot of innovation on web drinks retailing, many of our competitors around the world now use the layouts and terminology we started with our site 20 years ago.
MW: With e-commerce fast emerging as an alternate channel in several parts of the world (although not yet in India), how does high street liquor retail stay relevant and vibrant? How much of your own consumer facing business is online vs in-person?
SS: We believe strongly in high street retailing, especially for specialist products like whisky. We stock around 1,000 standard whiskies today, and it is very difficult for customers to navigate such an immense number of products with limited knowledge. Going into a shop allows you to talk to specialists who can help guide you with the right choices. We started online in 1999, and we opened our first shop in 2006, and now have three shops in central London, with the most recent opening in 2020. We hope to open a few more shops outside London in the next few years.
MW: How has the pandemic led to a change in liquor retail practices as well as consumer behaviour? What changes do you expect to sustain post the end of the Pandemic?
SS: We have grown significantly over the last 20 years, we have built in capacity to expand so when the pandemic happened and things went into lockdown, we were well suited to adapt to the new ways of working with social distancing, working from home, etc. We had a huge increase in online sales by around 80 per cent average, while other companies were adapting to online, we benefitted immensely. After the pandemic sales will definitely decrease but we believe so much of the world has now got used to ordering online that our new normal daily sales will be much higher than before.
MW: What’s the most important criteria that you look at when evaluating a new brand? Assuming especially if it comes from a start-up / relatively new company.
SS: With any brand we list the key element is liquid, liquid, and liquid. We receive samples from hundreds of companies each year and only keep products we like. It is important that we offer a range of products to our customers that they can trust will be enjoyable.
MW: Can you tell us a bit about Elixir Distillers? How many of the brands listed there are owned and run by you? Do you have any equity participation from any of the majors?
SS: We started bottling whisky under our own brands over 15 years ago. We recently set up Elixir Distillers as the subsidiary, which will manage all the brands we own. Elixir Distillers is 100 per cent owned by my brother and myself. There is only one brand that we distribute that does not belong to us, which is Tapatio Tequila. Our main brands are Port Askaig, Elements of Islay, Single Malts of Scotland and Black Tot.
MW: What would your advice be for whisky collectors who are just starting up? What should they start picking up to build a collection?
SS: I always say you should collect what you like to drink, the product is for drinking at the end of the day. There are many products from new distilleries that sell out very quickly due to the high demand from collectors. Of course, the big names are big as they produce great liquid in nice packaging, with global demand for whisky still growing immensely these products will always sell well.
MW: If India does open up, would you set up an India operation, do you have any plans in mind?
SS: I have always wanted to do something in India, we will see what happens at the time if things do change.
MW: We understand that you currently do have well-heeled customers from India who are customers of your rare whiskies. How do you service them?
SS: Most people who can afford to drink and collect single malt travel a lot, so they often come to us to pick up bottles. Some customers store with us, others use wine storage companies to store their whiskies.
MW: Any trends you observe in the kind of whisky styles/brands that they like?
SS: The majority of people looking to start a collection like the big brands, but some have crossed that line are more interested in single cask whiskies from the lesser-known distilleries.
MW: In the last few years, we’ve had two major epiphanies as far as made in India spirits goes. The first relates to Single Malts, starting with Amrut, and then carrying on to Paul John, and now Rampur. The second has related to Indian gins, with the number of Indian craft gins now in double figures. Also significant, at a local level, is the emergence of Indian native spirits like Feni and Mahua. We are also now seeing craft spirits emerge in other categories such as Rum and Vodka. Would love your opinion on the drinks category in which you think a breakthrough spirit could emerge from India and why?
SS: I find it very sad that a country like India that has such a huge appetite for alcohol does not have a product or brand that is known all over the world as being recognised as clearly being from India, a product that every Indian should be proud of. You have Cointreau from France, Campari from Italy, Jack Daniels from the US, we can go on. I would say Old Monk rum could have been that brand or even Kingfisher beer, but these are another story. It is good that Indian whisky is now available all over the world, and all these brands are very good. Indian gin is very interesting but maybe five years too late, time will tell. I am awaiting my sample of Mahua to arrive, definitely sounds interesting.
MW: Assuming that you’ve tasted single malts from India, would you say that there is a distinctively Indian style of Single Malts or that the malts you have tasted from India have more resembled styles from other parts of the world, and if so, which parts?
SS: I would say Indian whisky is close to Scotch in many ways. In blind tastings, it is difficult to pick them out except where you have different cask influences unique to Indian whisky.
MW: What are your five favourite whiskies from Scotland, and around the world?
SS: This is one of the most difficult questions in the world. I am going to take it that these are from a selection of whiskies available on the market at under £200:
This is in no particular order, if you asked me the same question on another day, this selection would be different. There are so many good whiskies on the market today.
Redbreast 15-year-old Irish Whiskey
Michters 10-year-old Bourbon
MW: Is your next-generation also part of the business? If so, what role (s) do they play?
SS: They definitely show interest in the business, but my daughter works for a bank and my son is at university, and my brothers’ children are younger. They all need to go and experience the world before they are allowed in.
MW: How do you unwind? What would your favourite whisky bar be to have a dram?
SS: I am a bit of a workaholic, so everything seems to orientate around my hobby of collecting whisky. The best bar is my office, as I have so many amazing bottles open. If I am out in London, I do not really go for whisky, I prefer cocktails or wine.
MW: What’s your desert island drink?