Wine Rack searching for a buyer

CONVIVIALITY, the owner of Wine Rack and Bargain Booze, is preparing to file for administration after it was plunged into financial chaos just three weeks ago.

The drinks wholesaler, which supplies 23,000 pubs and restaurants, will appoint administrators within ten days to wind down the business, putting 2,600 jobs at risk.

A spokesman said Conviviality intended to continue trading for as long as possible, while it considers offers for all or parts of the business.

The demise of the wholesaler, which earlier this year was considered a stock market heavyweight, is a dramatic fall from grace. Chief executive Diana Hunter left last week after more than five years at the helm following two profit warnings and a 66pc share price drop.

Conviviality had to suspend trading on the stock market after it discovered a surprise £30m tax bill, which it failed to raise the money for in an emergency cash call.

Analysts blamed a takeover spree which saw it snap up firms in quick succession for putting pressure on its bottom line.

Under Hunter, the company shelled out for drinks distributors Matthew Clark and Bibendum and the pop-up bar operator Peppermint in less than eight months.

Molly Johnson-Jones, a retail analyst at Globaldata, said: ‘Conviviality took its eye off the ball in search of new growth. Add in the accounting errors and hidden margin erosion and we see the reasons for [its] demise.’

Shareholders are expected to get next to nothing following the collapse, but Conviviality said it will try to deliver ‘as much value as possible’ to all stakeholders, which include lenders, suppliers and clients.

One of its biggest customers is pub chain JD Wetherspoon, with whom it recently renewed a long-term supply deal.