Consolidation within the wine industry continues to create a market of big brands and fewer producers, allowing for more deep-cut promotions in supermarkets.
Major wine acquisitions in the past few years have led to the creation of a fewer number of bigger players.
Constellation bought California’s Robert Mondavi brand in December last year, which gave a big boost to its US portfolio, while Pernod Ricard added Mumm and Perrier Jouët Champagne to its portfolio through its acquisition of Allied Domecq this summer.
Foster’s Group, meanwhile, increased its strength in Australian wines with its acquisition of Southcorp - and its
Rosemount, Lindemans and Penfolds brands - in May.
“This consolidation though is offset by the requirement of choice from the consumer, who is actively seeking variety,” says Paul Sullivan, marketing manager for Western Wines, which itself was recently bought by Vincor Inc. However, the company says it has remained mainly the same as the acquisition has given it more potential given Vincor’s premium portfolio in Australia, New Zealand, the US and Canada.
“We have been able to use Vincor’s distribution strength in the US and Canada to launch Kumala and ramp up its growth in these countries,” says Sullivan. On top of this, Western Wines this year became the first wine company to enter the top 10 ranking for the most trademarks registered in the UK this year, with a total of 42.
Alex Ansen, trading director at Thresher Group, says increased consolidation has added to the dominance of the multiple grocers and they can therefore implement aggressive price promoting, but this is giving off-licences and specialist wine shops the opportunity to seek out unusual wines and offer choice and diversity to the wine
consumer. “We have just relaunched our Wine Rack stores to tap into this market,” he says. “The stores will offer premium and interesting wines priced at £7-£15, and we will continue with the three-for-two offer across all wines that has worked to push up the average spend in our Thresher estate.”
The big brand owners though are looking at ways to introduce innovation to compete against the giants and specialist stores. Constellation, which owns three of the UK’s bestselling off-trade wine brands - Hardys, Stowells and Banrock Station - recently launched its Hardys Nottage Hill two-litre wine box innovation, designed to fit better in the fridge, and it says its Stowells ‘minis’ also fare well over Christmas.
Ansen says competition within the market is high at the moment, and he thinks this Christmas will be particularly interesting with brand and supermarket wars in the wine aisles. “Tesco is more aggressive than ever in wine and it feels as though Asda and Morrisons may be finding it a little tough at the moment,” he says. “Sainsbury has been rallying of late, but the aggression is really coming from Tesco, where there has been a lot of half-price activity and discounts on cases of wine are increasing.”
Sullivan agrees that big discounting in wine is likely to be as bad or worse than last year. “The Christmas period brings a number of infrequent drinkers and capturing this footfall is essential to both retailers and suppliers,” he says.