Tesco wine base price graph

Tesco has slashed the average base price of its wines by 11% in a move towards simpler pricing and reduced reliance on promotions.

The retailer this week announced it had overhauled its wine offer and pricing as part of Project Reset. Looking at products in stock over the past two months, Brand View data shows the average base price - before promotions and multibuys - of a 750ml bottle of wine at Tesco (excluding Champagne) has fallen from £8.13 to £7.20 [26 October 2014 vs 2015]. This has taken it below the combined average base price across the other big four supermarkets (currently £7.48) and has closed the gap on the average £5.07 base price tag at discounters Aldi and Lidl.

A key plank of Tesco’s new strategy is lower, simpler pricing and fewer promotions. “We are being more transparent. Customers will no longer have to navigate lots of deals,” said a spokeswoman for the retailer.

The shift away from promotions is already underway, with Tesco running 352 wine deals in the past four weeks versus 394 in the same period a year ago, while the average depth of deal has fallen slightly, from a typical saving of just over 30% to just under 30%.

Industry insiders say Tesco and the other mults are reacting to the discounters doing good business on low base prices. “Suppliers need to recognise they can’t try and drive lines in the grocers that depend on hi-lo mechanics if those same lines are available in discounters,” added one.

focus on wine, glass of wine red white and rose

The Tesco move includes a switch to rounder prices such as £5 or £5.50 rather than the traditional ‘£x.99’ model. The number of Tesco wines priced £x.99 has crashed from 285 in mid-August to just 55 this week [26 October], and the number priced £x.49 is down from 76 to only 15. In contrast, the number of wines priced exactly £5 has risen from nine to 62.

Some of the retailer’s key lines are adopting the new price points, with Plaza Centro Prosecco now £6.50 (versus an average of £9.68 over the past 12 months), Dino Pinot Grigio now £5 (versus £7.35 average), and Castillo San Lorenzo Reserva now £6.50 (versus £9.43 average).

Tesco’s Finest wines are a key focus of the activity, with the retailer saying it would sell these at “consistently simple and low” prices rather than rely on 25%-off promotions. The retailer is currently making good on its claim, slashing the average base price of its Finest wines from £8.91 a bottle two months ago to £7.53 this week - a drop of 15%.

Tesco also announced it would be cutting about 30% of products in its wine range under the Project Reset rationalisation programme, claiming the move would help boost availability. “It will mean the demand for wine will be more stable - helping us and our suppliers plan more consistently,” added a spokeswoman.