The UK has entered a wine discounting spiral it will find very hard to exit in the near future, given current retail conditions and excess supply.
That was one of the more gloomy predictions from experts at a London International Wine & Spirits Fair briefing last week looking at research, commissioned by trade group, French Wines, into discounting.
It revealed 48% of wine is bought on promotion in the UK, with Tesco the heaviest discounter followed by Asda and then Sainsbury.
Research among 1,331 drinkers showed that lines from Australia, South Africa and Argentina were the the most frequently bought on offer. Half
of drinkers say they would buy wine whether it was discounted or not, and Californian loyalists are the most likely to buy at full price.
Alex Anson, trading director at Thresher, said retailers like Tesco and Asda had been literally “giving away” wine in the past few months with 35% off New World brands.
Promotional activity on booze was at the front line of retailer price wars, with huge pressure to increase weekly like-for-like sales, he said.
“It’s the imbalance of supply and demand that has led to these pricing and promotional conditions, and the future is looking very similar,” he said.
“My fear is we have got into this spiral, yet every year retailers and suppliers are challenged with selling more wine, more profitably. The £1 off this year may need to be £1.50 off next year, then half price, and where do we go after that?”
Michael Saunders, joint MD of Bibendum, said he expected polarisation of loyal consumers and promo-junkies.
“The problem is, no brand will ever be strong enough to deliver shelf promotions out of retailer margins.”
Claire Hu