Jago: sub-£5 wine “increasingly difficult”
6th July, 2011 by Lucy ShawDan Jago, Tesco’s category director for beers, wines and spirits, has admitted that the days of being able to buy wine in the UK for under £5 are coming to an end.
Despite an unabating consumer appetite for discounts, Jago admitted that Tesco hadn’t run a “3 for £10″ promotion for over a year as the model was “unsustainable” and that the average bottle price at Tesco had gone up to £4.84.
Speaking exclusively to the drinks business at the Tesco summer tasting at the Millbank Tower yesterday, Jago said: “It’s increasingly difficult to get wine below £5. We’ve got a terrific range of wines under £5, but it’s getting smaller and smaller, which is a good thing.”
Jago however, spoke out in defence of wine promotions, saying they are not necessarily related to price. “Customers still love promotions, and they don’t always have to be price lead. We’ve got one on at the moment where you get extra Clubcard points if you buy certain wines, which is proving incredibly popular.
“My overall aim is use promotions as a way of introducing customers to wine, and to make sure customers are comfortable about buying wine.
“61% of the wines we sell are below £7, but we’ve seen significant growth in the £7-10 category. It’s the responsibility of retailers to get customers to trade up.”
The summer tasting featured a significant number of new wines in the £7-10 category, so is Jago looking to shift his focus to higher value wine?
“Adding value has always been a focus. We’ve had a big range review and have weeded out the wines that weren’t working, while introducing a lot of new wines.
“Fine wine is one of our strongest growth areas. We’ve got 300 lines in our Tesco Wine by the Case range now. Our six bottle cases are doing really well.”
With the recent demise of Threshers, Jago admits that it’s a tough time for high street wine retailers. “Trying to sell wines without parking has proved a challenge. Majestic is doing extremely well because it’s built around having a car park at each site. The high street model isn’t broken, but the mechanics of the model are clear.”
With 1,300 wines, Tesco has the largest supermarket range of wines in the UK. 150 new lines will go on sale mid August, 50 of which are in the Finest range.
I have recently moved back to the UK from Switzerland, and I am appalled at the cost of wine here compared to Switzerland and neighbouring France. From 50 to 100% more in the UK for exactly the same wines and brands.
While the iniquitous tax and duty here is horrendous, that is not the total answer on the difference in price. There is also much more choice available – and more competition.
It’s because retailers are greedy and want to make 30% margins so they can return huge profits to their shareholders. This means either squeezing suppliers or bumping prices up to the consumer.
I have just returned from a year studying in France, and I have to admit that this may be correct with the wines in the lower price bracket, and for this I believe the difference is largely due to duty. However, for the higher priced wines and champagnes, the UK prices are very competitive in the UK, especially on the French stuff.