Selling high-volume wine brands in the UK off-trade is becoming increasingly challenging as retailers curtail price-cutting practices and place more emphasis on developing sales of own and exclusive labels.
The amount of wine sold on promotion in the UK off-trade has fallen by 6% in the last 12 months
This two-pronged threat to branded wine was identified by Paul Schaafsma, UK general manager for Accolade Wines, who stressed the need for major suppliers to alter their approach to selling wine in UK supermarkets during a discussion with the drinks business last month.
“There is definitely a need for own-label and exclusive label in the marketplace and there is a need for brands to move away from the deep discounts that have been there in the past,” he stated.
Continuing, he said, “There are fewer half-price deals, it is more commonly 20-25% off – or a different mechanic – and you need to make sure your portfolio is capable of that… those focused on half-price drivers will struggle and you need to make sure you will sell off-promotion.”
One aspect encouraging a move away from deep discounting wine brands in UK supermarkets are new regulations from the Office of Fair Trading, and in November last year Aldi, Co-Op, Lidl, Marks & Spencer, Morrisons, Sainsbury’s, Tesco and Waitrose all agreed to adopt a new code of practice set out by the regulator.
These include the avoidance of any artificial price inflation to make a later discount look more attractive, as well as ensuring that any promotions run for the same or less time than the product was sold at its full price.
As a result of supermarket’s adoption of these retailing regulations, Schaafsma said the amount of wine sold on promotion in the UK off-trade had fallen by 6% in the last 12 months to July this year, quoting Nielsen figures.
He also said that 54% of the wine sold through retailers in the UK over the last year was purchased on discount, a much lower level than seen in the market over recent history.
Furthermore, a combination of factors, including fewer price promotions, has meant that the total off-trade wine market is down 2.9% in volume.