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Wednesday 20 August 2014

Australia must stop ‘mindless chase of listings’

14th April, 2014 by Gabriel Savage

Tesco has expressed concern about the “homogenisation” among Australia’s major wine brands, calling for them to work harder at standing out from the crowd.

australian-wines-1At a time when Australia’s overall volume exports fell by 6% during 2013, Tesco’s wine product development manager James Griswood told the drinks business that the country still remained “the most popular” source of wine among customers.

Nevertheless, he expressed concern at the lack of diversity offered by some of Australia’s largest, most mainstream names. “The biggest issue is the homogenisation between the key Australian brands,” warned Griswood. “They are all sitting in a very similar price, variety, style and quality area.”

Arguing that “none have any real, tangible differences that give them a unique positioning,” he flagged this up as a reason why “consumer spending is highly transferable between the brands.”

Griswood’s comments come shortly after John Angove, managing director of Angove Family Winemakers expressed concern at the strategy currently employed by Australia’s largest producers.

“I don’t know what they’re doing,” he told db, suggesting: “One of the key issues in the Australian wine industry at the moment is that it’s the mid-sized family owned companies who are keeping the industry going.”

While confirming the “core appeal” of Australia’s “classic duo of Chardonnay and Shiraz” for Tesco consumers, Griswood observed: “If Australia is to maintain its position as the consumer’s favourite wine producing country then it needs to drive a higher level of loyalty.”

In his view, “this can only be achieved if the key brands focus more on developing the essence of what makes their brand unique, and less to a mindless chase of listings and distribution.” At the moment, Griswood remarked, “some are doing this better than others.”

An in-depth look at Australia’s current export performance will appear in May’s issue of the drinks business.

12 Responses to “Australia must stop ‘mindless chase of listings’”

  1. Sancho Panza says:

    I love how the supermarkets come out with comments like these….“They are all sitting in a very similar price, variety, style and quality area.”
    Dear Tesco wine dictator, perhaps the answer is in how much you want to pay for ‘wine’. Try paying a little more and you will see how much more individualism you will find.

  2. Ravi Singh says:

    An interesting take. Wineries need to keep innovating to avoid fatigue. The passion helps the final product…so what Tesco is saying rings true.

  3. Jay Bhikha says:

    Dear Sancho ,
    You have hit the nail in the head! Well done your comments were the truest thing
    That anybody can say. Supermarkets are hypocrites they want the cake and eat it too
    They drive the market one way and then have the audacity to moan thats its
    Not goung the other way. Tesco dig deeper pay more and yes the quality will flow in and
    we the consumer have a choice.

  4. Leigh says:

    There’s a huge variety of wines.. types and prices. Tesco buys bulk. To ensure their enormous profit margins. Saying that there’s only 2 varieties on offer is completely disingenuous. Tesco demands such a narrow product line, that it reduces everything to the lowest commondenominator… If they wa something different, they would demand it.

    This article is a crock of sh (tesco) it…

  5. vintagewinds says:

    Tesco are the ones forcing the pace .Its totally self serving to belt people around the head every day of the year and then accuse them of homogenisation !!!! But that is what suppliers have become accustomed to. It will never change. Ask for ideas innovation higher quality but also drop your rice. Australia’s winemakers are neither mindless nor inferior and the wines are totally better than ever but if these grocers keep screwing costs to the bone its the only way to survive if thats your only card. And lastly Australia is not only McGuigan, Angoves and Hardys..there are hundreds of others seeking a better way.

  6. Jan Dago says:

    “If Australia is to maintain its position as the consumer’s favourite wine producing country then it needs to drive a higher level of loyalty.”

    A Mintel report found that more than half of all Britons who purchase wine to drink at home buy ‘depending on which has the best discount’.
    John Forsyth, senior drinks analyst at Mintel, says ‘The discounting strategy of major multiples may be controversial but it is a key purchase driver in such a fragmented market place.’

    “The biggest issue is the homogenisation between the key Australian brands,” warned Griswood. “They are all sitting in a very similar price, variety, style and quality area.”

    According to a Wine Intelligence survey for the Wine and Spirit Trade Association the rise of promotions appears to be stifling experimentation. It found the proportion of UK consumers who were adventurous in their wine buying habits had fallen in the same period as promotional offer increased in importance.

  7. Yvonne may says:

    Nobody is in a stronger position to take a leadership stance on this than the retail and online giant Tesco. Their Australian suppliers and the world of Australian wine beyond that, offers a breadth of diversity unparalleled in any other producing nation. Let Tesco invite some of their suppliers to provide a glimpse of that offering: light floral aromatic whites, gentle perfumed reds: Australua has it. It’s one big bit of land but it’s not one homogenous landmass – anything but.

    The challenge should be taken forward to open the opportunity to Tesco customers to try a new taste of Australia.
    This autumn will see a major consumer campaign driven by Tourism Australia highlighting the gourmet lifestyle of Restauant Australia. Tesco could be in the vanguard pulling that through in the wine aisles.
    -Yvonne May, Regional Directo, Wine Australia UK-Ireland-Europe

  8. It’s far too easy to lay this kind of criticism at the foot of the bigger wine companies. And really not very fair. First, there’s the question of whether variety – applauded by wine writers and other opinion formers – is really as desirable among consumers as they, the opinion formers, believe it to be. There’s a reason why most cars look the same nowadays why most men wear fairly similar shirts, ties and suits, and most hotel rooms are fairly interchangeable. Let’s face it, the experience of shopping in most supermarkets is pretty similar, too, despite what the retailers may claim. And consumers understand this, which is why they are notoriously ready to switch between them, just as they switch between wine brands. If customers were more loyal to brands like Tesco, maybe those brands wouldn’t have to make so much use of discounted wine as a “footfall builder”.

    But it’s also a little rich to hear a UK supermarketer, of all people, talking about the readiness of consumers to transfer between wine brands when it is is the bread and butter of every multiple grocer to induce them to do precisely that – through the inducement of deep discounting. How many brands in any sector can stand competition from similar products being offered at half price?

    Second, it’s unfair to say that Australian wines are homogenous. I’d say they’re actually a lot less homogenous than they were when Australian sales were at their peak: just look at the range of Chardonnays ad Shirazes that are out there right now. But… it’s unfashionable to say it but as I’ve indicated above, consumers actually liked the predictability of oaky Aussie Chardonnay in much the way that they now like the predictability of Chilean Merlot, NZ Sauvignon and Pinot Gris from just about anywhere. And there are entirely new styles. McGuigan has introduced its Semillon Blanc and JC has its Tempranillo, for example, but I don’t see either of these eclipsing Chardonnay or PG or Shiraz any time soon.

    It is also strange to hear a big UK retailer blaming producers for “chasing listings”. Now that a handful of multiples sell over 80% of the wine people drink at home, where else are they going to sell any volume?

    And finally, there’s the little matter of brand building. Spirits and beers are also pretty interchangeable but they benefit from marketing budgets of which wine brands can only dream. If a smaller proportion of their cash went into “supporting” the retailers, wine companies might find it easier to tell consumers “what makes their brand unique”.

  9. Glugger says:

    “They are all sitting in a very similar price, variety, style and quality area.”

    Eh? Sorry, Tesco, but aren’t you rather taking the Pinot Grigio. You want non-homogenisation? Then stop your pile-it-high-sell-it-cheap strategy (sorry, I mean buy shedloads, price it at £9.99 for 6 weeks in 3 stores before flogging it at £4.99 nationwide with the discount funded from a producer-supplied slush fund accrued by the inevitably related cutting of corners in wine production).
    Each and every one of your Australian suppliers, with the possible exception of Yellowtail, has amazing diversity in what is produced just a little further up the (real) price scale. Is it perhaps you who are stifling exploration by your customers who are more and more willing to trade up just a little if only you’d stop obfuscating the issue with your false discounting? Given your position in the market, think what you could do for diversification in the wider market if only you had the real desire.

  10. Wombles says:

    Kind of funny this comment coming from Tesco. But I guess the previously posted comments here already said everything that is to be said regarding the statement.

    This said, it always pains me to see, how “cheap” wine in general is, if compared to all the effort, climate risk and capital cost involved in its’ production. Really makes me sad to see at which prices you can sell Vodka for example, which is dirt cheap production with zero risk from plantings etc., while wine gets a relatively low margin on top of its agricultural cost. An industry that gives jobs to thousands of people in rural areas, uses lots of unfertile land not apt for other crops, takes big capital risks, gets strangled on price by the big retail bullies and then gets critizised by the very same ones for not producing innovative styles…
    Cute.
    Anyway, let’s keep in mind that those consumers, who really are interested in wine beyond the “Australian Shiraz” 3 for 2 promo, do not depend on Tesco to find those wines. Those wines are out there and available. But let’s face it, most will never know or care for a Australian Vermentino or GSM. And if there was a more massive demand for those wines, they’d be on the Tesco shelves all over. Mind you, at promo price of course and all mainstreamed style to hit the price point.

  11. Aaron says:

    Tesco, like Woolworths and Coles, are the true drivers of this homogenisation. They pay bottom dollar, often below cost, and demand sales volume in order to stay listed. Companies have to make a wine that sells for a low low price.
    Boooo Tesco!

  12. Daniel Lambert says:

    Not very clever comments from a retailer with an equally dumb range. But hey that’s alright, it’s cheap branded wine and the consumer will never work it out. Wrong Tesco!! Look at your results from yesterday. Slowing the penny is dropping that that you have been ripping off suppliers but more importantly your customers for years. Good luck with your homogenisation…..

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