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CHAMPAGNE: UK RETAIL: Own-label conscious?

In these testing economic times, does own-label Champagne still have a stigma attached to it, asks Alexis Hercules

It is wet and getting darker, a sure sign that the festive season will soon be upon us. However, if we are to take Christmas dinner invitations as our cue, we can safely say that for some it is already here. Among these forward planners are the UK’s leading multiples, who take the first leaf drop as a sign to start the promotions for the annual winter rush on beers, wines and spirits.

Champagne is obviously a massive part of this, as the sounds of corks popping are as essential to New Year’s Eve as a warbled rendition of Auld Lang Syne. Yet in these testing economic times, will people still be able to splash out a little extra on a Grande Marque, or will they have to opt for the cheaper option of a supermarket’s own-label brand? With the gloomy economy in mind, Sainsbury’s has launched an advertising campaign in the Christmas run-up, to promote the 15,000 own-brand products on its shelves with the slogan “Switch and Save”. Many feel this move is due to the success of budget outlet Aldi, which has seen its sales in the UK grow by 20% in the past three months, according to Branding Strategy Insider.

Champagne is synonymous with prestige and celebration, and this fact begs the question – are people still too aware of the potential social implications tied up with buying a bottle of own-label Champagne? The reason for purchase has a massive bearing on this, as the consumer’s mindset is very different when buying for personal consumption, to take to a party, or as a gift.

Last year Woolworths pulled off something of a cynical marketing ploy, by releasing a bottle of own-label Champagne at a ridiculously low £5. Though obviously separate from the big multiples who try to put a lot of time and effort into the sourcing of their product, it must be said that it did little for positive consumer perceptions of own label Champagne.

Yet this idea has been offset and largely banished in recent times by two factors. One is the need for cheaper products, meaning consumers are more open to trying less prestigious names. The other is the fact that less prestige does not necessarily mean less quality. Indeed, perhaps the first question should be amended, as it may no longer be a case of ‘can people afford to’ splash out a little extra, and could now be ‘do they even have to?’


ACORN categories: Comfortably off, Hard pressed, Moderate means, Urban prosperity, Wealthy achievers  

> The two highest index Champagne shoppers are Urban prosperity and Wealthy achievers.
> Both are “buying own label and branded to equal degrees”, according to Sainsbury’s senior wine buyer Melissa Draycott.

> The 18-24, 25-34 and 35-44 groups all over index on branded Champagne, compared to own-label.
> The 45-54, 55-64, 65-74 and 75 plus, all over index on own-label.
“This is probably what you’d expect,” says Draycott, “but it’s interesting that it does follow through.”

> Slightly more men buy Champagne, with the split at 51-49%.
> Branded and own-label purchases are exactly the same across men and women.

ACORN is the leading geodemographic tool used to identify and understand the UK population

Affordable quality
“I think own label is undervalued for the quality,” says Sainsbury’s senior wine buyer Melissa Draycott. “Own label Champagne is an important category for us. We have a loyal customer base for it and we sell huge quantities of it.” Sainsbury’s Nectar Card data reveals that, in general, the same people are buying branded and own label.

“From my position as a Champagne buyer, and what we know already,” continues Draycott, “branded is more about gifting, and own label is more about consumption at home, and that goes for wine in general. A brand’s advertising and its image may well appeal to a younger group, whereas older customers are not as brand precious.”

Sainsbury’s has several own label varieties: blanc de noirs, an award winner and bestseller that also comes in a magnum, extra dry, which is also available in a half bottle, demi-sec and rosé. The prices range from £8.99 for the half bottle to £29.99 for the magnum.

“One of our very successful Champagnes is the Taste the Difference Vintage, which is £23.99.

“We won the International Wine Challenge (IWC) Gold Medal with that this year, and it received a lot of great national newspaper coverage, which really helped our own label premium end sales.”

This is a special blend only available at Sainsbury’s made by Duval-Leroy, and as well as performing well in the IWC, it was named the Which? best-buy Champagne in December 2006. While sales for own-label Champagne have been constant in general, the positive press received for this wine has seen its sales rise 50% from 2007 to 2008, with Sainsbury’s quick to impart the good news to their customers via in-store notices. The Which? blind tasting, performed by six independent judges, was remarkable for the fact that six of the top 10 Champagnes were supermarket own labels, with Somerfield, Tesco, Co-op and Waitrose also represented.

Sainsbury’s has been involved in own-label Champagne for over 25 years, and Draycott feels that “it is as good as it ever has been, sales wise and quality wise”. Despite the success and quality of own-label, Draycott believes the best policy is to offer the customer a mix. “It’s not just about own label, but that is a very important element to our customers. It’s about having a mix of the brands, rosés, non-vintage, vintage and different sized bottles.”

Tesco is also heavily involved in own label, and according to Kate Sarginson, Tesco’s BWS PR manager, they are responsible for over a third of all own label wines sold in the UK, and over a third of the Champagne sold in the off-trade market.

“Our own label Champagne is bought by a wide cross-section of our customers,” says Sarginson. “With Champagne prices steadily increasing in recent years, we have worked hard to ensure that price inflation doesn’t surge ahead of quality, thus enabling our own range to continue to offer the best possible value for money.” Sarginson adds that this has been re-affirmed by “strong displays across all wine competitions each year”.

Like Sainsbury’s, Tesco’s own-label Champagnes cover a wide range of styles, including blanc de blancs, blanc de noirs, demi-sec, rosé, vintage and a Tesco Finest Premier Cru. “Customers are starting to understand the category in more depth,” continues Sarginson, “and we are seeing the continuing popularity of rosé and the emergence of ultra brut.” The prices for Tesco’s own-label Champagnes range from £14.99 to £19.97, and the Finest Premier Cru NV is the biggest seller at £17.98.

“Our own-label wines across our whole wine range have been designed to offer our customers the best possible example of a style at that price point,” concludes Sarginson. “Own label allows customers to experiment with different styles and varieties of wine with the reassurance of the Tesco name.”

A mutual faith between the public and their retailer of choice is also an important factor for Waitrose. “Unsurprisingly, Champagne is bought for celebrations,” says Champagne buyer Dee Blackstock. “The fact that good quality Champagne doesn’t have to cost the earth and can be own brand is something Waitrose customers are well aware of.”

Continuing the own-label success from the 2006 Which? tasting, in December 2007 Waitrose Blanc de Blancs was awarded the maximum five stars in a test run by Decanter, outperforming bottles from traditional houses.

Waitrose also offers a variety of own label, with an NV brut at £15.99, a blanc de noirs for £16.99, the afore-mentioned blanc de blancs at £19.99, and a brut special reserve vintage, priced £24.99.

“Piper Heidsieck produces our own brand champagne,” continues Blackstock, “and we rely on good relationships with the Champagne houses to ensure our wine and Champagne is always of the highest quality.”


Terence Kenny, export manager, Pannier

“BOB is cyclical. When the Champagne markets are buoyant BOB becomes scarce as the brands need the bottles and the sur lattes market has high prices, so bottles are sold on the inside Champagne market. This gives the major brands a guarantee of stock. Many a fortune has been built on own label Champagne, Gaston Burtin (Marne & Champagne) being the prime example.

“BOB serves a few purposes. It lets houses and co-ops sell off wines in a semi-anonymous fashion; this is the economics. BOB can also serve a vanity purpose, and this market has gone to the growers. Having your name on a bottle of Champagne is akin to having your name as a perfume brand.

“The vanity factor is enormous, but if everyone got their way the shelves would be filled with BOB clutter, just like certain duty free shops that have hundreds of new fangled perfume brands.

“When people visit Pannier’s cellars they have more of an affinity for our brand, and BOB can never replicate this.”

According to Keith Isaac MW from Patriarche Wines, the comfort provided by a well-known and trusted retailer is often all the recommendation a general consumer needs. He believes that own-label Champagne is aimed at “any consumer for whom ‘Champagne’ is in itself the brand” and who is “not fussed by spending more for an international brand, perhaps because they don’t know any”. It is also for “those seeking value, and for whom ‘X Supermarket’ is sufficient brand reassurance”.

Patriarche Wines is the agent for Champagne de Castelnau, and also for the other brands made by the Coopérative Regionale des Vins de Champagne.

“Own label is strong in the market, and has been for some time,” continues Isaac. “The battleground is for cheapest on-shelf Champagne, which is nearly always a tertiary label. More work and hence cost goes into producing and maintaining own-label lines and the only mechanic that drives market share is price, either real or imagined. In other words, the mark-down.”

The multiples were unwilling to release any details of their upcoming Christmas promotions, but as Isaac says “the usual practice often involves high-profile markdowns.” Draycott confirms that Sainsbury’s always has Champagne on promotion “to different degrees”, and that it tends to be “the bestsellers”. Meanwhile, Tesco will be offering up to 50% off selected wines and Champagnes as part of its Wine Festival 2008 campaign.

Although Draycott cites Duval-Leroy with regard to the Taste the Difference Vintage (but specifically not any of the others), and Blackstock names Piper Heidsieck, the multiples in general are keeping their cards close to their chest when it comes to revealing who makes their Champagne. The houses are also quite reticent, preferring instead to concentrate on their own brands. “The own label Champagne market does not form a principal platform of our commercial nor marketing strategy,” says Kattrin Thauer, marketing and communication manager for Champagne Nicolas Feuillatte. “We prefer to concentrate our efforts on our own brands, Champagne Nicolas Feuillatte and Palmes d’Or Champagne.”

However, own-label actually forms a significant part of the entire Champagne category, with 16% of the value, according to Nielsen. Champagne as a category has a total net retail price of £330 million, and own-label constitutes £53m of this.

Even so, Vranken-Pommery Monopole is also quick to dismiss the notion of any own-label links. “For VPM, the focus is on its two Grandes Marques,” says Colin Cameron, marketing manager at Percy Fox, the UK agents for VPM. “Pommery, in premium on-trade and fine dining, and Heidsieck & Co Monopole, in the mainstream off- and on-trade, are the absolute priority.” VPM does not supply any own-label businesses, and “the focus is always on the brands and the houses in the portfolio”, rather than supplying own label, which “doesn’t build brands”, according to Cameron.

However, he does acknowledge that own-label serves a useful purpose, and that it is obviously important to retailers who “want to provide an entry-level Champagne to their customers at a low price point.” This means that own-label also plays an important role in the total Champagne category, as it offers a wider choice to consumers. Once more at ease with the category, people may acquire the confidence to branch out into branded products. Cameron states: “VPM provides Champagnes that consumers can trade up into, away from own-label.”

Champagne Blin is involved in own-label, though it is not particularly positive about it. “In general we are not that keen,” says Champagne Blin’s UK agent Julian Baker. “It doesn’t really do anything for our reputation, and the margins are low. We do a bit of own-label and have done for years, but we do not do a lot as it’s simply not the most viable part of our business.” One of Baker’s major concerns is the fact that own-label spreads somebody else’s name, while “there is no advertising carried for us”.

Despite this, Terence Kenny, export manager for Pannier, believes own label Champagne’s connections with major supermarket chains can be a win-win situation. “Certainly the chains require good quality, and the quality co-ops or houses guarantee this with their ISO and BRC certificates,” he says. “There is really nothing wrong with this. A fair price is paid and everyone gets on with their business.”

With own label Champagnes competing on a par with, and even defeating some of the world renowned Grandes Marques in blind tastings, perhaps the time has come for a reassessment of their value. Consumers new to the category, who are worried about spending a lot of money on something they know little about, can use own-label as a stepping stone into the world of branded Champagnes.

With Christmas coming at a time when the pennies need to be pinched more than usual, the cheaper option of an own-label Champagne provides a welcome relief for those who want to celebrate in style, without being forced to compromise on quality. The prestigious Grandes Marques will always have their place, but thanks to the improved quality of own-label across the top UK multiples, backed up by strong performances in blind tastings, arriving at a party with one under your arm need not be a cause for any consternation. 


Can we expect more footfall-driving deep discounting from UK retailers this year?

Lynn Murray, marketing controller, Hatch Mansfield

“This is clearly an important tactic for UK retailers for wine and Champagne. Indications are that this will certainly continue this year and into next – sadly I don’t see there being any stepping back from this. However, with the impact of the euro, combined with increased costs from producers and the supply chain we are beginning to see some edging up of the ‘net’ offer to the consumer on Champagne. Certainly some of the ‘customer exclusive brands’ have crept up over time – the amount discounted is still strong but the final price the consumer is paying is going up slowly.”

Julian Baker, Julian Baker Fine Wines (agent for Champagne Blin)

“The reality is that no one wants to [carry out deep discounting] but anyone with a big marketing budget, such as the Grandes Marques, will probably do so if they see sales declining. At Champagne Blin, we feel that we give good value, which gives our customers a competitive edge. Instead of discounting, we prefer to persuade our customers that they are already getting a good price. Some houses may be forced to devalue their product and empty their cellars but it will only be a minority. I don’t think Champagne should be treated this way as it cheapens the image and makes no sense when you have worked hard to create a premium product.”

James Samson, Champagne Louis Roederer

“There is a certain inevitability that some retailers will use headline-busting discounts on Champagne to attract shoppers. This will be led by the usual suspects and then the others will follow suit. Once again this will contribute nothing to the longer term aims of the Champenois and their representatives over here to build the values of the category and the reputations of the houses involved. At Roederer, we are in the fortunate position that we work closely with our customers and they accept that we work to a pretty tight allocation which precludes any corrosive pricing activity.” 


  db © October 2008

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