Majestic claims Brexit has boosted Eastern European wine sales

Majestic has seen sales of Eastern European wine rise 400% since last year, which it claims comes as consumers look for better value in response to Brexit-related price hikes.

The retailer has reported a significant year on year increase in sales of wine from Romania, Bulgaria, Hungary and Slovenia year in the 12 months to April, which it attributed to Brits looking to avoid price hikes of traditional favourites.

The retailer has increased its Eastern European wine range in recent year off a relatively low base, it added, and it had seen a “steady rise” in sales from these categories over the last two years on the back of the wider offer.

“Its ability to deliver quality at low price points has been key to this,” a spokesman said, pointing out that two of the10 wines in its new Majestic Loves range came Eastern Europe. “We now use wines like our Krasno Sauvignon Blanc as a promotional highlight for our customers.”

Wine buyer James Reed said the biggest stumbling block for Eastern Europe and Portugal used to be one of perception, but the quality at different price points has “really impressed.  

According to the retailer, Eastern Europe has been greatly increasing the quality of its wines through internal and external investment and there was a growing level of expertise. “[But] it’s still a part of the world where costs are relatively low – so the pound buys you greater quality at certain price points compared to other areas. There’s also just more wine being exported from these areas with commercially viable styles and grapes.”

The wine specialist highlighted best-sellers Krasno Slovenian Sauvignon Blanc (RRP: £7.99 in a mixed case, or £8.99 per single bottle), Incanta, a “cheap” Pinot Noir from Romania (RRP: £6.49 mix six or £7.99 per single bottle), and its new Romanian Pinot Grigio in the Majestic Loves range (RRP: £5.99).

The wine specialist has also seen rising sales of its Portuguese Porta 6 (RRP: £7.99 in a mixed case, or £8.99 per single bottle), a blend of indigenous varieties Tinta Roriz, Castelão, and Touriga Nacional from Alenquer and Cadaval, which had become an unlikely best-selling wine.

Majestic’s buying and merchandising director’s Richard Weaver said that this would have seemed an unexpected several years ago, but that the economics post-2016 had “changed people’s willingness to test their taste buds beyond our traditional markets.”

Increased promotional activity

Richard Weaver, buying & merchandising director at Majestic [picture credit: Lowres]Speaking to db during an exclusive store visit in early July, Weaver told db that it was too early to tell whether Brexit had affected consumers buying patterns.

“I’m not saying there won’t be a big chance in consumer behaviour, but it’s too early too call – any shifts we’ve seen in buying pattern might be to do with our promotions. [So it is] too early to call what’s still a small adjustment made in the market,” he said at the time.

He added that the current market was being driven by consumer demand and retailers had to be clever in how they responded to and delivered this.

“We have to bear in mind that consumers have budgets – if prices are going up, [it is] best we check range matches those patterns of demand.” he said. “Our approach – and so far our customers too – is to be more experimental and canny in seeking out value. And there are still parts of the world that over-deliver in terms of quality and value and over time, those are the trends we will see.”

Part of this response has been to focus on boosting own-label wines as well as more imaginative sourcing.

Brexit effect on the market

According to Majestic, the market had behaved “as expected” in the wake of the Brexit vote last year, with the impact of prices only starting to come into affect at the start of 2017.

“All major retail business hedge for currently in advance so in May-June last year, everyone had provided for the rest of that year and through to Christmas,” Weaver told db last month. “We expected input cost increases to be reflected in sales prices in January, and it’s pretty much what we saw. We monitor our competitor prices and we saw a step change of between 4-6% which was very consistent across all retailers.”

He added that while the increase was unavoidable because of the impact of currency that affects the cost of buying, prices had not gone up as much as the 15% currency rise.

“This is an effect of the pound, so it impacts global market and is reasonably consistent whether you are buying in dollars, Aussie dollars, the Rand or euros. What that means is we’re not seeing European wines shooing up and other New world wines coming down, it is not a rebalancing of currency within the wine market.”

“From talking to suppliers the whole trade is still trying to adjust, this is an effect of the pound, so the impact is global and reasonably consistent whether you are buying in dollars, Aussie dollars, the Rand or euros. What that means is we’re not seeing European wines shooting up and other New world wines coming down, it is not a rebalancing of currency within the wine market.”

Last month the WSTA’s Q2 market report revealed that the average price of a bottle of wine had increased by 3% in the last year, going from £5.37 in the 12 weeks to 2016, to £5.55 in the same period this year.