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What The Market Says
The Good Taste of UK Consumers
Tuesday, 16th August, 2011  - David Farmer

The English love their tabloid press which debunks the grand and ridiculous in a fairly entertaining way. Perhaps this has rubbed off on supermarket shoppers who take a very down to earth approach when buying wine by refusing to budge from anything but the wine specials. They are viewed by the wine press, retailers, and wholesalers as the most promotion driven wine buyers in the world. The supermarket chains try all sorts of approaches to steer the buying to higher margin bottles but the shoppers have proved adept at resisting temptation. They seem well trained in the art of shopping.

Over the last few decades the supermarket chains in the UK have come to dominate the sale of wine at the expense of the specialist high street stores which simply could not keep up with the buying and selling pressures of these chains. Now they have captured the customers they do what retailers do which is try to make each sale more profitable.

Here are some comments I have collected over the last year which illustrate the approach. The underlinings are mine:

From Christine Boggis, Off Licence News, 4th April, 2011 we learn about new moves at Tesco (U.K's Largest chain);

"Tesco has reshuffled its wine team so that buyers are focusing on product types rather than countries of origin... in the following teams: own-label and UK-packaged wines; brands and exclusive brands; and Finest and fine wines.

"Wine category manager Claire Lorains said: "Changing focus away from country and towards product type will enable us to continue our industry-leading work of providing value at every price point. The team has a huge amount of experience and expertise in both wine and retailing, and this refined structure will ensure we always have the broadest and strongest offer for our customers."

"BWS category director Dan Jago said: "Claire has the best buying team in the business and this change to the way we buy continues our reputation for being both industry leading and totally customer focused."

Meanwhile over at rival Sainsburys (U.K's. 3rd largest chain), Gemma McKenna reports in Harpers, 10th September, 2010;

"...drinks chief Justin James said its radical in-store layout changes, grouping wines by style and customer appeal, was "gaining momentum". The changes....segment customers into novice, established, competent and confident consumers...

"He said the new layout also simplified wine for purchasers: "We have a category that baffles consumers and, left the way it is, leads consumers to make their decisions on price and promotions alone."

"James said the new layout points to a bigger own-label range, case deals and new arrivals alongside the core range. He added that driving consumers into the wine aisles, rather than having them pick up promotional bottles throughout the store, has resulted in an increase in non-promotional sales.

"James said he was particularly pleased with the performance of its House range which, aside from attracting novice consumers, was also proving popular with its most-confident purchasers."

Morrisons (U.K. 4th largest chain) are also making changes and this is what The Scotsman, Brian Elliot, 27th February, 2011 reports:

"When the next phase of Morrisons' revised wine strategy begins tomorrow, the focus switches from products to the customers themselves.

"The story began, however, two or three years ago when several new faces, including wine trading manager Arabella Woodrow, joined the buying team and began a detailed analysis of customer feedback. It was clear that purchasers valued expertise.... If wine buyers could assemble a range that navigated the maze for them then, amazingly, 85 per cent said they were prepared to pay up to £7 a bottle, when the national average is around a fiver.

"Although the supermarket chain had previously feared own-label wines created a downmarket perception, here were shoppers who regarded the company's signature as an important sign of its confidence in the product....

"The result was a range of 54 wines that absorbed some existing lines but introduced a number of new ones and used a colour-coded band to signal the three classic marketing layers – premium (gold), standard (black) and value (white). Although the focus can be expected to shift away from discounting towards own-label wines, they will never totally supplant it. The gravitational pull of "half price" offers remains strong for the numerous grab-and-go shoppers."

When you are dealing with very big numbers as these giants are it does not take much to move the profit gauge needle just a little. So let me interpret for you what these supermarkets are up to. They are attempting to get the wine buyer to trade up so they make more money per bottle and if that is not possible they want you to buy brands they own on which they make more money per bottle.

Fortunately the customer is also well trained in the art of not being manipulated so it is an enthralling battle. Scanning the tabloids may be just the training needed to keep alert as being constantly reminded of the foibles of the rich and famous is a great way to approach buying wine. It would seem the English supermarket wine buyer shows a great deal of common sense and for most customers it is much safer down market.

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