IS 5.49 THE NEW 4.99 ?

Published: 23 July, 2008

By Jack Hibberd

The 5.49 or even the 5.99 price point may become the main battleground for the big sub-5 brands, according to wine consultant and former Sainsbury's wine supremo Allan Cheesman. Over the years I've seen the major price points rise from 1.99 to 2.99 and so on. I don't see the insistence some people are putting on the 4.99 price point,' he told Harpers at the recent Sainsbury's Spring Wine Tasting. When you consider the duty increase of 4p - which is really 6p when you add VAT - and the strengthening euro and rand, which have been catastrophic for margins, then the 4.99 price point is unsustainable for most wines,' he added. Although many wines at the tasting were listed at the previously unthinkable price of 5.03, Cheesman said that this was a temporary blip: Most of those wines will move back down or go up to 5.29 or 5.49.' Stressing that he was giving a personal view, rather than that of Sainsbury's, Cheesman also said it was wrong for either producers or retailers to try to absorb the recent duty hike. The duty increase is a tax on the consumer; it is not a tax on the retailer or the producer. There's so many pressures on the trade, even things like rising freight costs, that it has to be the consumer who pays,' he said. Other retailers, including Safeway, Somerfield and numerous independents, have also raised their prices recently, along with a number of suppliers, such as Western Wines. Kumala, Western's flagship South African wine and one of the fastest growing brands in the AC Nielsen top ten, recently increased its price from 3.99 to 4.49 for its white blends and from 4.49 to 4.99 for the reds. Among changes to the Sainsbury's range unveiled at the tasting were a number of new wines from the Loire, where the vintage, according to the buyers, had a lip-smacking, refreshing quality'. Spain saw a move away from Rioja, as recent price rises have made it essential to offer alternatives from other DOs'. Galicia, Utiel Requena and Jumilla are among the smaller regions which have benefited from the new focus.

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