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Fizz fights

It's in the under-10 territory where much of the action is expected to be focused; and perhaps surprisingly, although it has run far more aggressive price promotions over the past couple of years, Waitrose joined Morrisons with a month-long deal (31 October-27 November) on its own very decently made fizz produced by P&C Heidsieck, which it has cut by 5 to 9.99. Since these offers opened, most of the major retailers have already slipped into the 9.99-a-bottle territory or below, and it is, at the time of writing, still only mid-November.

Perhaps fuelled by the fear that Sainsbury's, third placed in the supermarket league, really is closing the gap in trading profits under Asda's former boss Justin King, Asda seems to have temporarily forgotten its ELP policy when it comes to Champagne. And after a couple of years of quite reasonably deriding Tesco and Sainsbury's so-called half-price Champagne deals - typically involving a pseudo brand no one has ever heard of being traded for about a day in two stores at a full price of 19.98, prior to trumpeting the great reduction to 9.99 (usually still far too much for what's in the bottle) - Asda appears to be taking the same route.

From 14 November it slashed the price of its new Champagne line Hubert Laurent, supplied by the Alliance cooperative, from 19.98 to 9.98. This fizz wasn't on the supermarket's September price list, and I'd hazard a guess it wasn't on the shelves either, and although the mathematicians among you will be able to work out it's not actually the half-price deal advertised, in all other respects it follows the Sainsbury's and Tesco model. Although I haven't yet tasted it, I'd be pleasantly surprised to find a wine worthy of the name Champagne.

The e-mail that showed details of the Hubert Laurent deal also carried the news that Mot's category leading brand Brut Imprial was being further reduced from 16.98 to 12.98 over the same period (14 Nov '05-8 Jan '06), while Veuve Monnier, shown on the September list at 16.98, was being cut from 7.98 to 5.98, also for eight weeks. While it looked for a moment like the price war had really kicked off with a vengeance, these offers seemed a little far-fetched. When I checked, Mot had actually been reduced in price by just 3, to 19.98 - most other supermarkets are up around 23, and Thresher wants 27.99 for a single bottle (of which more later) - probably not the cheapest deal we will see on Brut Imprial this side of New Year's Day.

It will be interesting to see if Tesco and Sainsbury's simply follow Asda's lead with their own BOB labels specifically designed with the half-price promotional deal in mind, respectively Andr Carpentier and Etienne Dumont. No doubt the extra stocks are already sitting in a UK warehouse, and how far the shelf price drops will depend partly on customers' enthusiasm for such cheap Champagne. If all else fails and consumers don't buy enough now, they can always be sold off in a pumped-up Valentine's Day deal.

BOB'ing and weaving

This price-cutting activity comes a time when Champagne sales in the UK off-trade are ahead by 4.6% in terms of volume

and 6.5% in value, in the 12 months to 1 October 2005 (AC Nielsen MAT, total GB offs) - on the face of it, still a pretty strong performance. There is, however, evidence that this growth has been driven by price promotion throughout the year and the soft brands like the couple made by Champagne's two biggest cooperative groups: Nicolas Feuillatte and Jacquart.

Over the past few years, the Nicolas Feuillatte, produced by the Chouilly cooperative, has achieved a phenomenal growth rate, and this shows no signs of slowing, with volume up 19% and value ahead an impressive 27% (AC Nielsen MAT to 1 Oct '05). Only Laurent Perrier, Lanson, Veuve Clicquot and Mot are above Feuillatte in terms of off-trade brand value share, according to Nielsen. Now that it is officially distributed by PLB, rather than by Patriarche, Jacquart has also started competing in this price-led arena; and because Tesco in particular has repeatedly slashed its price, it too has seen sales soar, albeit from a much lower base.

Asked to explain the logic of the heavy price promotions on Jacquart over the summer months, Laurent Gillet - president of Union Auboise, one of the three cooperatives making the Jacquart brand, which is marketed under the Alliance umbrella - admitted to being surprised at Tesco's aggressive pricing. While the store lists Jacquart's Brut Tradition at 19.99, prices have been as low as 11.98 a bottle on the company's website.

Gillet says that Jacquart MD Jean Marc Pottiez convinced [the management board of Jacquart] that an aggressive marketing policy was necessary because retailers [like Tesco] were getting rid of some lines, and we didn't want to be a casualty of the cuts'. Gillet further explains that the cooperatives in the Alliance group - COVAMA based at Chteau Thierry, COGEVI based in A and the Union Auboise, which he heads - between them produce several million bottles of BOBs, and they are looking to decrease this (rather than reduce their long-term contracts supplying the ngociants) and increase sales of Jacquart, hopefully at a higher price point.

Jacquart's new aggressive stance brings it much more directly into competition with Nicolas Feuillatte, which of course used to be run, when it was a smaller player than it is today, by the same Jean Marc Pottiez. Part of the deal in getting listings for Jacquart is to supply the likes of Tesco and Asda with the BOB lines on which they can slash prices. Since Jacquart has supplied Asda with the Hubert Laurent fizz to run just such a half-price deal, it will be interesting to see if it can pinch any of Nicolas Feuillatte's business, making most of Asda's own-label champagne.

Change in the off-trade

If the depth of Tesco's price cutting tells us anything about the comparative strengths of the two co-ops' brands, on 15 November it was offering Nicolas Feuillatte NV Brut on

its website with a six-bottle price of 79.76 - a saving of 34.18, equivalent to a single-bottle price of just 13.30. So, it appears, as you'd expect given Feuillatte now sells more than seven million bottles a year worldwide, Jacquart has some ground to make up.

Veuve Clicquot and Taittinger are the only major brands, other than Feuillatte, that continue to do well in the total UK off-trade: volume and value are up 19% for Clicquot; while at Taittinger, value, up 18%, has grown faster than volume, ahead by 15% - just the sort of figure any prospective buyer of the company would want to see.

There has been one major change in the off-trade picture. At long last - and it appears partly as a result of Thresher's three-for-two deals - the grocers are not having it all their own way with Champagne sales. While the total UK off-trade market is up, as we have seen (4.6% in volume, 6.5% in value), Non-Vintage Champagne, which represents the bulk of the market, is up only 4% by value in the grocers but has jumped 11% over the same period in the multiple specialists. The star of the show here in terms of fizz brands is Veuve Clicquot, which has assumed Mot's mantle as sector leader with 21% growth year on year (MAT to 1 Oct '05). As a result, Clicquot's market share has risen from 13.8% to 15.6%, almost exactly mirroring Mot's decline from 15.5% to 13.8%.

If you were a deeply cynical person, you might think this has more to do with the fact that Nielsen now monitors Majestic's Champagne sales and Mot hasn't been stocked by Majestic for some considerable time (although, since May this year, it has listed magnums of NV Mot, albeit at the rather high price of 53.75). However, when Thresher's buyer James Griswood was asked if any particular big-name brand was doing well at the moment, he immediately mentioned Veuve Clicquot Yellow Label, followed by Taittinger.

Whether you put the specialists' improvement down to Thresher and Oddbins getting their act together or to Majestic's consistently impressive Champagne sales registering in the Nielsen stats, the three-for-two mechanism at Thresher has clearly had a significant effect. Thresher has also increased the number of Champagne brands it stocks: not very long ago, the only Vintage Champagne sold was Mot, now it has eight others in addition.

Thresher introduced three-for-two in December 2004, initially only on Champagne, not all wines, and as a direct result Griswood says they are outperforming the multiple-specialist sector, with value growth above 15%, year on year'. Given the high mark-ups on single bottles - Bollinger Special Cuve, for example, is priced at 37, compared to Tesco's 29.96 - I asked what percentage of Champagne sales are made at the discounted three-bottle price (it comes down to 24.66 for Bollinger).

In the case of wine, 80-85% of our customers are walking out of the store with three bottles,' says Griswood. For sparkling, however, it's a bit lower, varying from product to product and over different trading periods, because it's such a high bottle price.' But Thresher has discovered that the campaign is encouraging people to trade up from entry-point fizz to ros and Vintage styles'. Griswood adds, Customers have now had a year to get used to the deal, [so] hopefully this is where they will be doing their Christmas drink shopping.'

While the Champagne houses with the largest brands have all settled on the deals they want to run in the off-trade, they know there is little they can do to stop retailers slashing prices as they see fit. It's a case of gritting their teeth and waiting for the New Year. At least the price increases that have generally been pushed through will ensure the discounts have to be very steep to pull the major brands back under 15 a bottle. Unless, of course, that e-mail from Asda was a contingency plan, not a computer error.

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