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Quality drinks conference

Published:  23 July, 2008

Heavily discounted branded wines and high government taxation are putting the future quality of wine sold in the UK in peril according to Jon Moromarco, chief executive officer, Constellation Europe, who was speaking at a leading drinks conference in London last month (June).

Somerfield's decision to reduce the number of sub-4 wines it sells and, at the same time, increase the range of 5-7 wines and introduce The Collection premium wine range in selected stores seems to have paid dividends, according to wine trading manager Angela Mount.

The results have been that 4% more Somerfield customers are buying wine in its stores, she said, when previously some customers bought their food in Somerfield and then went elsewhere to buy their wine. On a year-on-year basis, Somerfield's wine sales have grown by 33% in volume and 38% in value terms in what has been a fairly static off-trade wine market.

The changes to the Somerfield range come on the back of consumer research in October 2004, which showed different consumer groups had different expectations, but they are all looking for value for money at any given price point'.

Consumers included the more-frequent purchaser or pleasure seeker' (who buys around 6.6 times a month) and who is looking for price promotions, such as 2.50 off the more premium wines, to enable them to trade up in quality. The would-be connoisseur' (buying 7.1 times a month) is less price-sensitive, more discerning when it came to wine, and more likely to spend 9 or more on a bottle of wine.

These consumer groups are among those shoppers targeted when Somerfield's Market Fresh store format was rolled out. Mount said both store managers and shoppers wanted more premium wines to be available. As a result, Somerfield relaunched its wine category in July 2005 by reducing the core range and increasing by 20% wines in the 5-7 price band, which now accounts for almost one-third of sales. These changes, said Mount, give the retailer an improved range, a clarity of range, and better communication on POS, promotional support and public relations activities.

Additionally, Somerfield introduced The Collection, a range of classic and eclectic wines' in the 8-20 price band in its top 100 stores, where the wines are merchandised together along with food and wine matching ideas for shoppers.

As a result of the changes, Sauvignon Blanc is flying', the under-trading in the New World has been readjusted, and there has been a resurgence' in sales of French red wine, said Mount.

Research among shoppers showed, said Mount, that demand is still strong for deep discounts' on the high price points, so shoppers expect to see 2 to 2.50 off 7 and 8 wines, and up to 5 off 10-plus wines. The hope is, she said, that once shoppers have tried more premium wines on promotion, then they might be tempted to buy them at full price.

But Mount said it is not just the wine category where shoppers are looking for bargains at all levels of quality.

The UK supermarket buyer is a promotional junkie regardless of the category,' she said.