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News special: 'Tis the season to be silly

Published:  23 July, 2008

We are just about to enter the last six weeks of trading before the New Year celebrations, the time when consumers' spend on booze, particularly categories like Champagne and sparkling wine, goes up dramatically. And what do the major retailers do at this time when demand for fizz is at its strongest? They make their biggest, most dramatic cuts in price, of course. It's the start of the silly season in wine retailing.

This will be the seventh Christmas in a row that Champagne prices have been slashed by the UK supermarkets - you may recall that this whole idea of using headline-grabbing deals on Champagne to entice customers away from competitors' stores was born by accident when Sainsbury's was left with huge unsold stocks post millennium and decided to clear its bulging warehouses by stacking it high and selling it cheap. It may not have been a considered strategy then, over Easter 2000, but when someone later looked at the grocer's increased share of the fizz market they saw the publicity opportunities of bragging about their contribution to UK Champagne sales.

Once marketeers added their spin about attracting additional customers of the type that spend more on other highly profitable luxury goods, there was even a justification for doing such deals again at or close to cost. But the nature of the discounting has changed subtly over the past two or three years. The policy of giving big single-bottle discounts on the three major volume brands in the UK market - Mot & Chandon, Veuve Clicquot and Lanson - appears to have ended, to the brand owners' relief. In its place, the grocers' strategy has been to introduce half-price' deals on pseudo brands.

In the latest Nielsen analysis of the UK off-trade, we now see in the Top 10' two such Champagnes, unknown outside Britain, that are sold exclusively by the two grocers with the biggest share of the Champagne market, namely Sainsbury's and Tesco.

Etienne Dumont and Andr Carpentier have become the fourth and ninth largest-selling brands in the UK off-trade, with their shares growing 117 and 61% respectively in the 12 months to 7 October 2006 (AC Nielsen MAT brand value share GB off-trade). In that period, Etienne Dumont's share of the UK off-trade grew from 2 to 4.3%, putting it just ahead of Bollinger, while Andr Carpentier's grew from 1.7 to 2.8%, keeping it slightly above the 10th-placed Piper Heidsieck.

At the start of November it looked like the biggest price deals in the supermarkets this year weren't going to reach previous lows, with offers under 10, even discounts to under 12, a scarcity. But by Bonfire Night all sorts of bottom-end deals had emerged and no doubt more will follow next month (watch this space).

So far in November, Tesco has cut the price of its own marque', Andr Carpentier, by 10 to 9.99 (9.49 if you buy six bottles or more) between 8 and 20 November, while Sainsbury's hasn't yet tampered with the price of Etienne Dumont.

You could interpret this in a number of ways. Either Sainsbury's plans to do it later, even nearer to Christmas, or perhaps, having already sold large volumes at 10.49 earlier in the year, they don't have sufficient stock to promote so heavily again. It's also distinctly possible that Sainsbury's has sensibly tired of the tit-for-tat price-cutting war with Tesco. It's certainly true that Boizel Chanoine Champagne (BCC) chief executive Bruno Paillard is known to be dead set against selling Champagne to UK supermarkets at too low a price, and Etienne Dumont is now produced at Maison Burtin, formerly known as Marne & Champagne when it was owned by the Mora family but now part of BCC.

For the moment, Sainsbury's biggest price cuts are only in evidence on its website, where Charles Joubert NV Brut is offered at half price', the cost of six bottles having apparently come down from 137.94 to 68.97, the equivalent of 11.49 each in a deal that will last until 31 December, according to the grocer. This wine, which is also from the BCC-owned Maison Burtin operation, perhaps hints at the lowest price Sainsbury's will drop to in its stores with any Champagne supplied by BCC. Also on the Sainsbury's website you can find GH Martel NV fizz cut from 21.84 a bottle to just 11.84 or 71.04 for a six-bottle case, a deal running until 21 November. Martel supplies Tesco with another potential discount weapon in the shape of Champagne Boutet, but this is presently priced at 15.19.

The deal that's arguably Tesco's current best is also website-based and involves six-bottle cases of Perrier Jout Grand Brut NV selling at 100, equivalent to 16.67 a bottle, in an offer that runs until 1 January 2007. For consumers who move quickly this was further reduced for

24 hours on 8 November to 90, equivalent to 15 a bottle.

Although this is a very reasonable price for an improved and reasonably well-known marque - Oddbins six-bottle price for PJ is 114.95 or 19.16

a bottle, while Thresher's is 29.99 (single bottle) or 19.99 (three-bottle price) and Majestic's 25.99 (single bottle) or 19.49 (two-bottle price) - there are still better offers around. One of the best to date is at the Co-op, where between 13 November and 3 December, the much-improved Piper Heidsieck Brut NV is down 7.33 to 14.66. This is better than Tesco's reduction on the same brand (11 October-7 November), under which the six-bottle price fell to 17.08, or Sainsbury's (15 November-5 December) where it falls to 16.14 - unless of course they react when they see the Co-op's latest deal.

Reacting to deals in the marketplace used to be very much the name of the game, and it says a lot about its more competitive attitude to wine trading generally that Marks & Spencer moved to significantly increase the saving on its Louis Chaurey Brut NV, supplied by Oudinot, now part of the Laurent Perrier group. This was, like the entire M&S Champagne range, which was due to be reduced 5 in price from 30 October to 31 December. But on day one of the promotion it was down 10, boasting a far leaner 9.99 price tag.

Exactly as we predicted in last week's issue of Harpers (10 November, News), Morrisons has also unwrapped a half-price' deal on relatively new listing Charles de Villers Brut NV, a Champagne previously sitting on the shelf at 23.99, the same level as NV market leader Mot & Chandon Brut Imprial. This will run between 13 November and 7 January 2007.

The surprise non-participant in this year's price-cutting campaign is Asda, which has, over the past five years or so, triggered some of the most dramatic deals by slashing its own prices on big-name brands like Mot and Lanson. While we all know about Asda's EDLP (everyday low price) policy, the grocer did a U-turn last year when introducing its own so-called half-priced deal' after years of criticising Tesco and Sainsbury's attachment to this strategy. At present, however, Asda doesn't even offer the pretty standard extra 5% off sales of six bottles or more that all the big grocers bar the Co-op and Morrisons give.

While at the grocers, websites apart, the best deals nearly all involve low single-bottle prices in a widespread acceptance that shoppers don't want to lug too many heavy bottles of fizz along with their groceries, it's a different picture among the multiple off-licence chains. Their strategies differ - although not as much as some of their prices - but broadly they are looking for consumers to buy three or more bottles, or in the case of Oddbins six or more. If you only buy one bottle of Champagne at Oddbins, Thresher or Majestic (you have to buy 11 bottles of something else in the case of Majestic or course), you are paying above the market rate for the wine, sometimes way above the market rate. The best, or perhaps I should say worst, example of this is Thresher's single-bottle price for Laurent Perrier Ros, which is at a new high of 54.99.

Some of the very best deals on Champagne this Christmas are offered by Waitrose and involve both their well-sourced own-label range and two of the highest-quality brands in the market in the shape of Duval-Leroy Fleur de Champagne Premier Cru (down 7 to 13.99) and Charles Heidsieck Reserve Brut (Mis en Cave 2001), down 5 to 20.99, 19.94 for six bottles or more.

Waitrose sales of Champagne have apparently risen by more than 20% year on year in a market that's broadly static, so perhaps the idea of stocking Champagne that is worth its full shelf price and occasionally selling it a reduced price to give your customers a great deal is a good one.