Multiples urge trade to stress price and value

Published: 03 October, 2008

By Shirley Webb and Richard Siddle

Retailers are urging suppliers not to promote premiumisation in the current economic climate.

By Shirley Webb and Richard Siddle

Retailers are urging suppliers not to promote premiumisation in the current economic climate.

Supermarket category managers are reportedly "fed up" with the trade's continued use of the term premiumisation.

The big four multiples are instead focusing their consumer campaigns on "value for money" in a bid to compete with discounters Aldi, Netto and Lidl.

Tesco has gone a step further by launching a new advertising campaign with the tag line "Britain's biggest discounter".

The move follows Tesco research that showed prices now featured higher on shoppers list of concerns today than 20 years ago.

However, many in the industry - including distributors, agencies, Pernod Ricard, Constellation and Diageo - have been pushing the premiumisation message, arguing they are providing "added value" to consumers.

But Matthew Dickinson, commercial director at Thierry's, said: "Retailers are saying, 'Don't talk to us about premiumisation, per se. Give us a solution that gives consumers more confidence in the wines they are buying...and then go on and deliver that.'"

Constellation president of UK and Europe, Troy Christensen, is one who is adamant the premium approach is still the right way to go. The group is believed to have turned away promotions as part of its strategy not to deep-discount.

John Mills, managing director of Constellation's Gaymer Cider Company, added: "We are concerned about Christmas. It'll be interesting to see what happens."

A leading supplier, who did not wish to be named, said: "How is the industry supposed to defend itself against government legislation if we entertain discounting? If retailers want to discount our brands they will have to do so out of their own pockets."

Garreth Anderson, managing director of DGB Europe, said: "Retailers are using their margin to run three for £10 deals. We cannot see how that can be sustainable once next year's duty rises are factored in."

A leading retailer told Harpers: "It is hard for us to highlight we are discounting alcohol due to the responsibility message. But we need to show consumers that we offer the best price. We are damned if we do and damned if we don't."