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Collapse of entry level wines pushes Côtes du Rhône upmarket

Published:  30 March, 2010

Following a near 75% collapse in sales of its entry levels wines to the UK in 2009 Inter Rhône is looking to build on a healthy increase in its plus-£4 wines and move consumers to its more premium lines.

Whilst sales of wines below £3.50 dropped by 73% last year, Côtes du Rhône wines enjoyed a 14% increase in wines above £4 with even stronger performances at higher price points, according to Inter Rhone figures supplied by IRI.

Inter Rhône claimed 71% of its wine sales in the UK were now over £4, compared to 42% in 2007. In addition 42% are above £8 a bottle compared to 32% of sales in 2008. Inter Rhône conceded that price points have been pushed up by increases in cost of entry and duty hikes, but believed it was also succeeding in building more loyalty with consumers thanks to its advertising and promotional work. Encouragingly 35% of its sales are now above £10 a bottle, which is higher than the Bordeaux category.

But Bordeaux still leads the way in the pivotal £6-£10 category and Inter Rhône hopes to make inroads into that in the coming year.

The Côtes du Rhône category is not performing as badly as the overall French market, with a 13% decline in overall volume sales, compared to a 16% drop in French wine. By value Côtes du Rhône saw a 5% decline against an 8% overall drop in value of French wines.

Inter Rhône said the UK was still an important market but it would be more in terms of value rather than volume in the near future. There are signs the market is beginning to stabilise with a 2.6% decrease in volume for the last six months of the year compared to a 18% fall in the first half of the year.

The dire performance of its entry level wines was put down to the economic conditions and the strength of the euro. It resulted in 4.7million less bottles of wine below £3.99 being sold in the UK. But that was partly off set by a near two million increase in bottles of wines over £4.

Inter Rhône said it planned to back Côtes du Rhône wines by £1.45 million in 2010, down from £1.5 million in 2009 of which 30% will be spend on retailer promotions and activity in all sectors. It is keen to push more non-price promotions and work around point of sale and running in-store competitions, gifting initiatives and bespoke bottle tags.

It is also to spend around £600,000 on above the line advertising with around two thirds going into print and a third on posters. It is also investing around £50,000 on the new Double Header rugby event at Twickenham in September with a potential link up with the Evening Standard.