14 May, 2010

Could this be the end of three-for-£10? Although it canít lay claim to entirely inventing the wine-retailing wheel, Asda certainly got the ball rolling when it came to multibuy pricing around the magic denominator of 10. A dubious accolade, some might argue, but with three-for-£10 pricing on wines, the retailer hit upon the silver bullet to gain the confidence of a large chunk of its shoppers who werenít going up the wine aisle and needed some pointers.

For many, it was far too blunt an instrument, but consumers seemed to disagree, securing the mechanicís ubiquity across the trade.

Love it or loathe it, and letís not overlook the fact some suppliers were secretly big advocates, there wasnít any escaping it in stores. A senior figure at one of the retailerís biggest competitors was said to have been so incensed by nearly tripping over the bays during a recce into enemy territory, that he demanded his buyers increased the prominence they gave to it pronto.

Its simplicity was key to its success Ė only time will tell how wedded shoppers actually were to the £10 price tag. Psychologists might argue consumers would always opt for a perfect 10, anything higher breaking some kind of impermeable mental barrier. But research has also shown shoppers would be willing to pay a few pounds extra for a multibuy if they believed retailers have put better wines in the mix.

One thingís for sure, the switch comes at a time when pricing has never been more sensitive in the market.

Running a rule over the current list of top-selling brands, you have to go a long way down before you hit a brand that has managed to simultaneously increase its price and sales.

At number 10 in the list, the gong goes to Concha y Toroís Isla Negra, which is obviously doing something right. One advantageous string to its bow is the negotiating power it can leverage from having a broad portfolio to offer.

Selling wine is as much about juggling the numbers as itís ever been, and it doesnít take Einstein to work out that on a three-for-£10 mechanic, there wasnít much fat to go around.

Things have been getting leaner still with the last governmentís taxation policy on alcohol (and you can bet itís not going to improve under the new one).

Itís commendable that retailers are citing a desire to move consumers up to more interesting wines as the motivation for increasing prices, but the stark economics of three-for-£10 were clear for all to see.

For all the moaning about a minimum price for alcohol and concerns that government policy is distorting the market, the reality is that, through duty, itís already happening.

Quite how much this matters to the trade is a point to debate another time. But if the end result of new pricing levels means consumers start to understand the benefit of spending more on a bottle of wine Ė and Sainsburyís believes there are plenty of ways to inform this decision beyond price Ė I donít know anyone attending next weekís London International Wine Fair who wouldnít see it as cause for some celebration.

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