Consolidating supply bases, reducing costs, reviewing logistical operations and rolling out budget lines were all top priorities as they rode out the throes of the recession.
“Despite inflationary pressures and duty rises, margin has been maintained by working with suppliers to find savings, altering the promotional balance by region, and improving promotional margins by running promotions focused on quality and origin rather than simply price,” says a spokesman for Waitrose.
The strategy paid off for the retailer, which saw wine sales grow 13% by value in the year to December 26?. Spirits were also up 13% in value, and beer and cider up 12.8%, according to Nielsen.
Tesco’s response to widespread consumer belt tightening was to expand its own-label Value range, with two new wines from Chile – a red and a white blend – joining the three-strong Spanish range in 1-litre Tetra Paks (rrp £3.99).
“We have found the Value wines extremely successful since they were introduced,” category manager for wine Andrew Carpenter told OLN. “The three Spanish 1-litre Tetra Paks have proved a big hit and turnover on an annual basis is now £10 million for those three lines alone. They have proved to be appropriate for the environment at the moment.”?The extensions came as part of a wide-ranging? review in which Tesco cut its wine offering by 10% to between 800 and 900 lines. The supermarket also introduced Great With, a nationwide fixture which suggests wine choices to go with different foods. “The Great With campaign has proved to be a huge success. Offering simple food and wine-matching advice has seen sales rise by as much as 200% in the fixture, even non-price-promoted lines, simply because the customer has confidence in the advice given,” says BWS PR manager Mary Rochester Gearing.
Despite the faltering economy, Tesco’s premium own-label Finest proved to be another success for the retailer, resulting in new additions to the range.
Morrisons introduced an entry-level range of French varieties under the Good French name and beefed up its Burgundy range with famous, but expensive names, being culled to make way for more affordable, better-value wines. Nuits St Georges at £19 was replaced with Hautes Côtes de Beaune, for example, which retail? for £13.
Morrisons also expanded its Rhône and Loire offerings, and extensively reviewed its Bordeaux range with poorer- quality petit chateaux being replaced by quality generic wines such as Lussac St Emilion, according to wine development manager Arabella Woodrow MW.
“With France there’s so much choice to offer, it’s a pity to ignore it just because some people want to buy New World Wines,” she explains.
Asda also increased its European range in response to growing demand for the Old World classics. In the three months from July, the retailer saw a 20% uplift in sales of Old World wines, according to senior wine product development manager Philippa Carr MW.
“Consumers want lovely fruit and great value-for-money wines – Europe is doing that. Old World does not have to mean old-fashioned,” she says.
In an effort to educate consumers about new regions and less-known grapes and blends, Sainsbury’s piloted a new wine bay with a “discovery” theme in 220 stores in October.
“Even in today’s straitened times, there is a role for innovative, exciting, quality wines that offer a genuine point of difference to our customers,” says senior wine buyer Julian Dyer.
It also introduced a new in-aisle section called Top 10, which features 10 wines that share a particular theme, such as Award Winners or Favourites for a Fiver.
Consolidating its range of branded wines priced at £4 to £6 was also a priority for Sainsbury’s. “We have streamlined the range to improve ease of shopping by giving clearer displays and wider facings, which improved customer access while still maintaining a quality offering and a broad range,” says marketing and PR manager Kimberley Davenport.
The Co-op’s priority for 2009 was to integrate? Somerfield’s BWS range into its offering. “Each of the category teams have looked in detail at all brands, exclusives and own-label lines to develop a best-of-the best range, to ensure a really strong offer for customers loyal to both stores,” says Vicky Wood, category marketing manager for BWS.
The Co-op also became the first retailer in the UK to launch a Fairtrade sparkling wine in partnership with South Africa’s Origin Wine.
In May the chain launched four bulk-shipped and UK-bottled wines in light-weight glass from Chile and Australia named Virtue. The wines retail for £3.99 and “sales levels are significantly higher than previous listings at the same price point”, according to the supermarket?. In the autumn Waitrose also fired the starting pistol in an online sales war by announcing it was on a mission to rival Tesco and Laithwaites’ online.
Talking to OLN in October, wine buying manager Justin Howard-Sneyd MW said: “Our biggest opportunity for growth is online. We don’t take advantage of the opportunity as much as some of our competitors and see significant opportunity for growing that sector.”?The push will include relaunching the Waitrose Wine Direct website this spring with a new look and content.
Waitrose also ploughed ahead with plans to improve customers’ appreciation of beer by more than trebling branch tastings
ast year and running a number of meet-the-brewer talks. It also arranged for more of its branch specialists to visit breweries including Fuller’s, Bath Ales and Ringwood to attend tours and beer appreciation courses run by the head brewers.
Value sales of speciality lagers have grown 38% and speciality beers 23% in the past year, according to the supermarket.
Asda put beer-buying behaviour in the spotlight with a major customer research initiative, resulting in a complete revamp of its beer aisle.
Previously ranged by abv values, the section is now split in two, with one side organised by promotions and the other grouped by world beers and premium products.
Thirty-one new beers were added to Asda’s range last year including world beers such as Zyweic from Poland?. New guest ales have been introduced on a three-monthly basis and four ales introduced seasonally.
“Throughout 2009 the beer team has driven innovation in terms of making quality, quirky local beers more accessible countrywide,” says beer buying manager David Armstrong. “At the same time it is supporting brewers in this drive for increased local choice while offering iconic pricing on the major brands
customers always look for.” Marks & Spencer also expanded its speciality beer and cider range with 26 new own-label products including a Cheshire chocolate porter, Czech lager, Breton cider and Belgian cherry wheat beer.
The retailer also integrated 31 regional spirits into its range, such as Scottish cream liqueur Cutie Cream, in an effort to be more relevant to its local customers.
Sainsbury’s worked hard to help customers navigate the whisky aisle by introducing the Whisky Flavour Map, which breaks down malt whiskies by their flavour profiles and has resulted in a 13% uplift in malt sales.
At Christmas it launched a three-strong range of single malt whiskies under its Taste the Difference premium own-label. Each of the whiskies have been aged for a minimum of 12 years and come from the Highlands, Islay and Speyside (rrp £17.99).
Other Scotch whisky regions will be added to the own-label range in the future, along with a golden rum, says spirits buyer Vanessa Pearson.
Sainsbury’s was the first supermarket to wade into the annual Christmas price battle with TV ads for a half-price offer on multipacks of Beck’s Vier. As the competition hotted up, the supermarket also started running half-price deals on Champagne, port and cava.
Asda cut the price of 1-litre bottles of big-name spirits brands to £10, and Tesco lopped 50% off the price of its Finest own-label Baileys equivalent and Croft port.
The Co-op and Somerfield unveiled price cuts and promotions worth more than £200 million in savings to their customers. Champagne sales were up 83% in the festive period, according to Wood, spearheaded by Veuve Monnier Brut Champagne (rrp £12).
In November, Tesco upped the ante in the pre-Christmas promotional stakes by launching a two-for-£10 deal on wines from its Finest range of premium own-label. The move was motivated by a need to give consumers familiar wines at keen prices, according to Dan Jago, category director for BWS. “People are becoming more finely-tuned towards knowing what they do and don’t like, and they’re being less adventurous in their shopping behaviour. We’ve seen that through three-for-£10, which has given people huge security and been extremely successful,” he says.
It’s such aggressive promotions that have thrust the supermarkets into the spotlight this month, with an influential group of MPs calling for a 50p minimum price per unit.
As the government, health lobby and media blast the supermarkets for “irresponsibly” low prices, 2010 could be the year that below-cost selling is outlawed for good. And if it is, the picture of the supermarket sector in 12 months time is going to be an entirely alien one.