Trade begs for end to deep discounts

18 July, 2014

Deep discounts on wine are crippling the trade and must be stopped if it is to have a sustainable future, according to suppliers.

OLN polled more than 60 leading suppliers for the 2014 Wine Report and the vast majority attacked the range of deals on retailers’ shelves.

Mark Wilson, UK general manager for De Bortoli, said: “Any deep, strong promotions are not sustainable. It is better to have smaller discounts so consumers believe in the value of the wines they are buying.”

Claudia Pech of German Wine Agencies said: “Wines should not be promoted. We already have one of the highest alcohol duties, at what point are winemakers supposed to make any money?”

Off-Piste Wines managing director Paul Letheren added: “Anything more than a third off doesn’t normally reflect the true value of the wine, and consumers are getting wise to this.”

Most suppliers agree that, unwelcome as deep promotions may be, consumers are hooked on them. “We have trained them to be deal junkies,” said PLB business development director James Burston.

Suppliers feel that discounts have become the easiest way for consumers to navigate the wall of wine that faces them in-store.

Nick Oakley, director of Oakley Wine Agencies, criticised promotions as “manufactured”, while World Wine Agencies director Nicky Burston added: “Most promotions aren’t real. They only lead to wine prices being over-inflated to accommodate the discount. Unfortunately, most customers still believe they are getting a bargain when the wine is on promotion.”

One supplier, who wanted to remain anonymous, said: “I strongly dislike discount retailing for wine as it drives the message away from style, rationality and history and leaves it down to a price point.”

Some suppliers welcomed the fact that unsustainable offers such as buy-one-get-one-free have fallen out of favour.

One said: “It is good to see that BOGOF and the like are at last in decline as they have been a catastrophe for the wine business and potentially very damaging to the reputation of the retailers. These are never honest promotions and, more and more, the public are aware of this.”

Others agreed that consumers were becoming wary of supermarket wine deals.

Lisa Duckenfield, marketing manager for Cellar Trends, said: “All big promotions work for retailers in terms of driving volumes. I do not agree that they deliver a profitable return

or drive brand loyalty, but the UK has been driven down this route over many years.

“Consumers are now aware that these promotions are on all the time. Some will only buy on promotion and some recognise that the realistic price is the promotional price, not the inflated rrp, particularly of own- label wines.”

Paul Hinks, sales director of International Brands, added: “Money-off promotions are most honest. Consumers are becoming wary of high-low offers, but these still drive significant volume.”

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