Calls for wine range revamp at convenience stores

06 November, 2014

Convenience store owners need to overhaul their wine ranges if they are to arrest a sales decline that threatens the health of the industry, according to a leading supplier.

In May, Treasury Wine Estates set out a vision to grow the wine category by £200 million by 2019 in the impulse sector, which is the only FMCG channel in growth.

By now it hoped the category would have grown £17 million, but instead it has declined by £9 million since May (Nielsen).

Shaun Heyes, head of convenience and wholesale at the Wolf Blass and Penfolds supplier, told OLN: “The difference is £26 million between where it is and where we hoped it would be. The £9 million drop in sales equates to £200 per store, and the £17 million in unrealised growth equates to £378 per store, so retailers are down almost £600 per store.

“Penetration needs to change. Within the impulse channel wine penetration is 5.5%. It’s around 70% in the grocers. If you were to increase penetration by a relatively modest 1% it would grow the category by £200 million over five years.

“Retailers need to realise the opportunity to have the right range across different varietals and price tiers.

“It’s about being sensible and recognising that people who come into your store have a broad range of needs. Ranges are too skewed towards one price tier. A £5 bottle of wine will meet the needs of some shoppers and some occasions but not everyone.

“You don’t need five Chardonnays at £5. You need a couple, and then maybe two at £6-£8 and one at £8-plus.

“We need to make sure retailers’ ranges aren’t just anchored at £5-£6. The £6-£8 and £8-plus tiers are the ones in growth and retailers need to look at them. ”

The Treasury portfolio is enjoying 6% value sales growth in the UK, which equates to £186 million (Nielsen, year to September 13). Australian brands are leading the way, with Lindemans up £80 million and Wolf Blass up £76 million.

The supplier sells its wine in the more premium tiers that are in growth, and urged retailers and other suppliers to push the market in this direction.

Heyes said: “The convenience channel and the wine market is incredibly fragmented, but the whole industry needs it to improve.

“We are trying to make sure the work we are doing with our brands can help retailers unlock some of this opportunity. We need retailers and other suppliers to follow suit.

“We are one of many suppliers and all we can do is continue to communicate this message. It’s going to take time but we believe it is possible.”

Sales of wine retailing at £10 or more double over the Christmas period (Nielsen) and off-licence owners need to capitalise on the trend, according to treasury wine estates.

It is predominantly multiple grocers that cash in on the trend that sees one bottle in every eight sold at £10 or more over christmas, said the supplier.

But it urged convenience store owners to tap into this “gifting opportunity”.

Shopper marketing manager Charles Overin told OLN: “Retailers should ask themselves, ‘am i geared up to grab my share of that sales opportunity over the christmas period?’.”

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