Supermarket range culls were 'necessary' and 'overdue': IWSR

21 May, 2015

Supermarket range culls were “necessary” and “overdue”, according to wine information company IWSR.

Senior consultant Ania Zymelka told a briefing at the London Wine Fair suppliers had been mainly positive about the cuts.

Tesco announced last week it would slash its range from 900 to 600 lines, while Asda has said it will cut its range by 8% and Sainsbury’s and Morrisons have said they will cut head office jobs.

Zymelka said: “The majority of UK suppliers believe supermarket range cutting is a long overdue necessary step and will help the market in the UK. Simplifying the wine market is essential and can eventually be an advantage for the suppliers that manage to survive.”

She said the vast majority of UK wine suppliers were overly reliant on three to four major players who control 80-90% of the off-trade wine market.

And she noted that they have little power when it comes to negotiations with these buyers.

She said: “First there are exclusive labels – consumers don’t realise they are not brands and they don’t care, so there is pressure on price from that part of the market.

“That is made worse by the rise of the discounters. Aldi is opening more stores in the UK every year than Tesco, with a completely different business model, and consumers are showing signs that they like this. Perhaps they are less overwhelmed by the choice of wine in discounters compared to major retailers, and the retailers can’t compete with [the discounters’] prices.

“Also, few brands are essential, and innovation is becoming even more difficult as retailers cut ranges.”

But Zymelka believed that range culls could put those brands that remain in a stronger position, improving suppliers’ negotiating power.

“Consumers will start to recognise the brands that stay available, and with fewer brands they will develop some kind of brand loyalty,” she predicted.

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