Supermarkets cling to deep discounts

29 May, 2015

Supermarkets are not honouring their pledge to move away from deep discounting, according to nearly 60% of suppliers polled in OLN's Wine Report.

Mark Wilson, business development manager for De Bortoli, says: “A higher percentage of wine is sold on discount than ever before, even if the discounting is not as deep all of the time.”

“They are being disingenuous if they say they are moving away from deep discounts,” says Les Caves de Pyrene sales and marketing director Doug Wregg. “Supermarket and high street retailers still practice deep discounting – small indies don’t.”

Others simply point to supermarket ads in national papers showing off their latest promotions.

But 42% of suppliers say there is a slow move away from the deeper discounts.

“Offers are still prevalent in UK retail but there is a move away from deep discounting,” says Liberty Wines managing director David Gleave MW. “I think it is important we move away from many of these offers to those that can restore credibility to wine’s tarnished image. The deep promotions, where wines worth £4.99 were priced at £9.99 and then promoted at £4.99, have turned wine into a commodity for many consumers, and the whole industry is suffering as a result.”

Half-price deals are one of the least popular with suppliers, along with three-for-£10, three-for-two and buy-one-get-one-free.

Case discounts offer the best potential for long-term sales growth, followed by other discounts, third-off deals, smaller discounts and multibuys.

Other popular suggestions include £2-off £8-£9 wines, 25%-off, and other percentage discounts.

“They all work in their own way, but the consumer is no longer fooled by BOGOFs or similar,” says Leigh Claridge, sales and marketing director for Maison Sichel UK.

De Bortoli business development manager Mark Wilson says: “Whatever discount has to be sustainable from the initial price, otherwise the consumer can never afford to purchase at full price and the supplier cannot afford to provide the necessary quality to justify it.”

Some simply steer clear of deals and discounts altogether.

“One has to question just who benefits from the use of any such activities, as it is clearly not the supplier,” says Pol Roger’s Nick James.

“No price promotion drives long- term brand equity, only short-term sales, which is not the way to build brands. An alternative is to run in- store activation, such as events and competitions,” says an anonymous supplier.

Martin Chapman, director of Peter Osborne Fine Wines, says: “For retailers, case discounts can be good. For suppliers, unless you’ve a big brand with a serious marketing budget to play with, the price is the price and one is selling the product on its quality attributes.”

And Les Caves de Pyrene’s Wregg says: “For us it devalues the product to see it deep-discounted or offered as part of a deal.”

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