Aldi BWS team is setting the benchmark for buying

12 May, 2016

The Aldi beers, wines and spirits team is riding the crest of a wave this year. Knocking Waitrose off the podium as Best Supermarket in this year’s Drinks Retailing Awards, as well as scooping the top gongs for Multiple Wine Retailer of the Year and Drinks Buying Team of the Year, is worthy recognition for the sterling work the Aldi drinks team has been undertaking over the past couple of years.

One in every 13 bottles of wine purchased in the UK is now bought at an Aldi store, and this growth looks set to continue with the recent launch of its online offering, along with its store expansion plans.

The UK retail model for wines has undergone a seismic change in the past 18 months. Gone are the half-price deals. Gone is the luxury of extensive ranges in major supermarkets. And this is where Aldi is getting it spot on – tight range, sharp pricing, top-notch wines, and impressive supplier partnerships.

The statistics speak for themselves. The latest Kantar Worldpanel data for the 12 weeks to February 28, 2016, shows a value decline of 3.6% across the total off-trade wine market. It’s not a pretty picture. 

With Sainsbury’s showing value decline of more than 11% year on year, and even Lidl facing negative figures – down 6.8% in the 12 weeks. Aldi was the only shining beacon, showing an encouraging 4.4% growth year on year. It now accounts for 5.5% of wine sales through grocery retail by value.

So how has it achieved this?  Its powerful national ad campaign has certainly worked, and the creative teams behind the marketing strategies have clearly hit the sweet spot, winning the hearts, minds and wallets of consumers of manifold demographic brackets across the country. Awards matter too, providing consumers with reassurance and confidence, and Aldi has maximised, adding in clear references to its recent haul of awards to the advertising mix.  

An increasing number of column inches in national print and social media is focused on the quality and value of Aldi wines. In last year’s International Wine Challenge, Aldi’s Exquisite Collection Clare Valley Riesling 2014 won the overall Great Value Trophy for Riesling, judged blind against hundreds of others.

But what’s most important is consumers and how they are reacting to the wine offer. Aldi has grabbed the opportunity proffered to it and is now using the wine department as a footfall driver to its stores. 

With more than 620 stores in the UK and a plan to surge beyond 700 by the end of the year, it aims to deliver the best value in the marketplace for wine consumers looking for high quality at low prices. Its landscape may be sparse in some areas, notably London, but the February launch of Aldi online has resulted in a further wave of customers who may not have a bricks and mortar shop close by. Early indications are that a high proportion of online sales are coming from the London area, which reinforces this strategy.

pricing strategy

Aldi is focused on becoming the most competitive retailer in wine ecommerce, offering free delivery alongside its sharp pricing. 

The pricing strategy, as in its stores, is simple – minimum six-bottle purchases, matching in-store pricing and offered as cases of a single wine or a selection of mixed cases. Many of the wines are those offered as core or seasonal ranges in store, but Aldi has brought in a bespoke range for online only.

The importance the retailer attributes to its wine range is clear. Aldi is not merely using wine as a footfall driver in store, but has built its online shopping offer specifically around wine, adding on a series of special buys, such as garden equipment. Aldi is also sponsoring The Wine Show on ITV.

In the current maelstrom of supermarket retailing, it’s tougher than ever to balance the cost structure and logistics with the best possible product. With ever-rotating buying teams, last month’s confectionery buyer can be today’s wine buyer, and it’s not easy to get cohesion and build relationships, as several of the major supermarkets have found. Aldi scores by having a buying team that is experienced and commercially focused, yet with an ingrained passion for the product it is sourcing, ensuring it gets the best possible.  

The recent spring tasting showcased 84 wines, many of them new. With the energy and burgeoning confidence of last year’s trading figures, the wine team is now pushing the boundaries and, while retaining its value offer, is bringing in an increased number of more premium wines, which all still offer value against their competitive set, including a 2012 Saint Emilion grand cru and an impressive Chablis premier cru at £12.99.

Aldi has already established a strong reputation for good, everyday wines at low prices, but it’s on the battleground of £7-£10 where it is now wielding increasing strength. Its small but impressively formed range has to work hard for it. 

The Exquisite Collection Limoux Chardonnay at £6.99 is an outstanding  baby Burgundy-lookalike, while its well-established Lot Series Priorat at £9.99 continues to attract ever more fans. So how is Aldi managing to turn out keenly priced, award-winning wines, which over-deliver on quality? 

Wine buying director Mike James says:
“We’ve had to work harder than everyone else because of the misconceptions people initially had about wine in Aldi. Those days are behind us now, and we are getting the recognition from both the industry, but more importantly, from customers.

“We won’t be beaten on price, and that is even more challenging in the current climate with the move to an EDLP position by other retailers. Therefore, at every level – from under £4 to our premium range – we have to keep working to ensure we have the best quality and over-deliver.”

transparent model

In an era where major retailers’ trading relationships with suppliers have been publicly challenged, the Aldi model is transparent. Negotiations are tough, but the company commits to a net price and a set volume. Among suppliers there is a lot of positivity about their dealings with Aldi. “You know where you are,” says one. “They are tough but fair in the truest sense of the word.”

There is a fundamental difference in the wine-buying strategy between Aldi and its rival, Lidl. The latter sources largely from a central pot of suppliers, adapting wines to the UK market. At Aldi, the supplier decision-making process rests in the hands of the UK buying team, which is essentially the highly–respected James. 

He has to be credited for clever buying, astute product selection and the way he has nurtured and developed trading relationships with key producers and suppliers over recent years. He and his team work with people who understand the Aldi ethos of over-delivering and who have bought into this strategy. 

James has an intuitive connection with winemakers and works with them closely. “We want to work with people who are creative and passionate about what they do,” he says. 

He cites Neil Hadley, of Wakefield Wines in Australia, and New Zealander Liam McElhinney, as winemakers who truly understand the style and quality Aldi is looking for and who work with him to deliver at all levels. 

James’s passion for the product is tangible. A new Chablis range, from £7.99 to a premier cru, has been crafted on a bespoke basis. “We work with producers who think ahead, are proactive and have bought into our strategy,” he says. “It’s all about commitment on both sides to make this work.”  

Similarly, the Lot Series, a selection of wines based on a finite number of bottles, is showcasing parcels of more quirky wines, which enables the buying team to see the consumer appetite for particular styles.  

And Aldi is not afraid of celebrating and showcasing the producers with whom it works. Aldi gives producers centre stage on the labels of the Lot Series and, more significantly, on its website, where there is a section labelled Meet Our Winemakers. This features Aldi’s chosen partners Wakefield Wines, Te Pa Wines, Jean-Claude Mas and Philizot Champagne. This reaffirms the Aldi wine team’s focus on developing, nurturing and maintaining key partnerships.

It’s not only wine which is thriving. The spring tasting also featured 28 spirits, including a range of flavoured vodkas and cocktail liqueurs. Plans for a bespoke range of Christmas whiskies, brandies and gins are already in place. 

An eclectic mix of 19 craft, regional and speciality beers and ales is also due to  go live in store from May 29. Aldi views BWS in its entirety as the golden ticket. While wine sales showed year-on-year growth of 5.3%, total BWS was up 8.2%, according to Kantar, indicating the early success of the beer and spirits strategy.

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