jamie goode's wine blog: Busy tasting, Tesco and Asda, and some comments on the market

Wednesday, October 08, 2008

Busy tasting, Tesco and Asda, and some comments on the market

It's peak tasting time at the moment in the UK wine calendar, and I've been busy at it. Yesterday spent a few hours tasting at Tesco's Autumn tasting. The Tesco tastings are held at County Hall, next to the London eye, and to get to the riverfront room used for these events you have to pass through labyrinthine wood-panelled, marble-rich corridoors.

The wines were pretty good. I'm always pleased when a retailer like this does good work, because most people buy their wines from supermarkets, and it's good that people are being given tasty wine to drink. Someone had a copy of Malcolm Gluck's new book, 'The Great Wine Swindle', so I had a quick flick through. It seems that Gluck is now putting the boot into the industry that has given him a very nice career, and he's accusing other people of conflicts of interest even though he got into trouble with his editor at the Guardian over the same issue. Odd behaviour. I want to encourage more people to drink wine, because it's good, it's wholesome, and it is pretty naturally made.

I was chatting to Tesco's Nick Juby, who revealed that since the beginning of the year 250 000 households in the UK have stopped buying wine. 'It's tough', he said. 'There's clear evidence that the customers are trading down. The retailers that are doing well are the discounters, and Morrisons and Asda'.

Today began with the 'Great Cape Wine Debate' (more on this later - very interesting event), and then Asda's press tasting. The offering from Asda was better than I was expecting, which sounds like I'm damning it with faint praise. But Asda have been buying well, and a number of their wines in the 3-5 range were really good. It's great for the consumer that they can buy good, affordable wine.

There was quite a bit of discussion about selling wine below cost - something that Asda have been accused of with their 3 for 10 offers. Philippa Carr MW, who heads the Asda wine team, would (of course) not comment on whether they actually do this (commercially sensitive information). But she did point out that brand owners can't set prices (price fixing is illegal) and it is up to Asda what price they sell their wine for.

I haven't asked Pernod Ricard's wine people this (they are the large drinks company that own a number of brands, including Jacob's Creek), but I don't imagine they were too impressed to see Jacob's Creek involved in the 3 for 10 offer (my advice to punters is buy, buy, buy at this price - it's one of the best of the big brands and a serious bargain at 3.33 a bottle). Moves like this have the capacity to devalue brands in the eyes of consumers.

Normally, promotions are funded by the producer. But some supermarkets actually foot the bill when they want to use wine as a loss leader to get customers into the store. Brand-loyal consumers are very price-sensitive with wine. If they feel they are getting a great bargain on their wine, then they might not notice when the supermarkets make their profit on other items which consumers are not as price-sensitive about. And you can bet that the supermarkets know exactly which items are price-sensitive and which are not.

I think it's a shame when wine is sold below cost. It hurts the producers - both those whose brand is damaged, and also those who are not promoted and thus considered as too expensive by consumers. I'd love it if supermarkets could think of selling interesting wines from smaller producers (perhaps by having a selection of 'niche' wines that differs from store to store - they often aren't any more expensive than branded wines), but this will never happen in such an artificially devalued wine market.

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7 Comments:

At 11:21 PM, Anonymous Andrzej Daszkiewicz said...

I would love to be able to say about Tesco Poland what you wrote about Tesco in UK: "pretty good", but in fact here it is a disaster, especially when you look at their prices, even for their own brands. Things barely drinkable start at 5 pounds a bottle. French chains, Carrefour and Leclerc, are doing much better job in Poland, and the best deals so far we could get at Portugese owned discount chain Biedronka (Jeronimo Martins).

Greetings from Poland!

 
At 8:12 AM, Anonymous Ben Smith said...

Good post Jamie - plenty to chew on there. I worked in County Hall for a summer when it was still the GLC (red Ken and all) - those corridors are very often used whenever film makers need 'corridors of power'

Ben

 
At 10:25 AM, Anonymous Anonymous said...

Maybe Tesco could be "pretty good" on the basis of their whole range, but certainly not on the basis of what is on offer in the average store (as usual, the vast majority of the more interesting stuff is only available at *** stores).

 
At 10:27 AM, Anonymous piedmont_phil said...

It is a much more frightening landscape for the small "boutique" producer. as you say supermarkets sell a lot of wine, and 3 for a tenner is quite remarkable.
We don't sell to supermarkets (too small for one) but in real wine terms production costs have been escalating for the past few years (vineyard labour, treatments, fuel, cantina stainless steel, power, bottles, printing, transportation.... etc.
So subtract the mandatory excise duty and VAT from the 3.33 bottle and what is left for the cost of the wine?
Perhaps not the consumers problem but challenging for us remaining little vineyards.

 
At 10:07 PM, Blogger Jamie said...

Andrzej and Anon - yes, it's true that Tesco are unlikely to be showing some of the nether reaches of their range to the press - can't remember when they last showed Gallo and Blossom Hill to us (although they were showing their yellowtail Rose).

Ben, must have been an interesting experience.

Phil, it's a challenging time to be making wine - I guess the key issue is finding a route to market.

 
At 6:19 PM, Anonymous Anonymous said...

I cant really believe that you found the 3 for 10 wines at Asda good, i have tried a few and all all of them were undrinkable and the same applies to the ordinary tesco range, yes, they do, have the occasional good wine but it is not cheap and it is not often... There are plenty of good places were you can get good wine without spending a fortune and these are not the supermarket. I would invite you to google and you will find plenty, one of them for Italian wines, continuing on what Phil said, Italyabroad.com (www.italyabroad.com) and it also has a blog where i posted in several occasions about cheap supermarket wines. Phil, come to England and taste the 3.33 wines and i am sure you will never call them wine.

 
At 7:52 PM, Blogger Jamie said...

Anon - if you read my post, then it should be clear (I hope) that the only 3 for 10 Asda offer I recommended is the Jacob's Creek one - I quite agree that most of the wines in this offer are pretty bad, especially the Californian brands.

 

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