This is the time of year when the supermarkets try t0 outdo each other with special offers on well-known fizz.
I was surprised when I popped into my local Asda and found Champagne Taittinger NV for sale at £20 per bottle, with a maximum of three bottles per customer. I’ve heard from others that Sainsbury’s and Tesco offered it even more cheaply, at £17.50 and £17.99, respectively.
So at the Taittinger Comtes de Champagne vertical last Friday I asked a member of the Hatch Mansfield (Taittinger’s UK agents) team how these promotions work. It would seem odd for a brand owner to risk damaging their brand in this fashion, by offering the Champagne so cheaply (normal retail is c. £33).
The response was that in Asda’s case (and presumably the case of Tesco and Sainsbury’s) the promotion is funded by the supermarket. And Hatch are furious, but can do nothing about it.
Asda have been building up stocks for a while in advance of the promotion, and Hatch speculated that they might have even been buying from a third party. This would make a promotion like this quite expensive for them, but marquee offers such as this are done to drive footfall at a crucial trading period.
It puts the UK agent in a difficult position, because with a Champagne such as Taittinger, they will be supplying a range of outlets, including independent wine merchants and restaurants. And this offer price is probably the same price that Hatch will be selling the Champagne to their customers at, making it impossible for them to come even close to the supermarket offer price, which makes them look very expensive indeed.
It is normal for brand owners to fund promotions, but these are usually discussed well in advance. When a wine is listed, there may be a discussion about promotional movement (say, £2 off) and the discount that will be given by the agent or brand owner to fund this. Now that many supermarkets do 25% offers across their entire range, this becomes a bit more complicated. Generally, the supermarket will ask for money for this from the larger players, but not charge the smaller ones.
But brand owners would normally never agree to the sort of discounting we are currently seeing with Champagne, because once a customer has bought Taittinger for £20, their impression of the value of this wine will be diminished.
At the moment Hatch are not supplying Taittinger to Asda, but will no doubt end up supplying them again in the future. Taittinger can’t cut off the supply to the supermarkets because they have 5 million bottles a year to shift. That’s not huge, but it is a sizeable production.
It’s interesting to see which brands are immune from this discounting strategy. Note that you never see Krug promoted at all. Of course, Krug aren’t allowed to discuss pricing with their stockists: no one is – this is highly illegal, because of price fixing laws. But I imagine that if you funded a Krug special offer, then you’d find it hard to get any stock in the future.