More on the loss-leading £4 Southbank Kiwi Sauvignon

A few days ago I posted on the £4 Southbank Estate Marlborough Sauvignon, and how this sort of price cutting was potentially damaging for brand New Zealand, even if it is a great deal for consumers.

I spoke to Elizabeth Ferguson at Southbank Estate’s UK agent Mentzendorff to find out the background to this story. Asda warned Mentzendorff that they were delisting the wine just before Christmas, and so Mentzendorff expected that Asda would then be selling through the rest of the stock.

But they didn’t expect it to be sold at £4. ‘They must be making a loss on this,’ says Ferguson, confirming that this is more than Asda were paying for the wine, which normally retails at £7.99. ‘They are funding it themselves,’ she said, referring to the offer price. ‘We deliberately don’t do stuff like that.’

It’s upsetting for a brand owner when their wines are sold below cost, because of the effect this has on the brand, and also the potential it has to upset other retailers who are stocking the same wine.

8 comments to More on the loss-leading £4 Southbank Kiwi Sauvignon

  • Resale price maintenance ended in the 60s, and there is no answer to this. Businesses are free to sell at the price they wish. Brand managers may be annoyed but what can one do in reality? It is a free, unencumbered market.
    It reminds me of what Churchill said about democracy,:’it is the worst political system imaginable. Except for all the others’
    (or words to that effect)

  • Why on earth does this kind of destructive/negative behaviour and practice go on, especially with regards to wine and retailling? It is completely unacceptable

  • BobO

    Business 101: sell, sell, sell and sell some more! That’s business, it’s not fair, but we’re all slaves to the free market (sic). If that wine’s really good, go buy as much as possible, enjoy it and buy it again next time at the “rightfull” price.
    What’s done is done, and can’t be undone.

  • Alex

    Interesting. Similar seems to be happening to Krug of all brands courtesy of Tesco.

  • The British public won’t buy anything any more unless it’s on offer. It’s all psychological and part the processes of self-destruction of capital.

  • One reason why we elected not to use importers and control distribution ourselves.

  • Simon T

    I guess there is an error with the following….

    ‘They must be making a loss on this,’ says Ferguson, confirming that this is more than Asda were paying for the wine

    More or Less ?

    This is nothing new and the retailers generally have a 25%/50%/75% rule to clearance in advance of range reviews – i once bought a Krups Espresso Maker for £5 in my local Tesco on this same scale. Very easy to winge about retailers etc, but they have to ‘land’ range reviews on a specific day and if they (wine buyers/category managers) do not clear the defunct stock through then their supply chain colleagues give them lots of grief.

    There are some genuine areas of concern with wine and multiple grocers, but I believe whilst this one is unfortunate it’s not that big a deal really.

  • Tim

    This was being sold at £3 a bottle in my local Asda this weekend. There was another NZ SB- Auckland Bay 2009 at £4

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