Creating value through strategic advice, branding and research
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Welcome to Wine Intelligence |
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Who are we?We are the only consulting, branding and market research company dedicated to serving the wine industry globally |
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The Wine Intelligence View: |
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Retailers play the percentage game June 2008
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Majestic, arguably one of the UK’s most successful and admired wine retailers, has warned its customers that prices are about to rise by 10 per cent. It’s nothing to do with corporate greed. Britain’s drinks retailers are facing spiralling costs, many of them created by currency fluctuations and an unwelcome duty hike, and something has to give. Shareholders will doubtless be nervous about the way consumers will react. With the economy faltering, shoppers are generally looking for ways to curtail household expenditure, rather than increase it. So will consumers reject wine retailers which pass on cost increases, or take their business somewhere cheaper? There is some grounds for optimism for Majestic’s shareholders. Recent research which we undertook on behalf of the WSTA as part of their Consumer Intelligence programme found that regular drinkers do not consider wine to be particularly expensive. Whilst they’ve noticed other grocery products getting more pricy recently, they’re not aware of having seen the same trends in the wine category. Our own Vinitrac UK data gathered in April 2008 showed that consumers were generally relaxed about a 10 per cent price increase – indeed, in some cases it was regarded more positively than a 5 per cent rise. This was particularly true for brands priced at or just below the £5 mark. |
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When we talk to consumers, it is abundantly clear that many have never considered abandoning their £4.99 comfort zone because retailers have never given them a reason for doing so. Indeed many who would be happy to splash a little more cash don’t bother, because there is always something tempting them at a lower price. The industry has little choice this year but to pass on its extra costs in the form of retail prices. As consumers are coaxed away from their traditional psychological price points, there is an opportunity to persuade them to take a completely fresh look at the wine they buy and how much they are prepared to spend on it. Despite all the talk of economic woe, there are wine drinkers out there who are ready and able to spend that extra 10 per cent … and, in many cases, even more than that. |
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Graham Holter, June 2008 |
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| For more Wine Intelligence views on current industry affairs, please contact us to speak to one of our industry experts | ||||||
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info@wineintelligence.com | |
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