Miracle in the wine aisle


shutterstock_295856963Despite prophesies of doom, some brands seem to be doing quite well in the UK supermarket channel
Once upon a time – perhaps 30 years ago – being a brand manager in fast-moving consumer goods (FMCG) looked like the best job in business. Yes, it represented huge challenges: understanding consumers, outflanking wily competitors, preserving the brand’s integrity from the internal cost-cutters, and keeping up with changing fashions. However it was also fun, exciting and – if you got the strategy right and the marketing mix properly aligned – hugely rewarding.
Who would want to be a brand manager these days? Retailers are lining up to beat you down on price and eat your lunch with similarly-packaged own label imitations. You have more and more ways of spending marketing budgets, but return on investment is difficult to find with fewer eyeballs to chase as consumers find craftier ways of avoiding ads. And too often, brand strategy is now in the hands of the accountants, which means cynical margin-shaving tactics (a few less beans in the tin, a smaller biscuit) and slashed marketing budgets.
This reversal of brand management fortune has been most keenly felt in areas where brands have traditionally been strong, such as packaged food, household goods and toiletries. The wine category has arguably been less affected, particularly in the UK, where for the past 20 years brands have faced an uphill battle with supermarkets for control of the category, and margins were traditionally thinner – so less marketing cash to spend in the first place.
However it may be that 2016 will be a year where brands gain the upper hand in the UK – at least temporarily. Why might this be?
First, economic winds are blowing favourably at the moment, and a distinct segment of consumers are actively looking at ways to trade up in what they buy (for more on this, see Eva’s story on trading up).
Second, the latest data from the WSTA Market Report suggests that the wine category is continuing to thrive at higher price points: 7.5 million more bottles of wine were sold at over £6 a bottle in UK grocery retail in the year to September 2015 versus the same period in 2013-14, an increase of 4%. Our own Vinitrac purchase data (which broadly points to people spending more money per bottle, particularly for social occasions) suggests this momentum will continue into 2016. Consumers need more reasons to spend a bit more, and often a brand name (often helped by its close relative, a prestigious region) can help nudge their spending upwards.
Third, there are now several branded wine offers that have momentum and strong fundamentals in the UK. Five years ago Concha y Toro’s Casillero del Diablo was known by around 20% of UK regular wine drinkers, and had been purchased in the previous 3 months by 5% of that population. Today, awareness of Casillero del Diablo is 65% of regular wine drinkers, and 21% say they have bought the brand. Last year the company reported that the brand was selling 1.1 million cases a year. And all this growth for a brand selling for between £5.99-7.99, in major supermarkets, in the teeth of the worst recession in living memory.
There are other brand success stories in the UK: McGuigan has almost doubled its awareness levels (13% in 2010, 24% in 2015), with corresponding growth in its user base; Yellow Tail has taken its aware base from 24% to 42%; Campo Viejo has done similar (23% to 44%). What do these brands have in common? They have all invested in building their brand awareness through a combination of advertising, sponsorship, events and point of sale; they are all selling mainly at over £6; and their primary route to market is the supermarket.
For more information, try our UK Wine Retail Trends 2015 report, or our UK Landscapes 2015 report. Merry Christmas!
Author: Richard Halstead
Email: richard@wineintelligence.com
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