New wine labels on the high street

In the wine business, the "c" word is being uttered with increasing frequency, and I'm not talking chardonnay here. I'm referring to the convenience store. Thanks in part to bulk purchasing online and in part to the swelling ranks of cash-rich, time-poor workers, the convenience store has become a battleground between the supermarkets and traditional top-up shops. Last month's Marketing Magazine reported that branded wine in supermarkets outstripped sales of branded beer for the first time. Wine sales in top-up shops made up more than a quarter of all retail wine sales last year, so you don't need to be a mathematician to understand their importance to the bottom line.

Like the mega-church that's gobbling local community churches in the US, there's a new prosperity theology that's allowing supermarkets to encroach on the traditional corner shop: the New World wine brand. Because of limited shelf space and the fact that no one spends any more time in a convenience store than they have to, workaday brands such as Hardy's, Jacob's Creek, Kumala and Blossom Hill give retailers an opportunity to offer a familiarity that breeds contentment. For that last-minute purchase before you head round to friends for dinner or settle in for a Big Night In, you can be confident that Jacob's Creek and its ilk will at least not offend.

Supermarket retailers now operate more than 1,100 convenience stores. With their buying muscle, promotional power and a little help from their loyalty cards, Sainsbury's, Tesco and Somerfield are doing their utmost to outwit rivals with fresh food and groceries, tailoring prices and range (Kosher wine for instance in north London) to the local community. Tesco reports that it more than makes up for the higher profit margins of the Europa and Cullen's shops it took over by selling much more at lower prices. Christine Sandys, the winebuyer for Budgens and Londis, confirms this pattern.

Yet wine sales in the 2,000-plus, independently owned Londis stores are on the increase. Competition has forced retailers to make improvements, from facilities for chilling wine down to promotions and friendly, local service. Somerfield's Angela Mount admits that "the view that you had to be desperate to buy wine in a convenience store doesn't apply any more". Is the general growth in the sector a plus? It's hard to see how it can compensate for the disappearance of nearly 2,000 independent retailers last year. Yet as John Taylor of Musgrave, which owns Londis and Budgens, points out, "Tesco Express hasn't had an adverse effect on the independent store. Independent sector sales are growing as a result of more stores joining Symbol groups [such as Londis, Spar, Nisa and Costcutter] and modernising." If, like my local Londis, it does what it says on the label ("Best value locally"), it's performing an invaluable service.

Comments