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Tesco Enters Sale of Fine Wines in UK

Posted: Friday, 27 July 2012 13:03

Tesco Enters Sale of Fine Wines in UK

July 27 : Tesco, the third largest global supermarket chain of UK known for a wide range of discounted wines and generally scoffed at by wine snobs and experts claiming that supermarkets like Tesco sell cheap brands in big volumes, squeeze producers on pricing and promote their own brands, is going for an image makeover as it announces its plans to sell high quality wines including Lafite and Mouton Rothschild, with initial focus on the 2009 vintage.

Tesco has announced that they are soon to introduce super premium wines including the much talked about Chateau Lafite with several other top quality wines not hitherto sold by them, beginning with the much  heralded 2009 vintage. Other wines to go on sale at the king of supermarkets will be the first growth Château Mouton-Rothschild, fifth growth Pontet-Canet, and the second growth Cos d’Estournel from Medoc while the iconic Cheval Blanc will represent St. Emilion.

“The wine was shipped sometime ago,’ says the now world-famous Director for beer, wines and spirits of Tesco, Dan Jago, adding they had ordered good quantities of all these wines. According to him, the duty paid prices will be very competitive. “We decided to make the move as a number of our customers were asking for certain fine wines we didn’t stock,” Jago said.

Discounted offers

Tesco has been a front runner in special offers (and recommended several times by delWine advising its UK readers or the Indian readers visiting UK for specific wines-editor). The half-price sales of Champagne are almost a tradition and perhaps helped the fledgling champagne sales during the recent recession. One may fault Tesco for selling its own branded champagne but several popular wines are also sold under their own brand at amazingly low prices. At £12.10 or the Rosé variant for even better value at £14.24 today their own brand offers value, but even the most popular brand,  Moet Chandon sells for £19.23 at the current discount of 36%.  This is much cheaper than the $52 (£33) it costs at the duty free shop at the Delhi Airport, also giving a lie to the misconception that duty free prices are always attractive and the lowest.

Similarly Veuve Clicquot Ponsardin (VCP) retails for £25.64 at 25% discount on the regular prices and Mumm’s can be picked up for under £20 as it sells for 36% discount till July 31. A skeptic would give you reasons like attracting bigger footfalls or being popular price leaders or limited price offers only but with sales offers on similar products in the following months make it possible for wine drinkers to stock up. An added attraction is the online purchase with generally free shipping.

The list is not endless, but attractive offers are available on other wines as well. Take for instance the example of the ubiquitous Villa Maria Sauvignon Blanc from Marlborough. One can pick up 2 cases of 2011 at under £5 at the current discounting of 47%. Same is available at the duty-free price of about £12 (US $19) at the DTF shop in Delhi- almost two-and-a-half times more expensive!

The prices appear even more attractive when one considers that in UK the retail prices include duties on the imports, which are fixed at £1.90 a bottle irrespective of its value for still wines under 15% alcohol and £2.43 a bottle on sparkling wine, due to the last year’s budget hike. VAT at 20% is also included in the prices.

Selling premium wines will not only add to the top line considerably and the bottom line reasonably, it will also help the supermarket create a better image as a wine retailer and perhaps make some experts change their opinion. The wines will be available by the bottle and mixed case in over two dozen up-market stores in UK. However, Jago is keen that the wines are picked up by the consumers and not investors. “I want to offer them as single bottles as we want to deter investors. We want the wine to be bought by the people who are going to pop the cork,” Jago told The Drink Business. Understandably, only bottles of wines will be sold and not En Primeur.

Other 2009 Bordeaux being sold in selected Tesco stores from this week are St Estephe’s Chateau Phelan Segur at £30, Lacoste Borie at £20, and Chateau Beaumont 2009 at £13, according to Decanter.

Tesco has been a front runner in announcing its intentions to open retail stores in India when the FDI in India will allow 51% foreign equity, a burning and contentious issue these days. Although, it may not be expected to enter the fine wine market- at least in the initial stages - it would be well advised to use its expertise to keep wines in its Indian portfolio because of the likelihood of organised retail getting a heads up in this sector. About 80% of the UK market in the off trade is controlled by supermarkets, creating a near monopoly situation. As Jago says, ‘supermarkets must be doing something right with the customer – we offer extraordinary choice. We need to give the customers a reason to spend more and hardly any of the multiple specialists or independent merchants are doing this. Perhaps that’s why the supermarkets have maintained their monopoly.’

Chains like Tesco may change the way wines are retailed in India once they are allowed to enter the organised retail, as they are expected to sooner or later-perhaps later, if one goes by the current political scenario in the country. But with chains like Tesco entering the arena, wine consumers will find the prices more attractive despite the despotic tax regime.

As the Tesco website proclaims- Every little helps.


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