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What is Behind the Rise of the Private Label Wine Trend in the UK?

It is now possible to create unique wine styles from Bulk Wine that are unlike others in the Marketplace, says Donaldson.

17/10/2018

Within the UK, the private label wine market is experiencing rapid growth, led by major supermarkets and discounters looking to expand their private label ranges. Being able to offer quality wines at affordable prices is an attractive value proposition to the British consumer and one key reason why retailers like Morrisons, Tesco and Sainsbury’s are enthusiastically embracing the trend. But what makes one range of private label wines stand out from another?

Private Label Wines as Credible Alternatives to Branded Wines

At one time, “bulk wine” was synonymous with low-quality wine – with the inevitable result that the first private label wines appearing on the shelves of major retailers had no chance of appealing to sophisticated wine drinkers. Consumers purchased these wines for one reason only – the lower price. But that’s no longer the case in the UK, as private label wines are now emerging as credible alternatives to branded wines.

Take the case of UK supermarket chain Morrisons, which has become one of the leading proponents of private label wines in the marketplace. Clive Donaldson, Wine Sourcing Manager for Morrisons, says that some of the most expensive wines on the shelf are actually private label wines. He cites the example of old vine Shiraz shipped in Flexi-tank containers from McLaren Vale in Australia – this premium Shiraz is the equal of any other branded Shiraz wine on the market.

And, says Donaldson, it is now possible to create unique wine styles from bulk wine that are unlike others in the marketplace. For example, consider New Zealand Sauvignon Blanc. Right now, the marketplace is flooded with homogeneous Sauvignon Blanc, says Donaldson, all of it made to resemble the style of Marlborough Sauvignon Blanc. That gives Morrisons a real opportunity, says Donaldson, to create a slightly different style of Sauvignon Blanc that will win over consumers looking for something different.

Private Label Wines as a Way to Stay Ahead of New Trends

Working with suppliers directly, retailers can help bring to market the wines that customers actually want to drink. “Don’t sell to me, but to my customers,” says Donaldson. What he means by this is that suppliers should be trying to figure out what his customers want to drink, and then offer relevant options. At one time, wine buyers played the role of “gatekeeper,” strictly determining what they wanted to buy based on their own preferences and tastes. Today, however, it is the consumer that is in control.

For that reason, says Donaldson, it’s important for suppliers to keep up with new trends in the marketplace. “The consumer is changing all the time,” says Donaldson. As a result, suppliers need to be fast to market, and capable of anticipating how new trends in the marketplace – whether it is the desire for new varietals or wines from new regions – will impact consumer demand, and by extension, the types of wines that big retailers will want to order. Donaldson compares large retailers like Morrisons to large oil tankers, while the suppliers are the small speedboats capable of making quick changes on the fly.

Private Label Wines as a Way to Boost the Bottom Line

Ultimately, private label wines are all about the bottom line. As the biggest UK supermarkets and discounters are proving, private label wines are a great way to boost margins, increase revenue and improve overall profitability. Consumers know that Morrisons is constantly updating its private label wine range to keep up with changing tastes and preferences, and that helps to build customer loyalty. They know that, every time they walk into the store, that they will be able to find high quality, affordably priced wine. Moreover, that wine will “fit” into the overall shopping experience at Morrisons, making shopping for wine as enjoyable as shopping for fresh produce or other items.

In terms of profit margins, Donaldson says that private label wines are particularly effective at avoiding duplication in the range. Every wine serves a particular purpose and is designed to appeal to a certain type of customer. That means that Donaldson can very quickly update ranges to meet quarterly and annual targets. Supermarkets have a real advantage over other wine retailers simply because they know so much more about customer shopping habits. They know how much they are spending each visit, what types of foods they are buying, and as a result, have a very good idea of which wines would make a good fit for their buying activity.

The goal, says Donaldson, is always to offer the right style at the right price. That means having a very clear idea of what value a product offers, and how it can help Morrisons achieve its retailing goals. As a result, every item in the range can be hyper-focused and hyper-targeted. That’s in sharp contrast to the approach formerly used for branded wines, in which sellers had much more control over the process simply because there were no other alternatives. In a customer-driven business model, though, consumers are back in control.

Join Other Members of the UK Wine Industry as They Discuss Bulk Wine

One way to learn more about these changes in the bulk wine and private label industry is by attending the upcoming International Bulk Wine & Spirits Show (IBWSS) in London in March 2019. There, members from each stage of the global wine supply chain – importers, distributors, négociants, suppliers, retailers and contract bottlers – will be meeting over a two-day period to discuss trends in the industry, to find new partnership opportunities, and to establish relationships with bulk wine suppliers and private label specialists from all over the world.

The International Bulk Wine & Spirits Show (IBWSS) will take place in London on March 11-12, 2019. 

This article has been adapted from one that originally appeared on The Buyer website. The author of the original article was Richard Siddle, who covers industry trends in the global drinks business and provides insights and analysis for The Buyer.

Source: The Buyer