Supermarket sweeping discounts - deal or no deal?

Asda’s pricing like the peace of God passeth all understanding. For peace of God, read piece of Mammon. Recently, they have been selling estate Southbank Sauvignon for £3.99, Ogier Crozes-Hermitage (from 2007!) and Montana Reserve Sauvignon for £4.89. How, why and wherefore?

Examine the figures and subtract duty, vat, shipping, handling and transport and you have a wine which is valued at 65p before margins apply, which is unfeasible even in these days of mass-produced grape juice. Factor in the historically low exchange rate and presumably you have a wine which is surely being sold well below cost value. So, is this buy-high-dump-drastically, or a flagrant attempt to bribe consumers with crazy deals?

I’m bored with this price propaganda. Asda is not the only offender in the supermarkets’ remorseless sales drive which inevitably results in devaluing the brand by selling it below cost, a commercial policy that begs the question of what happens when someone buys the wine at full price. If the wine is on special offer for such long periods of time, is the consumer then being ripped off when they purchase it at a normal price? And do sales of these wines eat into those of other wines sold at a genuine price?

As Jamie Goode writes on his Wine Anorak blog: “The problem with deep discounts and price promotion is that it’s the lazy way to sell wine. Go down a supermarket aisle and the only buying cues for punters are the money-off stickers and shelf barkers. We’re becoming a nation of promotion junkies”. On the one hand the brands are buying shelf-space; they hold the whip-hand determining what is sold where. Meanwhile, the supermarkets relish this financial flagellation, accepting it as part of their unappealing marriage of convenience. Supermarkets, effectively deep discount centres, have over the years managed to completely confuse the already blurred lines between discounts, special offers and bin end sales.

Jamie goes on to speculate what might happen if price promotions on alcohol were banned? Retailers would have to think of new ways of merchandising wine. Wine could still be sold cheaply (for example, a clearance line), but the original price would not be displayed. And it would be illegal to refer to competitors pricing (a sort of back-door promotion).

Undoubtedly, supermarkets sell deals and do so extremely effectively. Wine is purely a commodity for them. A buyer for Waitrose, one of the more reputable operations, told me purchasing considerations were primarily driven by where the wine sits on the shelf – in other words, price still precedes quality. Skilled negotiation (or screwing the supplier, as I prefer to call it) can bring some decent wines into the fold, but philosophically the role of supermarkets is not to improve the quality of what consumers are drinking, but to improve their sales at all costs.

Because of their buying clout, and the attractiveness of the one-stop-shop, supermarkets will always dominate sales but the independents can level the playing field. They can focus on better customer service, smarter education and making their outlets as attractive as possible. They can specialize and offer alternative wines ie from artisan growers, or less commercial, more individual wines. Go into any supermarket and you will see dozens, even hundreds of identical brands. The independents can advertise themselves as purveyors of quality; they can point to their relationships with their growers, they can show that they understand provenance. Supermarkets employ consultants to eliminate risk; their notion of quality control is a wine that won’t offend anyone. It is poor use of the resources of the masters of wine they all seem to employ these days.

Returning to the subject of price promotions my modest proposal would be that no wines should be discounted (except bin ends), but that supermarkets can give cash-back on those products that attract brand marketing support. This cash-back is tantamount to a naked admission that they are selling wine as a means to an end, a bribe to retain customer loyalty.

Otherwise I would legislate to ban bogof, 7 for 6 and similar, ensuring supermarkets and other shops sell at a straightforward price and make it illegal to retail at cost or below. We shouldn’t be playing games with, or fighting price wars on, alcohol. The system has to be made transparent by means of regulation. I’m aware that this is a pipe dream, but any measure that reduces the hegemony of supermarkets, encourages diversity, and promotes quality and individuality over quantity and global conformity is actively worth fighting for.