14 May, 2010

Could this be the end of three-for-£10? Although it can’t lay claim to entirely inventing the wine-retailing wheel, Asda certainly got the ball rolling when it came to multibuy pricing around the magic denominator of 10. A dubious accolade, some might argue, but with three-for-£10 pricing on wines, the retailer hit upon the silver bullet to gain the confidence of a large chunk of its shoppers who weren’t going up the wine aisle and needed some pointers.

For many, it was far too blunt an instrument, but consumers seemed to disagree, securing the mechanic’s ubiquity across the trade.

Love it or loathe it, and let’s not overlook the fact some suppliers were secretly big advocates, there wasn’t any escaping it in stores. A senior figure at one of the retailer’s biggest competitors was said to have been so incensed by nearly tripping over the bays during a recce into enemy territory, that he demanded his buyers increased the prominence they gave to it pronto.

Its simplicity was key to its success – only time will tell how wedded shoppers actually were to the £10 price tag. Psychologists might argue consumers would always opt for a perfect 10, anything higher breaking some kind of impermeable mental barrier. But research has also shown shoppers would be willing to pay a few pounds extra for a multibuy if they believed retailers have put better wines in the mix.

One thing’s for sure, the switch comes at a time when pricing has never been more sensitive in the market.

Running a rule over the current list of top-selling brands, you have to go a long way down before you hit a brand that has managed to simultaneously increase its price and sales.

At number 10 in the list, the gong goes to Concha y Toro’s Isla Negra, which is obviously doing something right. One advantageous string to its bow is the negotiating power it can leverage from having a broad portfolio to offer.

Selling wine is as much about juggling the numbers as it’s ever been, and it doesn’t take Einstein to work out that on a three-for-£10 mechanic, there wasn’t much fat to go around.

Things have been getting leaner still with the last government’s taxation policy on alcohol (and you can bet it’s not going to improve under the new one).

It’s commendable that retailers are citing a desire to move consumers up to more interesting wines as the motivation for increasing prices, but the stark economics of three-for-£10 were clear for all to see.

For all the moaning about a minimum price for alcohol and concerns that government policy is distorting the market, the reality is that, through duty, it’s already happening.

Quite how much this matters to the trade is a point to debate another time. But if the end result of new pricing levels means consumers start to understand the benefit of spending more on a bottle of wine – and Sainsbury’s believes there are plenty of ways to inform this decision beyond price – I don’t know anyone attending next week’s London International Wine Fair who wouldn’t see it as cause for some celebration.

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