Aldi and Lidl force supermarkets to wield axe
Tesco is drastically reducing its wine range to arrest haemorrhaging sales as the discounters’ growing dominance forces sweeping changes across the big supermarkets.
Suppliers are braced for a significant cull as the number of lines falls from around 900 to 600 following a complete overhaul of Tesco’s buying team as it slashes head office costs.
New wine buying manager James Davis MW joins later this month to oversee a heavily compacted team amid a raft of high-profile departures.
Latest sales figures from Kantar (52 weeks to March 29, 2015) show Tesco’s wine sales are down 3.3% to £1.3 billion.
A Tesco spokesman said: “The wine team is taking a fresh look at the wines available in stores to reduce product duplications and to simplify the range for customers.
“The idea is not to cut the range to a certain size, but to ensure Tesco has the right selection of wines for customers, in the right stores and at the right price.”
A leading supplier told OLN the wine buying team could face further redundancies as a result of the range reduction. He said: “More cuts could be on the cards. After all, how many people do you really need to manage such a reduced range?”
Tesco’s rivals are also reviewing their ranges and structures to maximise cost efficiencies and tackle the increasing stranglehold of the discounters, which have amassed nearly £100 million more wine sales in the past year at the expense of other stores.
According to Kantar, Aldi sales are up 18.7% to £272 million while Lidl surged 31% to £205 million, a growth of £48.6 million.
This week Asda revealed it would trim 8% from its range, while Morrisons and Sainsbury’s have both announced plans to axe head office jobs.
A leading supplier said: “The discounters have got all the big guys on the run. They are all making cutbacks at head office level and players that have always held control, such as Tesco, are really struggling to stay relevant. The others will probably all
look to cut down their wine
offer too once they have worked through their redundancies. The discounters have proven that small, interesting ranges can be just as appealing – if not more
so – as the huge selection that might have worked when that’s all shoppers knew to expect. But the rule book has been rewritten.”
In contrast to range reductions by the traditional supermarkets, Hulme is adding 40 new wines to Lidl’s 58-strong range.
The summer collection is sourced from across the globe and priced from £4.79 to £16.99.
Hulme said: “The growth of our wine cellar is testament to the great quality wines that we’re stocking and the considerable appetite from our customers for fine wine. To be recognised as a go-to destination for wine shoppers is something we are delighted to have achieved.
“We are excited to be introducing a more varied wine selection for the summer and hope our customers will enjoy the fresh new range we’ve designed to satisfy every palate.”
Lidl is also looking to take on supermarkets in the beer aisle by adding a portfolio of 48 beers sourced from breweries across the UK. It is teaming up with former Blur bassist turned foodie hero Alex James to launch the products.
Aldi has so far been the biggest winner in the premium bottled ale sector, stealing share from the big four as well as Lidl.
Growth set to continue
Discounters are set to continue on their inexorable growth course, 98% of wine suppliers say.
Eighty per cent of suppliers polled in OLN’s annual Wine Report believed that after a period of growth the discounters’ share of the market would stabilise – but 4% said they would keep growing and take over as the biggest retailers of wine in this country.
Nick James, outgoing managing director of Pol Roger, said: “I do not believe the likes of Aldi and Lidl should be referred to as discounters anymore. What they offer in terms of quality on both wines and food is often higher than is found in the big four.”
Another supplier warned supermarkets were in danger if they reacted by trying to beat discounters at their own game. He said: “Following the discounters’ lead is only going to end in tears for the supermarkets – they need to make their offering more compelling.”
De Bortoli business development manager Mark Wilson said: “Their growth is likely to continue until the supermarkets adjust their margins.”