Tricks of the trade-up
If you know your customers well enough, you're in with a chance of getting them to spend more. Nigel Huddleston reports on new research
There's never been a more important time to find ways to get consumers to pay more for wine. Pressure on retail margins, the binge-drinking outcry and the impending economic squeeze are all fuelling a drive to persuade customers to trade up to better quality and more expensive wines.
Wine Intelligence's Industry Council - whose line-up includes Tesco BWS boss Dan Jago and representatives from Sopexa and Foster's EMEA - asked the research company to get nearer some solutions through a detailed study of how, when and why consumers buy wine.
Quantitative research was carried out among 1,000 consumers, the details of which are being kept under wraps until the London International Wine Fair, but OLN has been given an insight into the second strand of the research project.
This involved observing a select band of consumers for four weeks, to build up a detailed picture of their wine-buying activity and to establish how entrenched they were in their habits, and what potential there was for wine producers and retailers to change them.
Wine Intelligence project manager Nicola Engelbach said: "We conducted a full study which included in-depth home interviews, diaries recording all their wine drinking and purchases, accompanying them to retail outlets to see their natural shopping state and questioning them whilst they were buying. We even looked at where and how they store wine in their house and also took them out to restaurants and bars to see their wine purchasing behaviour in the on-trade."
Those being observed and interviewed slotted into the following three wine-buying consumer groups.
Sociable bargain hunters
These are frequent wine drinkers with relatively low spending levels. They tend to come from older age groups, either in or coming up to retirement.
Engelbach said: "The people within this group all behaved in a very similar manner. They were very much price-driven."
Not surprisingly, th ese consumers buy nearly all their wine from supermarkets, and
the group is particularly problematic when it comes to trading up because of the ir commitment to bargain-hunting.
"Because they're always buying brands and looking for promotions, there's very little need for them ever to spend over £5 a bottle," said Engelbach. "There will always generally be a brand that they know they like available for less than that.
"Once someone is
a sociable bargain hunter they are unlikely to leave that group and there's
the industry can do . They just don't see why they should spend any more than they do on wine."
This is a less problematic group who aren't as nailed to the pursuit of cheap wine as the first. They are typically from "middle England", have families which keep them at home, and are more knowledgeable about wine at the top end of the group.
"They still buy a lot of wine from supermarkets and will go for a bargain if they see an offer for 20% off six or six-for-five," Engelbach said.
"But they do have more interest in the quality and enjoyment of wine. They feel the bottle of wine they put on the table for a dinner party is a reflection of themselves.
"They don't take pride in saying they got a wine for £2.99, but they do in saying they got a good wine for £6."
They feel at home with Oyster Bay and might trade up to brands
such as Louis Jadot.
So they will trade up, but crucially they need to feel they have a good reason to do so. Engelbach says providing them with information is key in persuading them to do so.
"A lot of the time, they're just not being told why they should spend more for everyday drinking wine," she said.
For these people, wine is more of a hobby. "It's an experience, not just a product," says Engelbach.
"It's on a par with going out for a good meal or going on holiday. And if they do eat out, the focus will be as much on finding a good bottle of wine as it will on the food."
These people are typically in their 30s and have often got into wine through visiting a vineyard when on holiday.
They still shop at supermarkets to buy brands they like at the Wolf Blass or equivalent level, but they also spend a lot of time in independent specialists seeking out different wines.
"If they have a partner, wine buying will be something they do together as an occasion," sa id Engelbach. "If they see the right thing in an independent they'll trade up from £5 to £15."
This group has the highest potential for trading up, but again they need a good reason to do so.
"To get them to spend more regularly at higher levels, retailers need to look at the range and the information they provide," Engelbach said.
"The range issue isn't just about having a good one, but constantly refreshing it to make them feel there's something new. It's also as much about giving them something that's really great value at £6 as it is about more expensive wines."
The potential to trade up the last two groups of wine drinker is there, said Engelbach, but to do so the consumer has to be kept in mind.
"They need information telling them about the wine: why it costs £7, who made it and how, and, above all, why they're going to enjoy it."
The research findings will be unveiled in depth at 2.30pm on May 22 in the Wine Intelligence Club Meeting House at the LIWF.
Register by contacting email@example.com