Champagne supplier warns against discounts
A leading supplier has warned that Champagne houses cannot afford to devalue their brands by competing with sparkling wine on price.
Champagne sales are down 1% in value and 2.7% in volume in the off-trade (Nielsen, year to September 14) while sparkling wine is growing at 13% and 10% respectively.
Retailers have slashed prices of their exclusive Champagne to £10 and branded Champagne to £13 to drive footfall and boost sales.
Oliver Dickson, senior brand manager at Piper-Heidsieck, told OLN: “One of the noticeable differences this year is the increasing of volume sold on promotion from the big houses like Moet and Veuve.
“Typically they would command the highest average retail price in the market. We have noticed the big houses selling around 20% more volume on discount and they are coming up to where the rest of the [branded Champagne] category is on promotions.
“They are being more aggressive to compete with sparkling wine.
“If big Champagne houses continue to go down the promotional route and try to match the price of sparkling wine, consumers will think they are similar products and we will struggle to get strong equity in Champagne.”
Dickson said Piper-Heidsieck is down 11% in value and 14.5% in volume in the off-trade but added that this is expected as the brand tries to move away from discounting.
“Historically we have fallen back on half-price but we are all about rebuilding it now,” he said.
“We are happy to take a bit of pain in the short-term. It could take five to 10 years to turn around the equity on the brand.”
Asda has Piper-Heidsieck at £18 down from £30 and Dickson said: “We can recommend our retail pricing to the off-trade but some retailers are now sitting on a fair bit of stock from throughout the year and are going to deep discounting on all brands.
“It’s our intention from 2014 onwards that Piper-Heidsieck never drops below £20. It’s very difficult to drive equity messaging if it’s sold at half-price.”
Instead Dickson aims to promote the wine’s quality by emphasising on the bottle that chef de cave Regis Camus is IWC sparkling winemaker of the year for eight years in a row.
He will also launch more gift packs as his research suggests 70% of Champagne is bought as a gift, while ramping up French provenance with an outdoor ad campaign called Grand C’est la Vie and promoting its links to the Cannes Film Festival.
“We want consumers to know the quality credentials around Champagne,” said Dickson. “People coming into sparkling wine is a good thing. Hopefully they will trade up to Champagne.”