Constellation chief slams deep discounting
- Friday 24 November 2006
Moramarco - CEO of the European arm of the world's biggest wine company - said our addiction to deep-cut discounting is turning the UK into a ‘commodity market’ for wine, but admitted much of the blame for the current situation could be laid at the door of wine producers themselves.
Speaking at a recent seminar on price compression, he said it was essential to get brands established across both the on- and the off-trade, and move away from deep cut price promotions.
‘They’re a very effective driver of business, and the UK consumer is very discount-driven, but we have to change that mentality. To do that, we have to get restaurateurs thinking about brands, and we have to convince the multi-specialists that big is not ugly.’
He contrasted the situation in the UK to that in the US where, despite a similar average expendable income, and far lower wine penetration as a whole, a significantly higher percentage of wine sells above £10.
‘One of the risks the UK has at the moment is that it could be perceived as a commodity market - and one of our challenges here is how to reshape that,’ he said.
‘We have not been good at building higher priced wine brands that consumers recognise and want to buy. We need to put those in place now – and the quality had better be in the bottle.’
Dan Jago, Tesco’s wine, beer and spirits supremo, agreed that the wine industry had been too quick to play the price card.
‘The wine industry is not that good at running itself as a business compared to spirits and beer,’ he said. ‘Don’t just bring us deals; bring us innovation.’
He also admitted, however, that it would take a long time to shift the mindset of the consumers, citing UK supermarket Asda’s ‘Every Day Low Price’ strategy as one that hadn’t worked, ‘which is why they’re changing it back. The consumer likes promotions.’