Tesco responds to spending habits

The UK’s largest wine retailer has undergone a major category review inresponse to consumers tightening their purse strings.

Dan Jago, director of beers, wines and spirits for the supermarket said the restructuring, which reduces the range by nearly 10%, ensures Tesco meets the challenge posed by shoppers’ reduced disposable income.

Tesco, which is simultaneously rolling out a wine and food pairing initiative this week, has implemented the category changes across all UK stores, tailoring the needs of customers by grouping stores into clusters and taking into account buying habits as well as the location and demographic profile of the store. For example, in affluent areas, where wine is often part of the weekly shop, Champagne will be given 40% of the shelf space while light and fruity wines will have 20% shelf space.

In less affluent areas, Tesco says the ranges have been "edited to reduce both duplication and confusing esoteric wines, while maintaining breadth of choice." The changes are also being seen in beer and spirits where, for example, up or down-weighting of brandy versus cognac is enabling customers to be given more choice within the range from which they actively purchase.

Talking of the review, Jago told the drinks business: “The main purpose of this review was to make sure it was not just suitable for the current climate financially, but going forward too. The challenge has been that disposable income has reduced significantly. As a result of which, people have tightened their purse strings and are much more considerate about what they spend their money on and how much they spend.

"The [wine] range has reduced in size but the largest stores have still got as many as 850-900 lines in them, that’s still the broadest and most comprehensive range of wines on the market."

Tesco, which currently has 30.8% of the grocer’s share of the market, says the review also includes an increase in the facings per line and more ‘grouping’ on the back of the success of grouping still rosé wines together. 

Meanwhile, in addition to a general category review, Tesco is also installing Great with… in 176 UK stores this week, a fixture which capitalises on the fall in dining out through making food suggestions alongside wines.

Jago added: “Great with… trialled last year and the response was phenomenal. It created both the ability to trade customers up in a way with which they were very comfortable, and raise the average spend. We were taking more money because everything from £4 to £10 was featured, including dessert and more esoteric wines."

None of the wines in the Great with… initiative have promotional prices, and the uplift on sales has been significant. Tesco reports that the higher-priced wines were the most successful during the trial, with Robert Mondavi Woodbridge Shiraz up 200%, Tesco Finest Gerard Bertrand Tautavel up 50% and Tesco Finest Ken Forrester Chenin Blanc up 80%.

Tesco’s wine customer planner Sarah Archer said: “With staying-in the new going-out customers are searching longer to find the perfect bottle to take home. If you give customers the right information it helps improve their confidence and helps them try something new. Offering clear categories for food matching is helping people have a more complete dining-in experience.”

A profile of Dan Jago will feature in October’s issue of the drinks business.

Jane Parkinson, 12.08.09