UK retailers have made things rather difficult for the likes of Diageo, Constellation and other alcohol companies by imposing huge discounts on alcoholic beverages in their stores and launching private label brands that cost next to nothing. Things were starting to look better once the government got involved over binge drinking concerns, but now Tesco plans to sell a bottle of wine at the same price as a glass in some pubs and restaurants. The chain says it is considering adding wine to its "Value" range, which means it could cost as little as £2.99 a bottle.
In recent years wine companies were forced to sell their brands much cheaper than normal to compete against private labels in UK retail shops. Constellation chief Rob Sands commented in the company's last conference call that the situation in the UK had improved. But are things about to get bad again? The Scottish government has already claimed such a move by Tesco "strengthens the case for government action to stamp out irresponsible promotions and pricing."
The Value wine also comes five months after Tesco said it wanted to work with the UK government on new laws to ensure the responsible pricing of alcohol following widespread concern that cheap alcohol is fueling binge drinking and crime.
Tesco's Dan Jago, director of the beer, wine and spirits division, says the chain's plans are a reaction to the credit crunch rather than any attempt to create a new alcohol price war with its rivals. Tesco already as Value brand beers and spirits and believes wines are a natural extension.
Tesco's Dan Jago said: "In the current climate it would be mad if we weren't exploring the value end as part of our ongoing review. We are inventing what our entry-level wines look like to offer the best quality and tastes that are great for the price.
"If customers say they want less expensive wines, we'll make sure we have them. Just because a customer is not paying £6 does not mean they don't deserve a quality wine."
Wine & Spirits Daily