UK wine trade must ‘wake up’ to change

(TDB) - “The wine trade is at a crossroads”, warns John Osborne of PLB Group, as he outlined the need to adapt to a major shift in promotional mechanics and stop consumers abandoning the wine category.

Speaking to the drinks business as he prepares to step into the role of PLB managing director next month, Osborne warned: “The agency model needs to adapt and the whole trade has to wake up to the fact that the industry is changing.”

In particular, he highlighted the impact of government regulation imposed by the Office of Fair Trading, together with the code of practice signed by most of the UK’s major multiple retailers in November 2012, which has resulted in a shift away from half price promotions.

“Retailers are having to change their whole promotional mechanic,” Osborne remarked. “Half price deals drove sales for years but the government guidelines are that you don’t do that any more.” Despite the short-term challenge this shift involves for the industry as a whole, he maintained: “In the long term it’s healthier.”

Osborne also offered a forecast on the knock-on effect of this promotional change, predicting: “Exclusive labels will start to decline because you can’t halve the price so brands will come in again.” In particular he highlighted the rise of “pillar” brands, including supermarket own label offerings. “That’s when you give consumers the chance to try things they wouldn’t have before – things like Falanghina”, said Osborne.

As a result of these changes, he described a scene where “there are more SKUs now across a wider range of categories” which means that suppliers in turn “need to be fleet of foot”.