Big Interview: Waitrose beer, wines and spirits boss Pierpaolo Petrassi
Pierpaolo Petrassi MW presides over a BWS empire that is showing healthy growth and cannot stop winning awards for the dynamism it brings to the grocery channel.
Waitrose has long over-traded in wine and is now outgrowing the market in beer and spirits too as consumers emerge from the recession and wander into its stores searching for something suitably delicious to wash down their Kalamata olives and focaccia loaves.
The BWS section of a typical Waitrose is an Aladdin’s cave, crammed with treasures from across the globe. At the supermarket’s autumn tasting this week Petrassi’s team showed off a new range of world whiskies that puts some specialist retailers to shame, and he speaks fondly of the way his bosses indulge him by allowing him to stock more sherry and dessert wine than is perhaps commercially astute.
Yet the numbers speak for themselves: Waitrose has a 5% share of the grocery market, but a 7% share of the wine trade (Kantar Worldpanel, year to September 14).
It sounds like cause for buoyancy, but Petrassi’s delight is underscored by an ominous note of caution, one borne out of the fear that his empire and the myriad treasures it contains could soon come crumbling down if alcohol follows the same path tobacco has been frogmarched down in recent years.
“Not a day goes by when alcohol misuse isn’t in the press,” he says. “We spend a lot of time thinking about it. There is a huge pressure on the industry to sell in a responsible way, but not everyone does and that will come back to bite the industry eventually.”
Bottles of Château Haut-Brion Pessac Leognan or Nils Oscar God lager would not look quite so dazzling with pictures of diseased livers adorning them, and Petrassi believes there is a serious chance of this happening if the industry does not buck its ideas up.
“The industry says the more government meddles, the worse it is,” he says. “But that’s short-sighted. We will be in the position tobacco is now in if we don’t work with the government and do more voluntarily.
“We make counter-commercial decisions because it is right in the long run. We are doing it to safeguard our future in a sustainable way. The easy temptation is to sell alcohol in a less responsible way for short-term gain. That's wrong. We need to make generational decisions.
"We are against price-busting promotions. It's controversial but we would be supporters of minimum unit pricing and legislation to end multibuys. We have managed to trade fine in Scotland after the multibuy ban.
“Not everything government has proposed is right, but I am under no illusion that unless we take proactive steps now we will damage the future of the industry.”
Critics may think it is easy for Petrassi to say that when he is operating at the premium end. Waitrose has almost become a parody of itself in popular culture – the iconic “overheard in Waitrose” Facebook page is full of amusing anecdotes about the dialogue overheard among its upmarket clientele. Among the best are: “Is it still called bread and butter pudding if one uses brioche?” and: “Don’t rummage around in the reduced bin – someone from the golf club might see you.”
But Petrassi, one of the world’s leading wine experts and a man who has previously held senior roles at Tesco and Waverley TBS, seems to be genuinely speaking as somebody seeking to preserve a trade he loves. He also understands the need to be competitive, but believes in sustainable price promotions used sparingly rather than swingeing half-price cuts that drive volume.
"We want to grow in a way that is sustainable," he says. "You can buy share – there is an inextricable relationship between share and price. If you drop price people will come in and buy more. But to be sustainable you need to grow share by persuading customers to buy something more premium.
“We can’t ignore the fact that we still have to be competitive, but we like to give value for money at all price points. I have bought £5 wines that I have been ashamed of – such a waste of money – but I have bought wines for £15 that are great value and have a great story.
“Our price for Oyster Bay and Casillero del Diablo has to match the marketplace. But doing heavyweight half-price offers doesn’t help – in 52 weeks' time you scratch your head and wonder what to do now. If you are stuck in a quarterly cycle of feeding into the overall company sales data for a FTSE report you can get sucked into [deep discounts], but it’s not sustainable.
“Money off should be a reward for loyalty. You don’t just want the customer to go to the gondola end as a default. Then they don’t understand the value of the wines. They don’t understand how much dishwasher tablets cost because they always buy what is on half-price. That would be a very dangerous place for the wine industry to go. There is no point in having 1,500 beers, wines and spirits if people only buy what’s on promotion.”
Petrassi points to Waitrose’s three-beers- for-£5 deal working well because it encourages experimentation and “inspires a shopper to buy three bottles rather than eight cans”.
He adds: “We use 25% off six bottles of wine with real discretion. The competitive set uses it far more frequently, but I think we get a better response because people can’t wait for it and it doesn’t have a negative impact on the preceding weeks. People revel in the range and try new things. The average item price actually shoots up during the promotion as people see it as an opportunity to try something they wouldn’t normally buy.
“Fighting on price will never take the market forward. Inspiring customers and making wine more than a three-dimensional entity will.”