Campos: Champagne is a "hostage" in retail price war
Retailers are jeopardising the future of Champagne by slashing prices and using it as a loss leader to drive footfall, according to a leading supplier.
Tesco responded to Asda’s £10 Pierre Darcys Champagne deal by cutting the price of its Louis Delaunay Champagne from £25.99 to just £8.
Julie Campos, managing director designate at Nicolas Feuillatte, the UK’s number-three Champagne brand, told OLN: “I had difficulty believing Tesco was selling Champagne for £8. I had to go to the shop to see it for myself. It was obviously being sold at a loss. Selling Champagne at £8 a bottle has no bearing on the cost price. It’s extremely misleading to the consumer.
“Champagne has become a bit of a hostage. The retail market is not expanding so the only way to improve figures is to grow market share. There has been a tendency in the past few years to cut prices on a few key products, such as Champagne, to get consumers in the door, even if you sell at a loss. It attracts consumer attention, but it’s dangerous for Champagne.
“How long can it continue? It’s not sustainable and it sends the wrong message to the consumer.”
She added: “There’s nothing we can do. It’s illegal to sell at a loss in France but not in the UK. It’s a very touchy issue, because consumer spending power is down and making popular things cheaper doesn’t get attacked – it’s popular politically to do it.
“It’s unfair on the companies that spend years investing in the vineyards and cellars and ageing the wines to deliver year-on-year quality, and spending a lot of money on marketing, to have people come in on the back of all that and sell it at a loss, it’s frustrating to say the least.”
Champagne has struggled in the UK recently due to the rise of Prosecco, but Nicolas Feuillatte is bucking the trend, with value sales up 8% (Nielsen, year to July).
Campos believes the it could soon become the UK’s number-two Champagne brand - it is currently third behind Moët & Chandon and Lanson - but she fears for the overall Champagne category as producers are too focused on their own brands and are not working collectively to promote the appellation.
She said: “For almost 10 years there hasn’t been an effective generic communication. Probably because they felt untouchable. That’s a mistake. No matter how strong a generic brand is, if you neglect it at some stage it will weaken and become threatened.
“Most of the brand building has been done on the individual brands in the past 10 years and it’s not sufficient to protect the appellation against market trends such as the rise of sparkling wine from around the world.
“Younger people don’t necessarily know enough about Champagne – how it’s made, how much is available. They know it is expensive but nobody is explaining what differentiates it from other products.
“Differentiation is the basis of all marketing and Champagne’s differentiation hasn’t been defended. The Champagne Committee doesn’t speak to the consumer. It’s important to build individual brands but it’s also important to work collectively to explain what Champagne means to younger consumers.”
But she added: “It would be folly to disregard the performance of Prosecco. In the short-term it can be scary on volumes but in the long-term it’s beneficial because more consumers are becoming aware of sparkling wine.”
* Nicolas Feuillatte has secured its first ever listing with Waitrose for 2014.
It will stock two SKUs that no other UK retailer has and Nicolas Feuillatte said it was pleased that UK consumers were being offered more from its range.
“The trade doesn’t know how big our range is,” said managing director designate Julie Campos.
It has also launched Nicolas Feuillatte Xploration as a limited-edition for Christmas, and it is selling a bottle of Grand Reserve with a metal, branded ice bucket t in Sainsbury’s for around £20.