Tesco reviewing wine promotion policy

Under mounting pressure from discounters, Tesco Ireland has announced that it’s abandoning its Tesco voucher scheme and is to reduce prices generally. It also seems to have reviewed its wine promotion policy for major Bank Holiday promotions in a bid to slow the growth of its rivals Aldi and Lidl.

Tesco has already confirmed that it’s reviewing its half-price wine promotion deals in the UK which look as though they will be phased out in October.

According to a recent report in Off-Licence News in the UK, “The move follows Sainsbury’s decision last year to drop half-price as a core price lever, a move analysts cite as the reason it lost significant sales, forcing it to reintroduce the deal on an ad hoc basis”.

A spokesman for Tesco confirmed that the UK’s half-price wine promotions are under review.

According to Off-Licence News, “Suppliers have warned that axing half-price deals would wipe millions of pounds-worth of sales out of the market and could cause colossal financial problems for businesses that have built their model around the mechanic”.

One such supplier told OLN, “When wine became a 100 million-case market, a third of that was three-for-£10, which effectively disappeared when that promotional vehicle was dropped by retailers. A further 25 million cases were made up of half-price deals and it looks like the trade is about to give up on the last volumetric driver it has.

“No one is making any money on half price, because economically, it doesn’t work when the tax on a bottle of wine is now £3. Retailers can’t make any money on wine at that level, which is why the category is losing space.”

He added, “If Tesco drops it, which we understand is its intention, other retailers will probably do the same.

“The knock-on effects will be huge. Production facilities will no longer be doing as much as they were, which will hit everybody from the suppliers relying on that volume to UK bottling facilities.”

Here in Ireland Tesco has simply reduced the number of labels it has on major promotion and now promotes a €7 special offer on major promotional occasions such as the May and June bank holidays while it runs smaller promotional deals on a range of wines.

There have been three €7 promotions since May.

In one such week-long promotion it’s believed that the multiple shifted 50,000 cases.