Champagne for £7.50 – Tesco selling under cost – why?

31 03 2016

We often see silly deals on booze at key seasonal shopping periods. This has to take the biscuit though as, if you take advantage of the 25% off 6 bottles, the Tesco price of Pol Aime comes down to under £8 a bottle and less than some Prosecco!

Let’s work this backwards.

Assuming you buy 6 bottles then you’ll get 25% off and pay £7.46 per bottle. Take VAT off and excise duty (sparkling wine is £2.67) so Tesco is left with £3.55. There’ll be some costs for shipping, warehousing and distribution – let’s say a conservative 20p per bottle (assuming they shipped several container loads). £3.35 in euros is €4.25. According to Drinks Business (March 2016) “The average price of grapes across the region in 2015 has stabilized at €5.89 per kilo”. It takes 1.2kg of grapes to make a bottle ie. €7 worth of grapes. That’s before any of the costs of making champagne with its two fermentations, ageing it for the legal minimum of 18 months nor the cost of that extra strong bottle, the mushroom cork, wire, foil, label and carton.

Anyone can see that doesn’t add up and someone is losing money somewhere. Perhaps the producer has an excess which they’d like to offload at a knockdown price but even so I’m betting that Tesco are losing money at the £9.95 price let alone the 25% off price. So why do it?

The answer is market share. It’s a very competitive world and there seems to be a race to the bottom on price. Yes consumption is elastic to a degree ie. if you decrease the price you’ll encourage people to drink more, but basically if you want to grow your sales you have to steal them from someone else and as Easter week is like a mini Christmas the more sales you can steal away from your competitors the better. Plus if you’re a supermarket advertising a killer deal you’ll attract more customers (away from ever more popular Aldi & Lidl) and they’re bound to do some grocery shopping of higher margin goods while they’re there.

I have to come clean and say that the only reason I knew about the offer was because my husband heard about it and bought some! So, yes the strategy works. We’ll sit on these bottles for a year or so and I dare say they’ll be perfectly acceptable. There’s a risk though that ever lower prices decreases the perception of quality and whole champagne brand image.

Champagne needs to watch out. Prosecco has become popular not just because it’s a cheaper alternative to champagne but because many prefer the simpler, fruitier, unstuffy style. Premium Proseccos are becoming trendy. Cheap champagne at a similar price isn’t.

Advertisements




2005 Feytit Clinet – glad I bought en primeur…

28 03 2016

With the 2015 En Primeur campaign kicking off and looking at prices of 2005s and 2009s, some of which haven’t increased, I was interested to try these wines and see whether I still think it’s worth buying En Primeur.

In 2006 I purchased 6 magnums of Feytit Clinet and 12 magnums of Ch Jonqueyres, a Bordeaux Superieur. We enjoyed three of them today for lunch (yes it was a big lunch with friends, not just the two of us!). Both the wines were excellent – the Feytit Clinet clearly more concentrated and powerful with a future still ahead and the lesser wine ripe and juicy, perfect to drink now.

Out of interest I looked up my paperwork and the Feytit Clinet was £267 in bond (6x150cl) and the Jonqueyres £108 (12x150cl). Today the Feytit Clinet is worth about £400+ and I can’t find a price for the Jonqueyres but you’d probably have to pay double now.

However for me the pleasure was all in having bought these wines as babies and having nurtured them carefully and then got so much shared pleasure from them. How much I paid for them and whether they had increased in value wasn’t really the point. They could have gone down and it wouldn’t have mattered, the initial outlay was long forgotten.

Isn’t this the real reason to buy En Primeur – for the future enjoyment not the investment potential. The other lesson I’ve learnt is to buy some magnums of a really good 2015 Bordeaux Superieur this year. Our children will definitely thank us in ten years’ time…





Looking forward to these magnums for lunch tomorrow!

26 03 2016

With the Bordeaux 2015 En Primeur tastings nearly upon us, I remember loving the 2005 vintage of Feytit Clinet when I tasted it en primeur ten years ago. Tomorrow I’ll see how the wine is maturing and whether I made a good choice…





Such a lovely Sancerre

26 03 2016

Dancing, delicate, minerally Sancerre with lovely finesse and delicious with fish pie for Good Friday. Claude Riffault is one of my favourite growers. I tasted loads at the Loire Wine Fair and just kept coming back to this top class producer.
sancerre riffault