Cut price Champagne offers in our Supermarkets are now increasingly becoming the norm. Most visits to the supermarket wine section will find bottles of Champagne for £15 or less. Last Christmas and New Year, offers were even seen for £10 per bottle. Champagne is supposed to be a premium product, so just what is the reason for this recent discounting and what is the effect on Champagne’s image?
Firstly, I think it is worth mentioning that the concept of heavily discounted Champagne is nothing new as this article I came across from the Independent in 1992 highlights. Moet & Chandon, in expressing their concern over supermarket own brand Champagne being sold for £7.99 a bottle, point out the long term damage to the brand and perceived quality of Champagne. “The quality of some of the cheaper labels is definitely questionable. At this price point they will often represent a first-time purchase for many consumers. We believe they may be discouraged from purchasing Champagne again”. As the article point points out, “instead of trading up to Moet and other grande marques, the fools will look to good value sparkling wines coming from the New World” (or nowadays good quality and similarly priced Prosecco or Cava).
That was an example from over 20 years ago but I would argue that today’s level of discounting and availability of budget champagne is far more prevalent then back in 1992. Looking at the impact of discounting on the big brands it is clear that large discounts for well known labels could cause huge damage to a brand’s perceived value. These Champagne brands have been built up over time at considerable cost. Heavy discounting may be beneficial in the short-term but ultimately, longer-term, it will prove incredibly destructive for a premium brand. As a personal example, over the last year I have purchased Piper-Heidsieck Champagne on a number of occasions from Tesco for £16. There is now no chance that I will ever be persuaded to pay the £28 non-sale price. A more extreme example was a bottle of Bollinger I purchased a few weeks ago from Sainsbury’s for £24. Why would I now want to pay, or even believe that it was ever actually worth, £46? The consumer mindset in supermarkets will soon be that there is always a big name on offer at the £15-£24 mark, so why bother to pay any more?
While the Champagne producers may well have little control over supermarket discounting, they should be concerned. As discounting becomes the norm it will be increasingly hard to justify the premium placed on brands in the £28+ bracket, especially when reduced or supermarket own label premium Champagne at £15-£24 tastes just as good.
Once you have started discounting it is incredibly hard to wean customers off and move prices back to where they were before. Eating out is another example. If you don’t go to Prezzo,
Pizza Express or Strada (a few examples among many) without some sort of voucher or money off gimmick you cannot help feeling you are somehow paying over the odds.
Champagne sales are down in the UK with 2013 volumes down by 5% year-on-year. Discount Champagne brands may be an attempt to stem this decline in volume by tempting consumers away from Prosecco and Cava – which actually saw sales volume increase by 8% in 2013. Attempting to draw customers away from Prosecco and Cava may well be a good idea but it could be doing real damage to the Champagne brand as a whole. Due to the increased costs of production and rising costs of grapes, a £10 bottle of Champagne is close to being as cheap as it can be and as a result might not taste that great. An £8 bottle of Prosecco is therefore likely to be a far more enjoyable and memorable experience (I recently had a £10 bottle of Champagne as an ‘experiment’, it was nasty and yes, the money would have been better spent on a good bottle of Prosecco with change left over). While this does echo Moet & Chandon’s earlier point, it also raises the point that people may start to think that there is something wrong with it or that Champagne of the £10 variety, but Champagne all the same, is not actually that nice.
So what’s the answer? The big brands seem to be feeling the heat from the drop in overall sales as well as the increase in cheaper own label alternatives. Heavy discounting is only ever a short-term tactic when you have a large powerful brand image and value to maintain. Perhaps they are worried that consumers will start to feel at home in the £15-£24 bracket and will stop believing in the marketing hype that attempts to justify a £30 product? An alternative could well be an increased focus on the value offered by Grower Champagnes. Never strong on a marketing front (one of the reasons for their low price), they struggle to get their product out to consumers on a large scale and move out of the ‘niche’ area of the market understood by only a few ‘in the know’. They do however offer the perfect match of a quality product and a fair price. They also have the potential ability to differentiate on a village or domain basis – unlike the big names or cheap supermarket labels. Yes its Champagne but its also from a particular Grand Cru or Premier Cru village. This is something the other two categories cannot do by the nature of being mass produced blends from many different vineyards throughout Champagne.
Coming in at the £25 mark, grower Champagnes (identifiable by the letter RM on the bottle) seem to offer what other forms of Champagne don’t; a high quality product at a reasonable price, a product that is not artificially priced to fund a huge marketing campaign and lastly, a product that is individual, unique and interesting – something that simply seems to get lost in other types of Champagne.