Supermarkets Flashcards
Sm are the most important retail outlet for groceries and households good, why? Give examples of sms
-consumers can buy everything under one roof
-British Tesco
-US Walmart
Sms have the largest market share when it comes to wine sales, why is this attractive to producers?
-can sell large vols of wine
What type of wine do sms usually stock?
-well known, popular regions and varieties
-made in the style that appeals to wide range of customers and they may have little wine knowledge
-wine producing countries= dominated by local wines
Give some examples of well known wine brands stocked by sms and why they are used.
-Jacob’s Creek, Barefoot, Oyster Bay
-attract customers to buy wine at sms
However, what is the problem with these widely known brands?
-widely available with lots of retailers
-customers can compare prices and buy wherever cheapest
What do supermarkets do so that consumers can’t compare prices?
-private labels
-stock wines bottled under labels exclusive to them (even if wines are available elsewhere under different labels)
-may be wine brands that are exclusive to particular sm- sm may have created the name and brand although sms name doesn’t appear prominently on the label
-eg Wamart, Cosco, M&S
-some have own brand range of wines (that clearly displays sms name and branding on label)
-eg Sainsburys Taste the Difference
-if brands popular, can promote customer loyalty to that sm
What do private label wines need to be?
-available in large formats= usually from larger producers
Why are private label wines attractive to producers?
-sell larger vols and high level of market exposure- sometimes in more than one country
-sms buy directly from producers= no intermediary costs
-many sms employ wms who work closely with producers
= supervise production and ensure quality control
=might improve quality of other wines they can sell elsewhere
What are the risks of using sms?
-sms need to offer varied product range- no point lots of similar wines competing at same price point
=lots of competition at same price
=more producers wanting to sell than sm needs =excess of supply over demand
=sms have enormous negotiating power, especially w price
=producers don’t receive as much for their wine as if they were to sell it through other channels
What’s another downside of using sms?
-producers expected to pay fee to have wine stocked with sm
-and for added promotions- eg desirable product placement and magazine coverage
-when sms offer price promotions- producers expected to pay for any reduction in profits due to reduced retail price
What do the strict contracts between sms and producers require and what happens if they don’t meet them?
-QC
-timing and manner of delivery
-packaging and labelling
-if not met, can refuse to take the wine
-if don’t achieve expected sale vols/profit margins= delisted
=serious financial repercussions
=worst case: left with large vol of wine can’t shift
What are some premium sm chains doing?
-buying from artisanal producers
-bought smaller quantities, once it’s sells out- no more
-customers= strong influence in wine
=may offer useful route into market for artisanal producer
