This is an edited version of an article first published today on The Grapevine newsletter from London Wine Fair.
Sorry you have lost me. What do you mean by Puffins and Penguins?
Yes, thought that might throw you. But bear with me. Back in the mid 1990s when supermarkets were still finding their feet with their own private labels there was a whole spate of own label lines that had an uncanny resemblance to the big household brands. It all culminated in 1997 in a landmark court case when Asda launched a Puffin brand to sit alongside family favourite, Penguin chocolate biscuit. Penguin's owners United Biscuits were not very p-p-p-leased about and it all ended with a chunky legal bill for Asda and own label brands have ploughed a different furrow ever since. Eventually creating their own exclusive and tertiary brands that have become as successful if not more so than leading brands in that category. In fact wine has been has been one of the most active and successful areas for supermarkets creating brands like Ogio, or sub brands like Sainsbury's House and Tesco Finest.
So why are we talking about this now?
Well, it appears we might be going back to those days again if the move by Sainsbury's to launch its own Chilean brand, Camino del Angel is anything to go by. On the face of it a brand that covers all the major grape varieties including Chardonnay, Sauvignon Blanc, Merlot, Malbec and Cabernet Sauvignon from such an on-trend and competitively priced category as Chile appears a canny decision. But take a closer look at the brand's design and if you were running a lookie-likey competition for Concha y Toro's Casillero del Diablo then it would stand a very good chance of winning. The fact the brand has appeared on shelf at a time when you will struggle to find a bottle of Casillero del Diablo in Sainsbury's stores then it becomes an even more interesting brand launch (even though you can still buy it online).
What have Concha y Toro said about it?
Well not a lot. But when asked by Grapevine what it thought of Sainsbury’s Camino brand launch it went as far as saying "we're aware of it, and are taking it very seriously. We have no other comment at this time”. Sainsbury’s were not willing to comment by the time we went to press.
But isn't this just a clever, tactical and innovative brand move by Sainsbury's?
Yes, it is all those things. And it is ultimately down to a supermarket to decide what products it wants to sell. Tesco, for example, delisted Carlsberg from its beer range last year and we have not seen customers camped outside shops demanding it is restocked. Brands and own labels will always have a delicate, and at times, uncomfortable relationship. They rely on each other to build up the category, drive consumer awareness and therefore help each other along the way.
But ultimately brand and retailer relationships all come down to pricing negotiations and margin. No matter how big or well established a brand is, it is always vulnerable. You only have to look at Unilever's fall out with Tesco and the so-called Marmite-gate affair last year over the supplier's attempt to introduce price rises. But with raw material and supplier prices going up across the board due to the fall in sterling following the EU referendum vote, those retailer and brand relationships are going to be stretched even more over the coming months.
But where does that leave other major wine brands?
In an even more precarious position than ever before. It is not surprising CYT are taking this matter very seriously. It is by far the biggest Chilean wine brand in the UK, the fifth largest overall and was one of the fastest growing of any wine brand in 2016. It has also invested millions of pounds in getting to be Chile’s number one. Including being the official wine of Manchester United and running one of the most ambitious and expensive TV and cinema advertising campaigns for wine ever with its “Wine Legend” campaign. Yet it finds itself in this situation.
No doubt the likes of Accolade,Treasury Wine Estates and other leading branded wine suppliers are following the situation with increased concern. For they know only too well that consumers given no other choice will happily buy the own label alternative, with different options now available at all price levels. Aldi and Lidl have built their success in doing exactly that.
Are we likely to see other retailers follow suit?
Well, with all our major supermarkets desperate to keep prices as low as they can for as long as they can in the face of the Brexit vote, then it is clear we are likely to see more of the same in 2017. Big chains can use the power of their brands and own label to keep control of the prices they offer, regardless of how popular and successful a household brand is. But, as with all trade relations, the devil is very much in the detail. None more so than in this case.
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