Monday, November 10, 2008

Wine Category Report: Tesco's Fresh & Easy Kicks Off New Merchandising and Promotional Efforts Designed to Grow Wine Category Sales

In this October 27, 2008 story,"Category Management Report: Fresh & Easy Conducting Wine Category Review and SKU Rationalization; We Offer Some Analysis," in Fresh & Easy Buzz we reported exclusively that Tesco's Fresh & Easy Neighborhood Market has been and is in the process of conducting a wine category review and sku rationalization, along with planning to further increase it efforts to promote the wine departments and wines in its stores.

The grocery and fresh foods chain started that increased wine category promotional efforts today, just two weeks after we wrote and published our piece.

Fresh & Easy Neighborhood Market introduced five new wine blends priced under $9 a bottle, today, along with offering a new promotional discount of 10% off on six or more bottles of mix and matched wines, except for the Arbor Mist brand and those wines it already sells by the case.

As part of the new promotion, the grocery and fresh foods chain also introduced for sale today a canvas wine bottle tote bag for $1.99 each, which we wrote Fresh & Easy would be introducing in this story on October 17. The new, reusable fresh & easy canvas wine bag holds up to seven bottles of wine, according to the retailer. Additionally, the canvas wine tote can double as a reusable grocery bag by turning the wine bottle compartments inside out.

Below are the names and per-bottle prices of the five new varieties of wines Fresh & Easy is introducing today:

>Corvina-Merlot Cantina di Merlara -- $8.99
>Ca' Miani Garganega-Pinot Grigio -- $4.99
>La Parra Loca Tempranillo-Shiraz -- $6.99
>Lancewood Cabernet Sauvignon -- $8.99
>Roslyn Family Vineyards Cabernet Sauvignon -- $6.99

A major merchandising focus of the new wines is to keep them under $10 a bottle.

We've been told by our sources that as part of its wine category review process and sku rationalization, Fresh & Easy arrived at the conclusion offering wines under $10 a bottle is a good price-point range for its stores.

The wine category is very important to Tesco corporately. The global retailer (third-largest internationally) is one of the top wine importers and sellers in the world. Wine sales at the U.S. Fresh & Easy stores haven't met the retailer's expectations to date. Therefore, the category review, sku rationalization and increased promotion are all part of its plans and hopes to juice up wine sales in its California, Nevada and Arizona stores.

Second wine category promotional effort

Fresh & Easy also launched a second promotional effort today as a way to gain further attention to its stores' wine departments and proprietary wine selection.

This effort is a public relations one though.

The grocery and fresh foods chain today distributed a press release touting sales of sparkling wines more than doubled at its 97 Fresh & Easy stores in Southern California, Nevada and Arizona for Election Day, 2008, which was Tuesday, November 4.

As we wrote about in this piece on November 3, Fresh & Easy launched an election day promotion in its stores that featured food items and beverages, including sparkling wines.

Fresh & Easy stores carry 11 different bottles of sparkling wines, including five that are proprietary varieties, according to a company spokesperson. Seven of the 11 sparkling wines retail for under $10.

The best selling sparkling wine in the stores for Election Day was the Fresh & Easy Montcadi Cava which retails for under $7.00, according to Simon Uwins, Fresh & Easy Neighborhood Market's director of marketing.

What Tesco's Fresh & Easy Neighborhood Market didn't mention in its press release today regarding the election day doubling of sparkling wine sales was what its pre-election day average sales of sparkling wine is. In other words, what was the average number of bottles sold each day in all the stores before election day, compared to sales on election day? That would have been an interesting figure to include in today's press release in our analysis and opinion. But then we are numbers wonks when it comes to such things.

For example, lets speculate the average sales per day for all of the Fresh & Easy stores combined is one bottle of sparkling wine. In that case, that would mean the stores sold on average two bottles of wine on election day, for a doubling of sales. That's not much in terms of a total dollar sales increase, although it still is a 50% increase, which is nothing to sneeze about even though it wouldn't amount to much of a gross sales increase.

On the other hand, lets speculate on average each store sells five -- or even 10 -- bottles of sparkling wine per day. Then a doubling, to 10 or 20 bottles on election day, would amount to some nice additional gross sales numbers.

Alas, that information isn't available.

And of course, we must merely take the retailer's word that the sparkling wine sales actually doubled on election day over pre-election day sales of the bubbly. We give them the benefit of the doubt and believe them of course. But it would be interesting to know the numbers behind the doubling, for the reasons we describe above, anyway. It would just add some realism -- and additional news weight -- to the doubling factor.

But it is interesting sales of sparkling wine increased at all since Americans aren't known to celebrate Presidential elections with sparkling wine or champagne, or really to celebrate elections much at all in general. Therefore, from a macro political participation sense we see this as a very good sign.

Perhaps with all the attention the historic campaign, and now historic election, of Barack Obama generated, we will see a new era of participation and celebration by American voters in the political process. That would be something well worth tipping a glass of sparkling wine to in celebration for sure.

And good for Fresh & Easy Neighborhood Market, which is owned and operated by the British retail chain Tesco, for launching and conducting an election day promotion. We didn't see very many U.S.-based and owned grocery chains hold election day promotions for example. It's not the Superbowl we suppose, an event every chain seems to promote heavily.

And searching for further Tesco Fresh & Easy synergy with election day, were it not for the defeat of the British centuries ago by men who were primarily a bunch of former British nationals who became Americans, America not only wouldn't have elections at all today, there wouldn't be a United States of America, let alone blue states (Democrat) and red states (Republican).

Additionally, were it not for the two countries forgiving and forgetting, and becoming close friends and allies, Tesco wouldn't have been able to come to America with its small-format Fresh & Easy grocery and fresh foods chain.

Therefore, we see a certain synergy, beyond merely trying to sell more food and wine, behind the Tesco Fresh & Easy election day promotion.

Meanwhile, it should be interesting to see what further efforts Fresh & Easy does to follow-up on its multiple efforts today to gain increased attention for and to build sales in its wine category. Wine category sales are extremely competitive in California, Nevada and Arizona, where the grocer has its stores, after all.

Fresh & Easy Buzz will be the first to report these efforts, like we have been with the other Tesco Fresh & Easy wine category developments. And of course, like in elections, it is up to you, our readers, to decide.

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