The £12.99 case of beer used to be the Christmas exception, but walk into any supermarket nowadays and you can pick up a cut price premium brand pack. Last year, shoppers were treated to a swathe of offers from the multiples in the run-up to the holidays mainly on alcohol, but across many other grocery categories and this year it looks certain the battle for custom will be even more bloody and cut-throat.
In autumn 2000, Asda announced an aggressive £15m for the festive season. One of its star offers was a case of Stella for £13.48. Safeway had a strong promotional programme on beers, wines and spirits, with a case of Amstel for £11.99. Meanwhile, Sainsbury sold Beck's at £12.99 a case, and had a total offering of more than £20m cuts.
This year, the multiples are keeping quiet about how low they will go, although it is almost certain that Tesco will add to its pre-Christmas cuts worth £100m and that Sainsbury's activity will be focused on its quality food offer.
Retail Intelligence analyst Richard Perks says grocery sales are strong. "They probably had higher sales at full margin in the first half of the year than they expected, and less stock to clear. I don't see how the market can stay as it is." He predicts an aggressive promotional push by the big five but adds that much will depend on who makes the price cuts first. "Tesco did so well with stacks of computers I wouldn't be surprised to see it doing well again this year."
Whatever happens, activity will centre on the big drinks brands in both beer and wine, and big packs. These "in your face" deals attract shoppers and make it harder for independents to get a slice of the Christmas cake.
Consumers do most of their festive shopping in the bigger shops and Landmark's trading director Martin Williams expects the promotions to be bigger and earlier than last year. He says: "There's much pressure on the multiples to keep up volume, turnover and profits and it's a key sector for them. It's easy to hit hard and early." Williams is gloomy about Landmark's drinks sales' prospects and says although it used to depend on promoting brands that the multiples did not, it is now harder to compete because all the big brands are up for grabs. "They're cutting more deeply on the bigger brands than before."
At Today's, group licensed trading director Nigel Cresswell is more upbeat about the group's prospects and says last year was the best Christmas for some time. He expects 2001 to be no different. "Obviously, the multiples' price cutting affects us, but it's not as big a problem as it could be. The wholesalers are generally looking forward to Christmas after all it's the one time of the year that people are guaranteed to buy a lot and trade up."
Ed Garner, communications director for TNS Superpanel, says that as the big retailers cut prices, so they're developing own label premium lines to restore margins and profitability.
"Many people will trade up regardless they might pick up cut price beer, but they'll end up spending just as much. There will be no prizes for providing a duff family Christmas just because it's cheap."
Shoppers may be lured into the big stores by cheap beer, but most analysts believe they will be denied a better deal on their trolley-load overall and predict big cuts on fewer items, rather than cut prices across the board.
Verdict Research's Richard Hyman believes a proper price cutting campaign will begin in the new year. "There will be a number of aggressively advertised promotions but while they will be keen to communicate the idea that they're offering fantastic value, they will want to sell as much product as they can at full margin."
Drinks analyst at Gerrard, David Liston, reckons it could be a pretty dull Christmas. "We're bound to see many price cuts and there'll be aggressive promotion of premium-packaged spirits from the likes of Diageo with its new J&B Twister and Archers Aqua. But 2001 is a bit of a nothing year and it looks as if unemployment will increase, so people might not be bothered about spending money and the cuts won't make much difference." n
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