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Wild Lidl's Claret Offensive pay off?
The so-called “Lidl Claret Offensive” is in full swing. The discount chain announced in July, to a volley of press coverage, that it had invested £12million in a promotion of more than 50 French wines, many of them from Bordeaux. The wines appeared in branches last week. A second onslaught is scheduled for October 16.
The mission objective is clear: win the hearts and minds of affluent shoppers. But is this posh red putsch all it claims to be? What does it tell us about the fight on the high street for your wine pound? And should you be rushing to your nearest Lidl to fill the boot with cutprice claret?
The Claret Offensive works like this: Lidl has a very small core wine range that it routinely supplements with a transient selection. These are bought in as one-offs, piled up amid a great hullabaloo – and when they’re gone, they’re gone.
It has experimented with claret before. Last year the German chain said it was “overwhelmed” with demand when it introduced shoppers to a £19.99 bordeaux (a St Emilion, Ch Laroze 2007) – then the most expensive wine it had ever sold. The seed was sown for a plan to lure in all those middleclass shoppers for whom the promise of cheap quality salami was not quite enough.
Lidl says its wine sales are up more than 20 per cent by value and 25 per cent by volume compared with 2013, in the financial year to date. That might sound good, but the key is in the balance of value and volume. It’s selling more wine, but it’s selling more of it more cheaply. Also, in terms of offering the sort of good-quality wines at low prices that might appeal to Waitrose or Majestic refugees, Lidl is being outclassed by its closest competitor, Aldi, which sells brilliant £6 gavi, rosé from Provence and sauvignon blanc, not to mention the best sub-£10 sparkling wine in the country and a superb £12 champagne. “Aldi is seen as a respectable place for ‘aspirational’ shoppers to go,” says one industry observer. “Lidl is just seen as cheap.”
Cue the Claret Offensive, a mass buy-up of some of the wines that Bordeaux négociants (middlemen), struggling with cash flow after the debacle of the 2011, 2012 and 2013 vintages, are frankly desperate to get rid of. Lidl claims to have bought five per cent of Bordeaux’s annual production, which over the past five years averages 693million bottles. As five per cent of this is 34million bottles and I am told that a total of 720,000 bottles – which includes wines from all over France – have been bought for the UK, we have to assume this is a pan-European figure, with other countries drinking a bigger share. Rather less extraordinary when you consider that Lidl operates in 26 countries.
“With such a significant presence, Lidl is able to leverage enormous economies of scale,” says the supermarket, and its claret offer has widely been touted as being “cutprice”. Is it really? Competitors selling wine on a national level have been poring over the four dozen new French wines in some agitation and two told me that they see “nothing in the price of the lines we were able to trace that gives cause for alarm”. Example: Lidl is offering Sociando-Mallet 2008, claret from a château beloved by American critic Robert Parker, at £25.99. Tesco has the (more highly rated by Parker) 2009 at £25.
Lidl is – like Aldi – free to apply low margins (Lidl did not say “no” when I asked if it sold wine at a loss): wine is used to drive footfall, and that both boosts sales generally and freaks out the competitors – although as one competitor drily remarks, “The lack of negotiation counteracts some of the margin.”
Indeed. “We knew what we wanted and we went in and asked for it and didn’t mess around. I think some of the château owners and négociants were amazed,” Lidl’s UK buyer Ben Hulme told me.
True, the offensive has queered the pitch slightly for others. “There’s one négociant we use for entry-level wines, and get good deals from when they’re desperate: they have had so much money from Lidl that we’ll have to look
elsewhere,” says one buyer.
Holding a big tasting of 3,000 wines in Paris, as Lidl did (the wines presumably being whatever this or that négociant wanted to show them) then picking the ones that taste best and then going and asking for them isn’t the best way to secure a bargain.
Nick Dagley, who has been buying claret for Majestic for 10 years, says: “I know where there are parcels of wine. When I sense an eagerness to sell, if you get the right négociant working for you, if you can offer brand exposure and brand-building – you can make a deal.”
The Lidl wines were better than I expected but not all that. My favourite was a fitou – Réserve de Fonsalis Fitou 2011 France (13.5%, £5.99, Lidl). It might not still be there: Lidl bought 10,000-30,000 bottles of each wine, which means that for many lines there are only 16 per store. Stick with Aldi, Tesco, Waitrose and Majestic for now.