Winemaker De Bortoli sees red over Woolworths private-label push, but experts say trend will continue

One of Australia’s leading winemakers says the push into private-label wine by Australia’s grocery giants is further damaging thin margins, but a wine marketing expert says the fragmented nature of the wine sector means the trend will continue.

De Bortoli managing director Darren De Bortoli has told The Age that the incursion by Coles and Woolworths into private-label wine is adding to pressures on the industry, already hurt by the high Australian dollar and the grape glut.

”In a lot of cases [with private label wine] the quality is a lot lower, but it will take a while for the consumer to cotton on to that,” De Bortoli told the paper.

But Justin Cohen, research director at the Australian Centre for Retail Studies who has recently returned to Australia after years in France, says the Australian system of selecting wine – choosing a grape and matching to food – lends itself to store brands.

Furthermore, brand is found to be one of the least important factors when it comes to selecting a wine, Cohen says.

“Wine is such a fragmented category; there are thousands to choose from,” Cohen says.

Beer, on the other hand, might prove a different story for the growth-hungry supermarkets.

Speaking as Woolworths promotes its home-brand beer, Cohen says consumers are typically more “brand specific” when it comes to beer.

Because there are fewer beer brands to choose from and brand awareness tends to be higher, consumers are more likely to buy the same kind of beer over and over, he says.

The comments follow an announcement by Woolworths that it plans to double the sale of its own brands over the next five years, making private-label sales more in line with levels seen in Europe and North America.

Cohen says although he understands why family-run wine labels are concerned by the supermarkets’ private-label alcohol, European “hypermarkets” such as France’s Carrefour and the UK’s Sainsbury’s have multiple store brands, some organic, and offer economies of scale for dealing with the global wine glut.

And if the product is perceived as value for money, Cohen says there are opportunities for the chains.

“If a retailer has a good brand, I don’t see why it wouldn’t be successful.”

Woolworths told the paper that just 4% of its wine sales were private label.

Coles said its private label wine numbers have remained steady for two years and no target has been set for sales of these products.