Changing the rules: Big Interview with Aldi buyer Mike James
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Aldi buyer Mike James |
There’s no denying the seismic
effects Aldi’s inexorable rise – and its growing focus on wine – have
had on drinks retailing in general and the big four supermarkets in
particular.
As
the German supermarket continues to grow – sales were up 17% in the 12
weeks to July 19, giving it a 5.6% share of the UK grocery market –
rival multiples have been slashing ranges and prices in response.
The
latest figures from Nielsen via the WSTA show average wine prices
falling and wines under £3 soaring a massive 130% in the UK off-trade.
But
while Aldi, which maintains a core range at £2.99, is a key player in
this market, UK wine buying director Mike James’s message is all about
trading up – especially at Christmas.
“I have been
looking after the category for five years now and have been offering
consistently good quality and not cheating my customers,” he tells OLN
at the retailer’s Christmas wine tasting. “If something is £2 more than
something else, it should be better quality.
“They are
now saying: ‘We trust Aldi. Ten pounds is more than we would ever think
of spending on wine at Aldi, but we are happy with our £5-£6 bottle so
let’s give it a go.’ We have got their trust and can take them to the
next stepping stone.”
This season that is all about the
classics, and James’s aim is to offer an enhanced range featuring the
main players you would expect to see in a serious portfolio.
He
says: “As wine people we want to put in superb, esoteric wines which we
think are fantastic, but if they don’t sell there is not a lot of
point.”
The simplicity of the range fits in with Aldi’s
ethos of no-frills retailing and everyday low prices on a compact range
of good value items. Then there is the odd thing that surprises you,
like an HD TV, a pair of rubber clogs, or a Priorat.
James is particularly proud of having signed up a Chablis producer in time for the festive season.
“It
is notoriously difficult to buy, but now I’m working with a producer
and it’s top secret who it is,” he says. “I have spent an awful lot of
time trying to get in with a really good producer for the long term. I
didn’t want to just put a Chablis on the shelf knowing it will sell
because it says Chablis on the label.
“I have been
going out spending time with winemakers, understanding their regions and
how they work so we can give that to our customers. We are going to be
selling at fantastic prices, but just because it is low retail doesn’t
mean we don’t need to over-deliver on quality. We need to convince our
customers the quality is consistently good and over-delivers.
“If
people have always spent £4 on an Australian Chardonnay but at
Christmas treat themselves and trade up to a Chablis, it would be a
problem if they then thought it was not much better than the £4 bottle
of Chardonnay. That wouldn’t help us to get people to trade up, which
ultimately is what we are trying to do – we want customers to spend a
little bit extra because, proportionally, the extra quality will go a
long way.”
This is not a new thing for a retailer to
say, and almost the whole trade’s mantra, from Tesco to the smallest
start-up wine merchant.
But it may come as a surprise
to hear it from a retailer best known for its keen prices – although
there are numerous awards to attest to its quality credentials,
including 43 International Wine Challenge medals and OLN’s own Drinks
Retailing Award for Multiple Wine Retailer of the Year 2015.
LOW PRICES
Prices
remain low – in some cases eyebrow-raisingly so, such as a complex,
keroseney fruit bomb of a 2003 Riesling Auslese for £9.99 and a Limoux
whose smoky, steely, fruity and savoury flavours belie its £6.99 price
tag.
Has James had any trouble keeping to these price
points at a time when, until recently, most supermarkets were pushing
prices up?
“Not this year,” he says. “Duty didn’t go up
and the pound is stronger. But as a member of the UK wine industry it
is incumbent upon me to try to enthuse our customers to treat wine as
the amazing thing it is, and maybe spend 50p more because you will get
the equivalent of £2 more enjoyment.”
James says part of the secret to getting great deals is to have long-term relationships with producers.
“The
more long-term we are working with people the easier it is for them to
invest time in making bespoke products for us. The other thing that sets
us apart from some of our competitors is that we always buy a fixed
quantity. Once I’m happy with the wine we will agree to a fixed number
of bottles of that vintage, with the same price for the first and the
300,000th bottle. We don’t go back halfway through the contract and say:
‘We are taking £1 off the retail price, can we have some help?’ It is
very clean-cut and straightforward for the suppliers and they appreciate
that, as far as possible, we try to get it right.”
He also thinks a tight buying team is essential if you
want a range without passengers. “The great thing about just having one
person in charge of wine or beers and spirits is that you have a
complete overview of the range and are not competing with a colleague
for shelf space. I know what I have got and how it is working. I might
be thinking maybe I should have a premium South African Sauvignon Blanc,
but if I have three things from Chile doing the same thing there is not
a lot of point.”
One of the key weapons in Aldi’s
armoury when it comes to trading up – and using wine appeal to draw in
its target middle-class shopper – is its Lot Series.
The
first collection of four limited- edition, individually numbered wines
launched in spring with a headline- grabbing four-per-customer limit,
and a further five were unveiled at its recent Christmas tasting. Ten
more Lot Series wines are to be released next year.
The
latest collection, all priced at £9.99, features a South African Chenin
Blanc, a Priorat, a Carmenère from Apalta and Colchagua, a Cabernet
Sauvignon from Clare and Coonawarra and a Super Tuscan. There are around
35,000 bottles of each wine, each with a tasting note on the front
label and a neck hanger with information about the winemaker.
James
says: “It is about communicating with customers. People are fascinated
and scared about wine in equal measure. The more help we can give to try
to communicate our passion and the wonder of wine to customers the
better. The Lot Series is all about telling the wonderful story of wine,
and explaining that it is a little bit of the winemaker’s heart and
soul in a bottle.
Many of the deals have been years in
the making – James tells how the Priorat was conceived at a tasting in a
mountainside vineyard when he was on a trip he won through a
scholarship in his WSET Diploma studies.
“Priorat is
not a go-to wine in the UK, and it wouldn’t work unless we were able to
communicate properly with our customers,” he says.
And are they open to trying these lesser-known wines?
“One
of the first wines in the Lot Series was a Pézenas at £9.99. Pézenas is
fairly unknown and no other supermarket would sell a Pézenas. We sold
10,000 bottles in the first week. Customers are coming to Aldi to try
these wines.”
A lot has been written about the appeal
of the discounters – the comfort of a no-frills range and the openly
functional shopping environment for cash-strapped consumers, the
euphoria of feeling they’re getting a bargain which drives them to spend
more, and the simplicity of not having to choose between 10 types
of medium-mature Cheddar while furiously trying to work out which is the
best deal.
But when James starts playing independents
and multiples at their own game with less well-known wines, bigger
ranges and more expensive bottles, doesn’t he risk compromising Aldi’s
USP?
In fact the store’s core range remains tight at 70
wines, and many of the extras are just here for Christmas. In the five
years James has been buying wine, the core range has only grown by 10%.
“Over
the course of 2015 we will have sold about 200 wines, a lot of them
just here for Christmas, or summer,” he says. “We are limited by space.”
James
joined Aldi 11 years ago, on the operations side of the business. When
the buying job came up he was finally able to indulge his love of wine
professionally.
“It was known I was quite into my wine on an amateur basis, with a library of wine books and going on wine tasting holidays.
Aldi gave me the opportunity and I haven’t looked back, and hopefully it hasn’t.”
Critics
sometimes say the success of the so-called discounters rests with their
tight management structure, and that individual buyers are simply
carrying out instructions from their German head offices. But James says
this couldn’t be further from the truth.
“We are based
in the Midlands – a UK office packed with UK people. We are Aldi by
name but Aldi UK by nature. It means we are more aware of our customers
and are not putting wines on sale to satisfy a European palate rather
than a UK palate. And not just from a content point of view – packaging
and everything else is for the UK market.”
How does he
feel about the term “discounter”? “I prefer the term great value
retailer. We don’t promote. We like to think we offer fantastic value.
We over-deliver compared to our price points, so we are an
over-deliverer.”
Origin information: OffLicenceNews
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