Internet Intoxication

Wine of the Times

Lidl Sommelier Bampfield Source Lidl
Lidl sommelier Richard Bampfield is bringing the best Bordeaux to the masses.
  • Why it matters

    Why it matters

    Wine stores in Germany are under attack from discounter giants such as Lidl that can afford to buy even the best wines in bulk and pass the lower prices on to customers.

  • Facts

    Facts

    • Food retailers and discounters increased their share of the wine market from 52 percent in 2012 to 56 percent in 2013.
    • Lidl is diving into the prestige wine market, with 800 to 1,000 wines already available from its online store.
    • The discounter is currently selling a 2011 Château Montrose for €89.99, or €30 less than other retailers.
  • Audio

    Audio

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Château Lafitte, Château Petrus, Châteauneuf-du-Pape are vineyards and vintages whose names have passed into myth and become synonymous with Bordeaux, the most famous wine region in the world.

Château d’Yquem, a Sauternes dessert wine from the Gironde area of Bordeaux, belongs in this legendary lineup: It is widely considered to be among the best Sauternes ever made.

Normally, wines like the Château d’Yquem are found in specialty wine stores and tend to be prohibitively expensive for many consumers.

But German discount grocery chain Lidl aims to change that, selling the 2011 wine – one of the most expensive in the world – online for €349 ($446) a bottle, around €40 less than in wine stores. While that price is still far too high for most Lidl shoppers, it’s not for some, and these are a new target group Lidl hopes to tap.

The pricing of Château d’Yquem is not an isolated case. In its online ad “Voyage to Bordeaux,” Lidl offers various products from the world’s largest contiguous region for top wines at prices well below those of specialty stores. For instance, a bottle of Château Montrose from 2011 costs €89.99, or €30 less than at other retailers.

“How credible is a wine offering when the prices for a bottle of white wine run between €1.19 and €349?”

Nikolas von Haugwitz, Marketing Director, Hawesko

Lidl plans to offer high-priced wines from many other regions as well, according to Carsten Schmitz, managing director of the retailer’s online store.

The company already sells wines from Portugal and Spain online, in cooperation with its own operations in both countries. “We currently offer between 800 and 1,000 different wines in the online shop,” Mr. Schmitz said.

The discounter, he added, can offer top wines in large quantities because the discounter has the capacity to order and store products in bulk.

Because most specialty retailers can’t afford to sit long on unsold wine, they place much smaller orders with the vineyards, often using a middle man to negotiate the purchase. That adds to their costs.

Developments such as the Bordeaux offer from Lidl are part of a larger trend that could see wine stores being squeezed out by aggressive pricing, according to Michael Pleitgen, a marketing expert and founder of the Berlin Wine Academy. “Discount stores have been building up their wine offerings for many years, also online,” he said.

Top-end wines are increasingly available at grocery and discount stores as retailers push their way into the premium segment.

A study by consulting group Macro Wine Consult agrees. Retailers obtain the highest prices through Internet and catalog sales. Many connoisseurs now use these sources to buy premium wines.

Top wines from renowned vineyards, once the domain of specialty stores, are now increasingly available in grocery and discount stores as retailers push their way into the premium segment, according to Mr. Pleitgen.

These stores benefit from their widespread presence. Food retailers and discounters increased their share in the wine market to 56 percent in 2013 from 52 percent the year before, according to the Society for Consumer Research.

“Whoever has a lot to sell – whether as a maker or a region – can’t bypass the food retailers and discount stores,” Mr. Pleitgen said.

For Germany-based wine market leader Hawesko, the move by Lidl did not come as a surprise. But Hawesko marketing director Nikolas von Haugwitz questions how a discounter, known to sell products at cut-throat prices, can sell a top product without diluting its brand.“How credible is a wine offering when the prices for a bottle of white wine run between €1.19 and €349?” he asked.

 

Jürgen Röder is the finance editor at Handelsblatt Online. To contact the author: roeder@handelsblatt.com

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