Tesco’s brand cull recently claimed it’s latest, and biggest scalp as it removed most of Carlsberg’s range from its shelves. The move which includes Sommersby cider will see Carlsberg reduced to just one line: its four-pack which will be available in 200 stores. The move is part of Tesco CEO Dave Lewis’ plan to return the battered chain to profitability.
Tesco had already announced plans to cull its wine ranges as well as pulling the plug on its online wine club. Others supermarkets are likely to follow suit. The threats to brands are all too real. But does the threat apply to all brands?
As the Grocer notes, with Bud overtaking Carlsberg as the number four lager it’s hardly surprising that Tesco has removed a poorly performing brand. However, it must also send a warning to other brands that Tesco is looking at more than just price.
Whilst these range reviews (or culls) have their critics, it does make sense. After all why should supermarkets stock brands that don’t sell? There’ll no doubt be plenty of other brands anxiously waiting to see where the brand axe lands next. It’s not just beer or other alcoholic drinks either as the supermarkets all review their extensive ranges.
Is it all doom and gloom though? For brand owners it might appear to be a worrying time. However, there’s also an updside to these changes. For many, the moves are about reducing the number of similar lines which rather than giving consumers choice simply confuse. Offering consumers a genuinely wide range of products can work effectively. Waitrose is a great example with ranges that contain depth and variety.
Just look at it’s range of craft beers not to mention its spirit range which includes a large selection of craft gins. English wines is another category where its focus on a high quality, diverse range is paying dividends: earlier this year Waitrose reported sales (of English wines) up by over 90%.
The other opportunity is in offering customers smaller, locally sourced products. There’s plenty of innovation across a range of categories such as British cheeses, craft beer and sauces (among many). And consumers do want to buy these products as research from Ocado shows. Ocado claims that 70% of its products come from small suppliers so what’s stopping the other supermarkets?
One factor will be attitudes to smaller suppliers. Decisions to stock them can’t be driven on constant discounting, spurious payment terms and aggressive behavior. These might work with the global brands who have the resources to support their stocking. For smaller suppliers it can be the route to be driven out of business. Yet pushing small suppliers to the brink doesn’t help anyone.
What’s needed is for supermarkets to rethink their way of working with smaller, locally based suppliers. Instead of trying to get everyone to operate to one model isn’t it time that they recognise the positive benefits of stocking premium, local products and fit their processes around how best to get these to customers? Supermarkets stand to gain too: by attracting customers who want to buy local products, they can focus on the quality and move away from the incessant focus on price discounting. Remaining competitive is important. So is remembering that their brands are about more than just low prices. Whether any of them take advantage of the opportunity is another question.