When Brits drink wine, they don’t care who made it, just so long as it gets the job done at an affordable cost.
A new Nielsen market survey found that 79% of participants switched wine brands regularly, and aren’t loyal to any one single brand. At the same time, sales of wine costing between £1 and £3 increased 130% in Britain over the past year, while wines costing between £4 and £6 faced a 3% decrease. In other words, Brits are drinking wine that costs less than $4.50 USD like it’s nobody’s business.
“The research is fascinating and shows the complexity of brand loyalty, even between categories,” said Miles Beale, Wine and Spirit Trade Association chief executive. “The nature of the markets mean that wine drinkers react very differently to brands than spirit drinkers and as such companies will have to react in different ways to this.”
This news is not as good as it might seem. Sure, it’s great that sales are up for low-quality wine brands, but a repeat customer spends 67% more than a new one. Considering that fact, building loyalty with just 5% more customers could lead to an increased average profit per customer of between 25% and 100%. In other words, brands could make far more money if they could just keep a fraction of their consumers coming back.
The trouble is that it’s tougher for the alcohol industry to build brand loyalty. The report also found that 28% of participants admitted they were less loyal to alcohol brands than other branded products. In other words, a consumer might die for Heinz’s baked beans, but could care less what wine they drink.
“It is also interesting to see how highly drinkers of all products place emphasis on recommendations from friends and family, alongside the traditional of factors such as quality and value for money,” said Beale.
The study also found that the most common reasons people try new brands is because of the value, quality, and recommendations from friends. More than two out of five (41%) said they’d switch brands because they just like a change; almost one in three (30%) followed a friend’s recommendation; and almost another one in three (30%) switched around because of the value.
Only 6% said an effective advertising campaign influenced their purchasing decision.
Ultimately though, this research can help wine brands build loyalty, as Beale noted, explaining, “This [finding] suggests that marketing approaches that take this into account will be most successful.”