The Co-op: Convenience sector can help Covid-struck wine producers

The closure of the on-trade has created opportunities for the convenience sector to react creatively and work with producers who have been hit by the pandemic, according to the Co-op’s BWS boss Simon Cairns.

Speaking to the drinks business recently, Cairns said that the change in customer behaviour caused by the pandemic and the national and regional lockdowns – shopping locally with bigger baskets as well as shopping online – had created opportunities for retailers to cater to supply more food-friendly wines and larger pack sizes, which helped open a new avenue for producers hit by the Covid pandemic.

“Our big focus as a business is to look at the mission-led way of operating and the meal tonight is a big opportunity that we identified,” he said, saying that there was a bit opportunity to work with producers who have wines or formats that align to that mission.

“If you look at what’s happened across the Old World, supplier there are reliant on the on-trade across Europe – the balance of what they sell is more reliant on the on-trade than in the UK. It means there are fantastically food friendly wines out there that align with what we’re trying to achieve. So that is a great opportunity for us.”

Range review

In total around 20 new lines have been added in store in recent weeks, including an extended Beaujolais offer and new lines at the £6 price point, such as a £5.50 Malbec from Argentina that was a good example of wines that appeal to customers buying wine to go with dinner, Brangelina’s new white wine, Studio Blanc by Miraval 2019 and, a Finca Las Moras Organic Chardonnay at £6 driven by increased demand for organic wines.

Cairns argued that despite the challenges of ranging in a pandemic, range review were as important, if not more so, than ever.

“Range events allow us to bring newness into the range,” Cairns explains. “You need that newness and excitement as it breaks the monotony, it’s important that we keep newness and interest so we’ve recently had a range event go live with another planned for February, which is in line with normal timelines.”

The focus for the most recent range review was rosé, “which seems alien going in winter months, but it’s such a year round category that even doing a range event in October is appropriate to balance the range and demand and capture that trend,” he said. “We’ve tried to capitalise on that trend for drier, lighter Provence style and there’s been a lot of changes from all around the world in terms of what we’ve brought in.”

Other additions include a Crémant, which has been in planning for a number of months in part to build on the ongoing value in the range. “People are getting very cash conscious, so we need to ensure there are appropriate levels of value in the range and having a serious sparkler that sits somewhere between prosecco and Champagne.”

Digital acceleration

Cairns said the Co-op had been well placed to take advantage of people working from home and like-for-like sales throughout the first national lockdown were “above anything we could have imagined”

Speaking about Co-op’s success, Cairns said that the lockdown had accelerated trends that were already being seen, for example the move to convenience and digital and online shopping, “and it feels that we’ve been well place to take advantage of that, change of lifestyle” he said.

“If I look at growth of our online sales – we’ve got the partnership with Deliveroo and the Co-op ecomm app – they’ve been astronomical as well.” He noted that it wasn’t just the younger generation using digital apps now, older shoppers had also started to adopt it.

Similarly Co-op’s sales through Deliveroo have quadrupled since the start of the first lockdown, and the online delivery service now covers around 400 stores, with the aim to get to 650 by the end of the year, across 100 towns and cities in the UK.

“It’s quite an ambitious roll out for us, but it’s certainly a good extension to the Co-op’s offer,” Cairns said. “Anything that is there to service the community I think is good for us. What we’re finding with Deliveroo is that a third of those customers are new to The Co-op, they haven’t been into a bricks and mortar store, so it is driving a lot of the reappraisal of our range from a customer base that we’ve not seen before.”

However he noted that shape of the business had changed slightly. “Frequency has always been the life blood of convenience, but actually frequency of visit has dropped off slightly as you’d expect, people don’t want to go into stores several times a week, but  when they are in store the size of basket has increased, which has more than compensated for the drop off in frequency.”

He said the opportunity going forward was to “capture those consumer that have reappraised Co-op’s offer and hopefully been delighted with what they’ve bought from us and as that frequency starts to return to our channel then we hold onto those larger baskets.”

Strong performance

Performance had been strong across the range, he said, driven by the hot weather and the stores’ ability to chill the wine and rose offer. Larger formats and bag-in-box wines were a standout performer, with like-for-likes up 60%, “which is really significant” he added. The retailer was also able to bring in larger packs of beer and cider to cater for people wanting to pick up more lines per trip, rather than the single bottle or 4-pack purchases that is “core to convenience”.

“We really had to try to reshape our offer to suit that change in customer need. But because the on-trade was closed, we were taking on-trade packs, that weren’t really destined for our channel, we were giving them a home and giving them to our consumers so it worked very well,” he added.

Following the easing of lockdown, Cairns said there was little impact from the 10pm curfews and people were far more measured at the onset of the regional lockdowns. “Customers are reassured that there is still stock on shelves, they can still come into store and buy what they want when they need it without having to go and fill their cupboard,” he notes. “And we’re able to respond as we have a regional depot network, so that allows us to be more targeted as to where we send stock.”

Looking towards Christmas, Cairns said it was unlikely that the convenience sector would see the usual drop off in trade, as people switch to larger basket shopping. He said consumers were likely to be wary of the traditional big get together

“What we’re predicting is there will be a series of smaller get together – one with family, one with in-laws, one with friends, one with neighbours, all sticking to guidelines that apply within your area  – but it won’t be that big basket main or destination shop.” he said. As a result the convenience sector was set to benefit.

“Normally we lose share over Christmas as people do go and do a big basket shop, but we’re pretty confident we won’t see that drop off this year. So I am optimistic from a channel perspective that convenience will do well this year.”