The Pricing of English Sparkling Wine at Ocado

Setting the price of  a product can be a tricky business and there is no simple formula. Depending on the profile of the company, its cost base, its financial position and the state of the market it which it operates it may be aiming to maximise profits, build market share or some combination of the two. For premium-priced wines (including English sparkling wine) a high price might signal high quality, exclusivity and desirability to consumers, but there’s always the risk that the product won’t sell. On the other hand, set the price too low in order to attempt to build market share and consumers may feel that the product must be in some way of inferior quality.

Pricing-at-Ocado-Feb-2015So how are English Sparkling wine producers setting their prices? Given the growing number of producers, each with several different wines and with multiple distribution channels, there is no simple answer to that question. So in order to simplify the matter considerably, this brief analysis just looks at the four English Sparkling Wines currently being sold by Ocado.

There is price history information for the past 12 months available for each of these wines at My Supermarket, and these data have been compiled to produce this chart.  It reveals some interesting patterns. Firstly, none of the wines has had a constant retail price in the past year. Each of them has had multiple periods – sometimes of quite short duration – when the “normal” plateau price has been discounted, typically by 20%-33%. Secondly, there is a clear price differentiation between these four wines, which are priced at increments of ca. £5/bottle apart. Nyetimber seems to be positioning itself as a high-quality luxury brand, while Denbies is more about developing a broader consumer base. Let’s hope both approaches are successful, for at this stage both are likely to prove both necessary and beneficial to the long-term development of the English Sparkling Wine Industry.