Tesco gears up for international growth

Tesco, the UK-based international multiple retailer, is gearing up to improve its wine offering to all its stores around the world.

Dan Jago, Tesco’s category director for beers, wines and spirits, told Drinks International that the company has appointed an Australian to head up a new section to look at the specific wine needs of stores in each of the 14 countries that Tesco retails in.

He said that Duncan Macdonald, who trained as a winemaker and was formerly with Australian wine producer, Yalumba, is about to embark on a fact finding trip to stores in Asia.

“We are looking to come up with a consolidated group of between 100 and 250 wines which will be made available to stores in the various countries,” said Jago.

He foresaw the wines breaking down roughly into batches of around 25 for entry level wines, mid-price, Tesco Finest own label, brands and exclusive labels.

He cited Korea’s taste for sweet US wines as the sort of instance that they have to take into account when looking at wines for that country. At the moment Asian countries are pre-occupied with red wine but Jago sees a time when white wines will find their place.

The logistics of such an initiative are still in the process of being worked out. Most of Tesco’s mainstream volume wines, own label, are shipped in bulk to the UK and packaged there. The company has a regional distribution centre near Bratislava which services its stores in central Europe.

Once volumes are established, Jago foresees wines from the likes of Australia, New Zealand and Chile being shipped direct to its Asian operations.

Tesco has 2,715 stores in 14 countries including the UK, US, China, Japan, India, Korea, Thailand, Malaysia, Ireland, Turkey, Hungary, Poland, the Czech Republic, Slovakia. That represents 36.7m sq ft. of selling space and it employs 293,676 people.

Asked about the global wine market, Jago sees a “two-speed wine industry” with wine companies trying to service their traditional markets which still account for 95% of their business while trying to balance up the opportunities of emerging markets such as those in Asia.

The Chinese through the Hong Kong hub have already announced their interest in fine French wine, such as First Growths from Bordeaux which are seen as sound financial investments and symbolic of wealth. Jago believes the more full bodied, fruit-forward wines from countries such as Australia, New Zealand and Chile, will soon find favour with Asian palates.

Back in the UK and Ireland, Jago sees recent tax and duty increases have made those economies “very challenging”. He said UK wine drinkers still see wine about £5 as a luxury but it is becoming increasingly difficult to sell wines under £5 because of UK government tax increases, unless they are on promotion.