A Majestic whine about prices

ID-1009400When the folks at Majestic Wine said customers would be able to buy one bottle at a time rather than the previous six, it provoked debate. Was this a bold move to dominate the high street or was it a last-ditch effort to remain relevant in the face of stiff competition?

On the surface, Majestic’s long overdue change of business model appears to be the right decision. No more cases of Oyster Bay stacked haphazardly on top of each other. No more requirement to buy six bottles when all you wanted was something to go with your roast. No more confusing pricing where the only way to get the best price was by buying two of everything. From here on, simplicity reigns. Majestic is no longer a dusty warehouse; it’s your friendly neighbourhood bottle shop. Right?

Well, not so fast. While Majestic is emphasising its decision to sell by the bottle, its pricing model remains largely focused on selling  by the mixed case of six. In the past week I visited my local Majestic on two occasions to buy a single bottle and twice I walked out empty-handed. In each instance this was based purely on price. Despite being able to buy one bottle, there is no incentive to do so when the spread between the single-bottle price and mixed-case of six price is so wide.

Among the bottles I considered buying at my local Majestic were Nyetimber Classic Cuvee 2010 and CVNE Imperial Reserva Rioja 2009. Majestic lists a single bottle of Nyetimber for £35.99. But if bought as part of a case of six, it drops to £26.98. That’s a difference of £9.01 or 25%. Similarly, CVNE Imperial Reserva Rioja 2009 is listed at £25 for one bottle or £19.99 when bought as a case of six, or 20% less.

If buying six bottles at a time, Majestic’s prices aren’t bad. But anyone wanting just a single bottle is being forced to pay a premium. And it’s not as though either of these wines are difficult to find in other retailers. For instance, CVNE Imperial Reserva Rioja is widely available across the UK, for example at Waitrose for £21.99, at the Wine Society for £16.67 (after paying one-off £40 membership fee and shipping if the order is less than £75), £19.95 from Asda and at the Co-operative in the region of £17 based on a recent visit to one of their shops.

The price of the Nyetimber is even more telling because it is so widely available. Waitrose sells it by the bottle for £31.99. Slurp does it for £31.95. So too Berry Bros & Rudd. Even high-end retailer Hedonism sells it for £31.50. Over at the Wine Society, it will cost £27.50 once you’re a member. And at Amathus, the 2008 vintage is listed on their website at £32.75.

I wondered if these two bottles were simply anomalies, so I went onto the Majestic website to do some comparison shopping with randomly selected bottles that are widely available. First up is Villa Maria Private Bin Sauvignon Blanc 2014. One bottle at Majestic will set you back £11.99, but in a mixed case it costs £7.99. At Asda, Tesco and Waitrose, it sells for £9.50. Next is Lopez de Haro Rioja Blanco 2014. At Majestic, it’s £9.99 or £7.49 in a mixed case. If you want just the single bottle, you can find it cheaper at Highbury Vintners, selling for £9.

Now, to be fair to Majestic, the next wines that I looked up appeared to be priced in line with competitors. E Guigal Cotes du Rhone 2011, for example, lists for £11.99 at Majestic or £7.99 in a mixed case. At most other retailers, the price was broadly the same: £11.50 from Waitrose, for example. Similarly, Catena Malbec 2013 lists at £12.99 for a single bottle (£9.74 as part of a mixed case), the same price as Waitrose.

So where am I going with this? Majestic’s bold change of business model is a clear sign that they are listening to what the market wants, but I’m not convinced that they truly believe in it. Offering a discount for buying by the case is a standard incentive in the wine trade, but usually it amounts to 5% for six and 10% for 12. Majestic is still using the supermarket tactic of applying deeper discounts of 25% and 33% to wines when buying six at a time, but there is little evidence that they want to be competitive when it comes to some (many?) of their single-bottle prices.

On that basis, it seems Majestic is still trying to hang its hat on the concept of selling by six bottles or more by setting the price of a single bottle unattractively high. It is doubtful that their stores will attract a raft of new customers looking to buy just one bottle at a time when so much of their stock is sold cheaper elsewhere.

Advertisements