Evaluating the risk of increasing wine prices in Grocery due to alcohol duty.
Our client, a grocery retailer, wanted to understand the reaction to an increase in wine prices due to ABV (alcohol by volume), to gain crucial insights that will inform their range strategy ahead of the implementation of alcohol duty.
Due to taxation changes in the market, wines with higher ABV are subject to a greater tax, and therefore, a higher price for the consumer. Our client wanted to understand the impact this will have on the category, and appropriately align their range to continue to meet their customers’ needs.
Research was required to understand more about the grocery wine shopper and their buying behavior. We needed to ascertain where ABV sits in the decision-making hierarchy, gauging the reaction to the proposed change in tax duty and how shoppers anticipate it changing their wine-buying behavior.
We conducted an online survey of n1,000 UK shoppers who had bought wine from a supermarket in the last 3 months.
The survey included a max diff trade-off exercise to understand what the main decision drivers are when buying wine. This included ranking the importance of ‘specific ABV/strength’ compared to other features such as ‘wine color’, ‘age of wine’, and ‘a taste I know and like’.
Our research found the limited role of ABV/alcohol strength in wine purchase decisions.
The research gave evidence that ABV is not well understood by most wine buyers and indicated that the reaction to the proposed tax duty change was largely negative.
We were also able to provide recommendations to our client around communications and signposting of the upcoming change, as well as promotional tactics.