Price discounts fuel wine dumb down'

The relentless downward pressure on drinks prices has forced a producer to "dumb down" its wine and continue selling it under the same brand name, Mike Novy, the Western European sales director of Ernest & Julio Gallo has claimed.

Novy said discounting had forced a supplier to the UK on and off-trade to downgrade its wine formulation and use a lower quality of grape.

He said discounting was "sucking oxygen" from the sector and warned it could eventually spread from the off-trade to the on-trade as pressure grew on pubs to cut wine prices.

"I know of a producer that has had to change its wine formulation because of price discounting.

People just can't afford to continue to sell their wine at that price," he said.

"This came from a senior source within a wine company.

They confided in us and said they have had to go down a tier in grade of quality and continue selling at the same price and brand to sustain their business.

They are effectively putting lower grade ingredients in their product."

Novy said customers would not be able to notice a difference in the product, but added that the dumbing down of wine was more a "moral issue" than one of consumer rights.

Gallo has signed a distribution deal with Waverley which will give it access to 12,500 outlets.

Novy warned pressure to reduce prices, and thereby potentially quality, was growing on wine producers as they sought to increase their presence in the on-trade, and the off-trade continued to slash prices.

Novy added: "You get what you pay for.

I can't fathom that someone can sell their product for a quarter or half of what they intended and sustain that over the long term.

Sometimes the pressure is overwhelming and people either respond to it by changing their pricing structure or changing the formulation of it."

A spokesman for the Wine and Spirits Association said: "Inev-itably, if margins are squeezed more than before, people find it difficult to invest and keep the same quality.

"The idea of brands keeping the packaging but changing the formulation is, however, a disturbing development.