Are Lidl and Aldi bad for wine?

Recent stats reveal that Aldi and Lidl grew their market share of the UK grocery market by 15.1% and 18.9% in the 12 weeks to between December and February. Between them, they now have 10% of overall sales, while Asda's share fell by 4% to 16.2%. 

The success of these newcomers is built on their reputation for value. By keeping costs low - a no-frills shopping experience, large-scale buying and eschewing big brands in favour of private labels - they are able to undercut their rivals on every type of product.

This includes wine, of course. As wine commentators generally agree, they have an uncanny ability to buy wine that offers a quality to price ratio that seems impossible. Aldi have Toro Loco, for example, a Spanish Tempranillo that currently costs £3.49 per bottle and delivers a level of flavour concentration and balance that would shame many Spanish reds at twice the price. Last autumn, Lidl had a parcel of wine including a Crozes-Hermitage and a Sancerre Rosé, both of which showed great typicality, and both of which were priced at £8.99.

The problem isn't that they are bad quality (they're not), nor that they're all dirt cheap (£8.99 is still significantly above the average UK bottle price); instead, my worry is that they are almost without exception the very lowest possible price for their type. Indeed, this is the very key to the success of Lidl and Aldi, and you can't blame customers for taking advantage.

Such unrelenting focus on price, however, risks skewing the perspective of the consumer. If you can buy perfectly good Sancerre Rosé for less than £10, why pay more? That not only puts pressure on independent retailers (who are experiencing falling sales according this week's Wine Merchant survey), it potentially strips profitability out of the supply chain, all the way down to producers. Is such practice really sustainable?

The UK wine market has always been price driven, and Aldi and Lidl are by no means villainous. In fact, their flat pricing policy (that is, no false savings through deep discounts) is much to be praised. Yet as more and more grocery shoppers buy wine from them, the expectation of what wine should cost will inevitably be affected.

The wine trade constantly discusses trading up and retaining profit to keep the industry healthy, especially when trading conditions are tough. I can't help thinking that as the discounters continue to grow, their low price strategy could threaten the diversity of our market.