The year 2010 is shaping up as even more challenging than 2009 for retailers in most industries, according to published forecasts. Many consumers are changing their buying habits. Some are “buying down” with less expensive products, while others are postponing nonessential purchases. It’s a challenging retail environment, but what does it mean for U.S. supermarket retailers that sell alcohol beverages in their stores?
According to a recent Beverage Insights study, supermarket retailers are turning to wine as the most important source of sales growth in the alcohol beverage category. And within the wine category, some major shifts in subcategory preferences have emerged.
Surveyed retailers were asked to rate sales growth potential and projected space allocation for subcategories of beer, wine and spirits, as wellas to rate aspects of category management for the subcategories. Responses were measured for the total group and for two subsets of chains: those with 50-plus stores and those with fewer than 50 stores.
Sales Growth Potential Value/economy wine earned the highest overall alcohol beverage category ratings for projected growth, followed closely by mid-priced table wine and box wine, as shown here. This 2009 growth potential rating represented an improvement for box wine, compared with the 2008 Beverage Insights study. Supermarket chains with 50-plus stores saw much stronger high-growth potentialfor box wine in 2010 than did retailers with fewer than 50 stores. The same larger retail chains rated category management performance by box wine suppliers well below that of value/economy wine suppliers.
Importance of Wine to Consumers
Survey participants were asked to rate the importance of beer, wine and spirits to consumers’ basket ring and for attracting consumers to the supermarkets to buy the alcohol beverage Products.
Wine easily outpaced spirits and beer as an important element of supermarket customers’ basket ring. Category managers from both storesize groups favoured wine over spirits and beer by a substantial margin (see the graph).
Suppliers may want to support and sustain this retailer preference for wine importance by improving category management services for wine products. Ratings were decidedly average for all wine subcategories surveyed, although two-thirds of the larger chains rated categorymanagement for mid-priced wines as "excellent."
When asked about the relative importance of the respective categories for influencing consumer shopping trips, retailers provided the same ranking, but the importance of alcohol beverages was seemingly less important in getting consumers to the stores than in filling their shopping carts once they were in the stores (see the graph).
Category Management Expertise
Retailers were asked to rate 10 category management performance elements for named wine suppliers. The findings were expressed in the format shown here and will be shared confidentially with sponsoring suppliers, but some general comments can be made. The ratings in the graph come from actual data. Very few category managers of smaller chains rated services "above average" or "excellent."
The Beverage Insights 2009 research showed that wine is clearly the preferred opportunity for growth in the alcohol beverage category for supermarkets. Lowerpriced wines led the way, especially in the opinion of category managers of the larger Chains.
Consumers may be buying premium/ super-premium wines in other venues, but over 75 percent of surveyed retailers projected medium to low growth in 2010, despite above-average ratings for the category management services of suppliers. The larger retail chains were particularly positive about growth prospects for box wines.