Heard through the grapevine

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Americans are catching up to their European counterparts in the appreciation of wine. Not only are overall wine sales in food stores with sales of more than $2 million up 5 percent for the 52 weeks ended December 21, 2013, according to Schaumburg, Illinois-based Nielsen, but the beverage has even begun to supplant beer as a preferred quaff in some quarters: 22 percent of Americans say they’re drinking less domestic beer because they’re drinking wine instead, according to research from Chicago-based Mintel.

This means that supermarket retailers have a great opportunity to boost profits by shining the spotlight squarely on their wine departments. To do this, astute grocers are paying close attention to category trends and consumer demands.

“Our shoppers are primarily looking for value — great wine at a reasonable price, with a special emphasis on local i.e. Washington — and, to growing degree, Oregon wines,” notes Jeff Cox, wine merchandiser at Seattle-based PCC Natural Markets. “Because we’ve built a reputation for offering quality, character and value, our customers tend to trust us and are willing to try new varietals from diverse regions.”

While that openness to new drinking experiences is evident elsewhere in the country as well, across the United States, consumers are gravitating to certain types of wine. “We see a lot of wine shoppers looking to try a different brand,” asserts Roger Scott, Business Manager for beer/wine at Lubbock, Texas-based United Supermarkets LLC. “Cabernet, Chardonnay and red blends [are showing] strong growth. We also still see growth in moscatos for those who want sweet. Many of those [shoppers] appear to be entry-level guests.”

“Our customers look for a variety of wines, with red blends, moscato and Malbec wines being some of the top wines for our customers,” offers Benny Smith, Manager External Communications at Salisbury, North Carolina-based Food Lion.

“Chardonnay is still the No. 1-selling varietal, but red blends continue to see good growth,” says Ralph Kernohan, VP Off-Premise Chains at Livermore, California-based Wente Family Estates. The company will be celebrating its 130th vintage with the release of a new package this summer.

Who’s Drinking?

Another part of understanding your customer is to realize exactly whom you’re selling to. “I think that the Baby Boomer generation is most interested among wine shoppers,” observes Cox, adding that PCC’s challenge in the wine business is to introduce Gen Xers and Millennials to wine.

“We see a good blend of shoppers in our stores: Baby Boomers, Gen Xers and Millennials are all buying wine,” offers United’s Scott. “The difference that is apparent is what they may be willing to pay, and, in some cases, in the varietals they prefer.”

“Currently, the Boomer generation is the largest consumer base in wines,” says Kernohan. “It is unclear if they are the most interested in wine, but they are spending the most money in the category. The Millennial generation’s interest in wine is growing, and they have an unmatched sense of adventure; however, they seem to be the least brand-loyal wine consumers.”

How to Sell

Armed with knowledge of their prospective wine shoppers’ tastes and the surrounding communities, demographics, retailers can then craft approaches that lure more customers to the department. “We continue to try to stay at the front on new item introductions and to try to source wines that are not in broad distribution,” says Scott. “We also have been able to drive sales through better store presentation of the wines, in association with wine-tasting, bottle-signing and bottle-engraving events.”

“Our promotional activity isn’t driven by pricing — we seek to offer value and let the products do the talking, while offering competitive pricing on widely available brands,” explains Cox. “We tell the story of our wines and beers via an e-newsletter, social media, a blog, and we look to launch in-store tastings in the near future.”

Indeed, as Cox notes, retailers are increasingly relying on technology to interact with and educate consumers. “Social media and other educational tools on wine varieties are readily at the customer’s fingertips, making it less complex for consumers to seek out their choices,” notes Food Lion’s Smith.

Steady Growth

Results bear out these retailers’ meticulous planning with regard to wine marketing and merchandising.

Cox states, “Our wine sales have grown steadily over the past year, as we continue to source and promote wines.” Smith also reports continuing category growth at Food Lion.

“We continue to show sales growth that is a little stronger than our unit growth,” says Scott. “This is due to our average price of a bottle of wine sold continuing to move up. A couple of years ago, wine in the $9.99 retail was the sweet spot. We are now seeing guests who are willing to pay a little more.”

Of course, it’s not just supermarkets that stand to benefit. “The channel is critical — without grocery store offerings, it would be difficult to grow the channel,” insists Kernohan, who notes double-digit growth each year for more than five years for Wente, which he attributes to increased distribution and focused brand offerings that resonate with consumers. “Grocery makes wine purchases easy for consumers, because it easily pairs wine with foods they are preparing and enjoying.”

Advice From Yogi

What’s on the wine horizon? A blend of the old and trusted with the new and unexpected should keep the category in full flow, as retailers and winemakers balance the pros and cons of increasingly plugged-in consumers.

“Alternative packaging/offerings will continue to grow and excel as consumers look for ease of consumption,” predicts Kernohan. “While it’s varietals will continue to pique consumer interest in the short term, a focus on staple varietals, such as Chardonnay and Cabernet, will remain important to long-term growth. In terms of marketing, it is increasingly important to communicate how/where consumers are engaged, so focus on social/online channels is key.”

“As technology and bombardment with information vie for consumers increasingly divided attention, further consolidation of brands, more homogenization of styles, and a greater reliance on packaging and branding concepts to gain attention and drive sales. Which doesn’t mean that we’re on board, of course. We think an effective strategy can be to ‘zig’ when the competition ‘zags’ — or to, as Yogi Berra puts it, “hit ’em where they hurt.”

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