Is America Ready for Wine Superstores?

Discussion
Apr 14, 2006
Rick Moss

By Rick Moss


In the Fort Lauderdale area, independent wine shops have long ceded the lion’s share of wine sales to big chains such as Publix and Costco. But Bacchus’ crown may soon be passed
on once again. Enter a spirit superstore named Total Wine & More, featuring a selection of 8,000 wines, 2,000 spirits and 1,000 beers.


Typical of the “category killer” strategy, price, in combination with unmatched variety, is the ultimate draw. Total Wine & More, according to the Miami Herald, offers wine
at $7.99 a bottle on average, generally one to two dollars below warehouse club prices.


In a category that has the high household penetration of pet care, for instance, the rationale for dedicating a superstore shopping trip to a single category has long been established,
but is America ready for big box wine retailers? Perhaps so, based to the latest stats. The United States, by 2008, is on track to be the world’s heaviest “quaffer” of wine, according
to a study released last year by International Wines and Spirits Record. Last year, wine did $26 billion in sales in the U.S., up 5 percent from the previous year, according to
the Wine Institute.


However, not all of this incremental growth is going to the new wine and spirits superstores. Independents, local chains and some innovative new franchises are doing well, bringing
a heightened level of service to novice wine drinkers. Despite the threat that a category killer poses for these stores, many smaller operators are taking a “new competition is
healthy” attitude, as long differentiation is part of the game-plan.


‘Anybody can stock everything that’s available,’ said Bob Gibson, marketing director for ABC, a chain with over 150 stores in Florida. “It takes some expertise to differentiate
the finer wines.’


Others appear to be bracing for a hit.


“It’s just going to make business tougher to do,’ said Michael Kassal, vice president and general manager of the 30 store Crown chain. “We can’t compete with price. We know
that our forte has to be customer service. We try to be the Nordstrom of fine wine, spirits, gourmet food and beer.’


Moderator’s Comment: What does the future of the American wine market look like? Is wine about to have its Starbuck’s moment?


Oscar Wilde once said that “America is the only country that went from barbarism to decadence without civilization in between.” Given that for more and
more Americans it’s impossible to imagine a civilized meal without “complex varietals,” perhaps we’re taking a giant step backwards.


As an aside, a recent experience in a newly opened specialty wine store gives me great optimism for independents and small franchises in the possible coming
battle against superstores. Being that our town is really skimpy with liquor licenses, part of the Saturday night ritual here entails grabbing a bottle or two on the way to the
restaurant. Entering the new wine shop just off the main downtown drag, we were very efficiently asked where we were heading for dinner. “Raymond’s,” we said, “right down the
block.” The sales person responded by suggesting a delicious and reasonably priced red that went perfectly with Raymond’s burgers.


And boy, did it ever. – Rick Moss – Moderator

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9 Comments on "Is America Ready for Wine Superstores?"


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Robert Dyer
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Robert Dyer
14 years 10 months ago

The trend that I am noting as one with an appreciation for fine wines, but also good value, is the emergence of smaller local wine shops with complementary wine bars. They are filling the education and appreciation role that the larger retailers cannot. The total wine experience is captured through wine education classes, pairings of cheeses and small plate foods, and social interaction. Several of these wine shops have opened within a 25 mile radius of me in Southern California; shops that are good at identifying good wines at value prices that are even somewhat competitive to Costco. I believe the consumer will gravitate toward that option vs. superstores because they appreciate the total wine experience.

M. Jericho Banks PhD
Guest
M. Jericho Banks PhD
14 years 10 months ago
Allow me to echo Robert Dyer’s comments about small wine shops popping up all over in SoCal. It’s happening here in NorCal, too. Why is this important? Because the per capita consumption of wine is higher here than in any other state. Because wine grown in California dominates U.S. sales and consumption. And because trends of all types seem to begin here and spread eastward. So, we may be seeing a view of the future of the American wine market that is quite different from the big box model. There is a near-big-box spirits chain here called Beverages & More, or BevMo!, with 53 stores sprinkled in the SFBay area, LA, and San Diego. They feature a significant selection of wine and beer from around the globe, distilled spirits galore, glassware, entertainment supplies, noshes, and gifts (www.bevmo.com). I can get lost in there just like I used to get lost at Home Depot. The interesting thing is that with all these stores, significant wine selections in every supermarket, and huge selections in Costco and Sam’s,… Read more »
Daryle Hier
Guest
Daryle Hier
14 years 10 months ago

This concept will work. Here in California, BevMo is essentially a superstore specializing in wine, beer and hard liquor. They offer tastings, usually on the weekend, which seem fairly successful as the stores are usually always bustling (my own anecdotal evidence). These stores are intimate enough while submitting a very good selection at very reasonable pricing.

Although most specialists oriented stores seem to be the growing trend, Total Wine will find this segment a little tougher but, as long as they indeed differentiate the model, this opportunity should be a success.

Carol Spieckerman
Guest
14 years 10 months ago

I think wine is already having the genesis of a Starbucks moment. One of my favorite wine store concepts is “Best Cellars” in New York. Wines are arranged by general character (“fizzy,” “fresh,” “big,” etc.) that are surprisingly accurate, most bottles are $15.00 or less, and wine-loving recommenders are always on hand to talk up the wines, serve up a taste and pin-point your specific taste. In a relatively small location, they create a user-friendly wine experience by featuring unique and yummy new finds without condescension.

I have found that most wine super stores basically offer a whole lot more of the same old stuff . . . say, three shelves full of Kendall Jackson Chard and end caps loaded with Yellow Tail at $7.00 rather than 12 bottles.

In wine, more is not necessarily better and well-planned, edited-and-intimate environments seem more appealing. (Hey, sounds a lot like Starbucks)

Bernice Hurst
Guest
14 years 10 months ago

Now that Americans have discovered wine, there is likely to be no stopping them. Sales will almost certainly continue to grow and an increasing number of varieties sampled. Some people may prefer specialist dealers because they want to learn about the drinks. Others may prefer specialists just for snob value or lower perceived prices or more choice. Whichever way you look at it, customers will be able to get far more from specialists than from supermarkets.

Gary Joyner
Guest
Gary Joyner
14 years 10 months ago
Total Wine is simply a large specialty store. Specialty stores exist, grow and prosper in every segment. Customer service, assortment quality and staff knowledge are keys to this market. In every category, there are affinity shoppers, price shoppers, aspirational shoppers and people who just want to have confidence in their purchase, whether for a gift or a dinner party. This is where all specialty stores live. Nothing new here. Based on my experience with Total Wine, I think they have opportunity. Their challenges will be to have enough presence and visibility in the right locations in new markets to get attention and draw traffic, while maintaining the level of associate knowledge and expertise that allows them to differentiate themselves. The average grocer or superstore misses on quality and service/knowledge. Costco usually has quality in their limited assortments, but in many stores lacks service and education, save their shelf talkers. Interestingly, they beat Total Wine on price on labels I buy frequently. Smaller wine specialty stores tend to be less “comfortable” for many consumers and can… Read more »
Jeff Lynch
Guest
Jeff Lynch
14 years 10 months ago

This is my new favorite store.

Mark Lilien
Guest
14 years 10 months ago

Tasting is a great catalyst for wine and spirits marketing. In the states where it’s legal, many wine and spirits retailers have tastings on a rare intermittent “special event” basis. Smarter retailers schedule tastings as frequently and steadily as possible. They get support from their suppliers. They have tie-ins with nonprofit fundraisers and tie-ins with bars and restaurants. In states where tastings are illegal, tie-ins are even more important. Most supermarkets and other wine and spirits retailers are content to let the suppliers’ brand advertising and price promotions carry them. So they have mediocre results and they’re vulnerable to higher-initiative competition.

Ryan Mathews
Guest
14 years 10 months ago

The problem with a wine superstore is that you have to carry a good deal of inventory some — almost by definition — guaranteed to move slowly. But the wine market is a “snob” market and all snob markets love small sellers.

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