HIGH ON WINE

WILLIAM SMYTH

Break out the bottle and pop the cork! Wine sales have retailers celebrating, and destination centers for wine and spirits in supermarkets are becoming more and more of a hit with consumers as retailers learn to successfully market products through these designated areas.

Wine sales in supermarkets have really taken off recently, statistics show. According to Information Resources Inc., Chicago, table wine is a hot item in supermarkets. For the 52-week period ended Aug. 15, 1999, table wine brought in $2.8 billion in sales. Of the notable brands, Robert Mondavi's Woodbridge sales jumped 25%, generating $106 million. Kendall Jackson was up 2.1% to $108 million in supermarket sales, and Almaden raked in $89 million, a 12.6% increase. Vendange experienced a 5.1% increase to $90 million in sales, and although Sutter Home increased sales by a mere 0.6%, it still led the table-wine category with $146 million in sales.

Other brands in the table-wine category, however, didn't fare as well. Franzi sales were down 5.6% to $132 million. Ernest & Julio Gallo sales were down 0.6% to $123 million, and the Gallo Livingston Cellars brand sales dropped 7% to $122 million. Carlo Rossi ($112 million) and Beringer ($85 million) were down 8% and 5.4%, respectively, rounding out the Top 10 selling brands.

Other categories of wine have prospered at the supermarket retail level and, according to ACNielsen, Chicago, categories such as Sangria, sparkling wine and sake have all witnessed growing sales. In supermarkets that generate more than $2 million in yearly sales, those three categories blossomed for the 52-week period ended Oct. 2, 1999. Sangria was up 4% with $18.4 million in sales, compared with the entire sparkling-wine segment, which in 1997 was up 4.1% to $237 million in sales. After only going up 2.7% in 1998, sparkling wine experienced a 6.6% increase in 1999 with sales of $259 million. Sake witnessed a 5% increase to $3.4 million this year.

Bill Nelson, vice president of government relations for the American Vintners Association, Washington, said chains are experimenting more with wine destination centers as a result of the growth spurts in sales. "I just came back from Oregon and they had quite a bit of them," said Nelson. "The same goes for California and even Washington. In the West it's pretty common to find them. The specialty aspect of wine in supermarkets has moved the category along."

According to Nelson, there are a couple of reasons why wine destination centers are good for supermarkets. For one, they boost profitability. "Wine centers help by bringing in better consumers who are willing to spend more money on more expensive items. It's like a halo effect. If you have wines and then you had some more expensive wines, it can attract people who will buy the expensive wine and that will increase your profits," said Nelson. "It brings in more people for new reasons to shop there."

Another reason, he said, is wine's strong relationship with food. "There is a strong coalition with wine and food. When people are planning a meal, they sometimes plan wine with it. If you're in a supermarket and you see a nice salmon, you'll need wine to go with it. If the wine is there as well, why not buy it at the same place," added Nelson. "The idea of going to a second store to purchase items is foreign."

At Brown & Cole, Bellingham, Wash., wine is taken very seriously. According to Chuck Beebe, beer and wine category manager, sales have definitely increased with the help of wine departments. Three of Brown & Cole's 35 stores have them -- two smaller departments and one giant "store-within-a-store." They are between 400 and 550 linear feet and wooden boxes add "ambiance" to the area, he said. The wine is laid out by region and country and contains signage to add to the decor. The two smaller departments have metal wire Metro shelving, while the larger one has standard shelving units and an island that consumers can walk around.

The departments are staffed with workers who have a knack for wine. "Wine customers expect someone who is knowledgeable to help them with their purchase," said Beebe, who added that more wine departments are being planned for next year at Brown & Cole.

Bashas' Markets, Chandler, Ariz., also pays special attention to its wine category. "We've had a lot of success with our wine department and it's a place that customers flock to," said Brian Roberts, director of liquor sales at Bashas'. "We have a lot of fixtures and it [the wine-destination area] is just a better way to sell these products."

According to Roberts, the wine department is set up on the side of the store and is roughly between 150 and 300 square feet with a wooden rack laydown display that carries all the imported and boutique wines. Other stockkeeping units and shelf gondolas hold a variety of wine and spirits items. Roberts noted that Bashas' runs a lot of ads for wine and has display programs with manufacturers quite often.

Another Bashas' banner that does a lot with wine is A.J.'s Fine Foods, a five-store gourmet, food and wine set that Bashas' owns in the metro Phoenix area. According to Roberts, wine tasting, various wine events and dinner pairings are all part of the A.J.'s experience. A full staff specializes in wine and spirits.

Lunds Food Holdings, Edina, Minn., has wine stores attached to the sides of six Byerly's supermarkets. These Wine and Spirits shops are liquor stores designed to attract grocery shoppers. According to Art Miller, director of retail operations at Byerly's, the stores carry more than 2,000 different kinds of wine and spirits from more than 15 different countries. The stores are roughly 3,000 square feet in size and they have a wood atmosphere to give them "wine cellar feel" with library stairs and wood wine bins, he said. The stores work with distributors and manufacturers on promotions and displays, but Miller noted that upper management would not comment on the sales performance of the stores.

A buyer from an Eastern chain who did not want to be identified has also experienced firsthand much success with wine destination centers in stores. "We view these destination centers as an opportunity to bring in that extra consumer by giving them an area where they can buy and browse an assortment of wine and spirits products," said the buyer. "The wine department is very important in terms of sales, especially with the holidays."

According to the buyer, the wine departments are set in the back of stores, and brass fixtures and wood frames house the wide variety of imported and domestic wines carried. There are wooden bins set up in the front of the section and wine bottles hang on a ceiling rack set up in the middle of the department. In the back of the area is a spirits section, filled with liquors and champagne. Promotions and displays market the products daily and ads are placed in the weekly circulars. The company does extensive programs with manufacturers on a limited basis but mostly focuses on local favorites.

"We try to keep it fresh and appealing to the customer's eye," said the buyer. "We're trying to get consumers out of the liquor stores and into our stores. We want them to shop for all their needs with us. The wine department does just that, by attracting them with its decorative nature and its wide variety of products. We're happy with the results."

Of all the chains SN spoke with, Fiesta Mart, Houston, was the only one that has not yet developed a wine destination center. According to Kevin Garner, liquor buyer at Fiesta, the store has been reducing SKUs and wine is stored in the aisles -- not in a department or center. Shelf-end displays are occasionally featured and, although he said there has been no noticeable growth in sales, Garner told SN the store is "currently decreasing the domestic-wine inventory and increasing the imported."