RETAILERS LAUNCHING LOW-COST WINE LINES

Barbara Murray

PORTLAND, Ore. -- Following the smashing success of Trader Joe's two-dollar varietal wines last year, Safeway and Fred Meyer stores here and Raley's Bel Air Markets in Northern California have launched inexpensive wines, while Albertsons is preparing to do so.

Charles Shaw wine, or "Two Buck Chuck" as it was dubbed, is sold exclusively at Trader Joe's and became one of the fastest-growing brands after it was introduced last year. Taking advantage of an oversupply of grapes, Trader Joe's wine buyer made a deal with the producer, Bronco Wine Co., Ceres, Calif., and was able to bring to the table four varietals that sold for $1.99 a bottle in California and for $2.99 to $3.49 in Trader Joe's stores elsewhere.

Safeway recently introduced a $2.99 proprietary label, Pacific Peak, as part of a deal with Golden State Vintners, Napa, Calif. Safeway's regional spokeswoman, Bridget Flanagan, said in a published report, "A lot of people are conscious of the Trader Joe's phenomenon. It's a very competitive industry. Golden State brought this value to us. We saw the opportunity and seized it." She did not return calls made by SN, nor did Safeway's corporate spokesman in Pleasanton, Calif.

Raley's, based in West Sacramento, Calif., introduced California Arbor wines March 26 at $1.99 in its California stores and two for $5 in its Nevada stores, according to Nicole Townsend, a spokeswoman for the chain, who added, "It's doing extremely well, beyond our expectations." Wines can retail for less in California because producers can ship directly to retailers. Townsend said that although Arbor is not a private label, their wine buyer did work with the vintner, Black Oak Winery in Healdsburg, Calif., to create the blends of Merlot, Cabernet Sauvignon and Chardonnay.

Albertsons featured bottles of Pine Brook Merlot at $2.99 late last year with good results, according to Dennis Schwarz, director of marketing for Albertsons' Northwest Division, based here, with 141 stores.

"It's certainly a phenomenon we are looking at, we and the others," he told SN. "We are all looking at the marketplace and paying attention to it."

Rob Boley, spokesman for Fred Meyer, told SN that Fred Meyer is searching for -- and already has some -- wines in the $2 to $5 price range, but he said they have to be of good quality, and in 750 ml. bottles, packaged in nothing so plebian as a box.

Rick Davison, a consumer who lives here, told SN he found Fred Meyer's Weston brand -- $2.50 per bottle -- displayed outside of the wine section, next to the canned vegetables. The wine steward at this Fred Meyer store told Davison that Weston was not in the wine section because all the other wines sell at a 10% discount per case, but no discount is offered on a case of Weston. The employee also said that the store had sold 100 cases of Weston the week before. The question on everyone's mind is whether the mainstream chains can duplicate Trader Joe's success.

"It's hard to imagine anything taking off the way Trader Joe's did because it was out there by itself for months," Karen Ross, president of the California Association of Winegrape Growers, Sacramento, told SN.