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7-Eleven gets into the $4 wine business

7-Eleven's Yosemite Road will sell for $3.99 in most of the United States.The news this week that the convenience store chain was launching a $4 wine brand called Yosemite Road sent chills of excitement through the Wine Curmudgeon. Finally, there was a Two Buck Chuck equivalent that I could buy at a store just three blocks from my house.

Not so fast, cheap wine breath.

Turns out 7-Eleven, through a wine producer called The Wine Group  (best known for not having a Web site and its Franzia and Big House labels), made hardly any Yosemite Road at all. There are just 3,500 cases in the U.S., split between cabernet sauvignon and chardonnay.  That's about what a small regional winery makes in a year. 7-Eleven's Kevin Elliott, senior vice president for marketing and logistics, said he expects most of the wine to be gone by the end of the month.

Or sooner, as the case may be. I stopped at four 7-Elevens yesterday (no sacrifice is too great in the pursuit of cheap wine), and none of them had the wine. If and when I get my hands on some, I'll review it. Or, if anyone else tries it, leave a comment or send me an email and I'll post it. Until then, a few thoughts about what it means that one of the world's largest retailers is getting into the very cheap wine business.

7-Eleven sells wine, and has done so successfully for the past couple of years. In fact, wine has been one of the chain's best performers this year, Elliott says, outselling other items in the store and the national wine market, which has been mostly down. The company, over the past 12 to 18 months, has even encouraged its franchisees to carry more wine in their stores.

The wine in the four stores I visited were selling national brands like Yellow Tail and Barefoot for the same prices as other retailers. There were also some surprising labels — Estancia and Kendall Jackson among them. But I shouldn't have been surprised, says Elliott; 7-Eleven's customers aren't limited to harried fathers buying disposable diapers late at night or beefy construction types picking up a six pack to drink after work.

Still, that doesn't explain why Yosemite Road and why now. The company already sells two inexpensive private labels, Thousand Oaks ($6.88-$8.99) and Sonoma Coast ($9.99-$12.99).

"This is a challenging economic environment," Elliott says, "and value is at a crescendo. With this value type, there is a stronger value proposition for our customers. We felt there was a white space at this price point that needed to be addressed."

Which is the real shocker in all of this. 7-Eleven, a chain that has traditionally not paid much attention to pricing, is not just paying attention to pricing, but pricing for wine. (Though, to be fair, this approach has changed markedly over the past couple of years.) A chain that is selling Barefoot for $6.99 and Yellow Tail for $7.99 has decided that it needs to sell a wine that costs even less. That's not exactly an attitude that I see a lot of in the wine business.

Meanwhile, 7-Eleven is hedging its bets with such a small production. When this sells out, there will be another 4,000 cases or so and then a decision will have to be made whether to keep going. And that will depend on whether there is a market for a $4 wine at a convenience store chain. I'd have thought not, but it won't be the first time I was wrong.

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