Will German discounters Aldi and Lidl change grocery store wine in the I.S. the way they’ve changed it in Great Britain? That’s the question to answer as Aldi grows to 2,000 stores over the next couple of years and Lidl opens its first stores on the east coast.
Because the chains have significantly changed the way wine is sold in Britain, not only forcing traditional retailers out of business but cutting sales at mainline grocers.
“You wouldn’t have believed it possible five years ago, but Aldi and Lidl are now setting the pace in the U.K. supermarket wine trade,” writes Finoa Beckett in the Guardian newspaper. “Between them, the pair have 10 percent of the U.K. grocery market, with Aldi alone accounting for one in every 13 bottles of wine we buy.”
By comparison, Costco, considered the biggest wine retailer in this country, has about eight percent of the U.S. market, while Kroger may account for about four percent. In other words, two upstarts in the U.K. have done almost as well in that market as two multi-billion dollar retailers do here. What does that say about the way grocery stores have traditionally seen wine in the U.S.?
What accounts for the Aldi and Lidl success?
• Cut-throat pricing. Each does $10 wine, even allowing for exchange rate foibles, in a way we can only dream of here. Beckett recommends Lidl’s £6.99 (about US$10) Cremant de Limoux, sparkling wine from the Limoux region of France; a similar wine costs $16 here. And she says Aldi does a French red and South African white for £5.49 (about US$8), about two-thirds the price of each in the U.S.
• Supply chain brilliance. A British grocery store consultant told me the companies get such good prices because they make producers an offer the latter can’t refuse. The grocers will buy all of a vintage at one time, so that the producer is happy to sell at a lower price because it has the cash immediately and doesn’t have to wait for the wine to be sold over the course of the year.
• Smaller selection. The same consultant said that smaller selection translates into lower overhead and keeps costs down. “The traditional supermarkets’ massive range makes choosing hard for the 99 percent of consumers who have no idea what most of the wines are,” he explained. “And the discounters have been winning awards and getting plaudits for the quality of their wines, which when combined with their much cheaper prices is a sure fire winner for most consumers.”
That’s the good news. The bad news? So far, Aldi hasn’t shown it wants to do the same thing in the U.S. My local Aldi, as well as the others I’ve visited, has good prices and a small selection, but most of the wines are of indifferent quality — too much Winking Owl and not enough Vina Decana, and I’ve yet to find a white to buy regularly. If Lidl follows the Aldi example, we haven’t gained much.
Still, there is reason for optimism. Most experts ignored Aldi and Lidl when they entered the U.K., and now even ASDA, owned by Walmart, is suffering badly from the discounters’ success. Besides, given the sad state of cheap wine in the U.S., any sign for improved quality and value is welcome.