Tag Archives: wine trends

Once more, how consumers buy wine

how consumers buy wine
how consumers buy wine

Even I know — and I’m just a gratuitous cute dog so people will put this on Facebook — how consumers buy wine.

Dear Wine Business:

I know we have our differences, but we do want the same thing — to get more people to drink wine. Hence another of my letters, which I send you periodically to tell you what happens when I talk to consumers about wine. This time, how they buy wine, and it doesn’t have much to do with scores or premiumized wine.

Marlowe, one of the two official dogs of the Wine Curmudgeon, needed a haircut, so I took him to a local place, Kinder Kritter. I know the owner a little, but we’ve never talked about wine. This time, though, she was curious about my license plate, 10 WINE. I told her, and she asked me for some recommendations. What do you drink now? I asked.

I know you don’t want to believe this, Wine Business, but she drinks $10 Bogle cabernet sauvignon, and $12 J. Lohr cabernet when she wants to splurge. So cheap, Big Wine grocery store brands that are easy to find and aren’t sold on the basis of reviews, winespeak, or cute labels. In other words, none of the stuff she is supposed to drink and which makes her a fairly typical wine drinker.

Yes, small sample size, but it’s not like I haven’t heard it before. She likes red wine that is easy to drink, but has a little more going on than just that. I recommended the McManis cabernet and the Rene Barbier Spanish red blend. The former was similar to what she was already drinking, and the latter was like it in some ways, but also different enough so that she could expand her horizons. Because isn’t that what every wine drinker should do?

The owner was also very excited when I told her the Barbier was only $6. So much for premiumization, huh?

I’ll let you know what she thinks of my recommendations. And thanks again for your patience in reading this.

Your pal,
The Wine Curmudgeon

More about consumer wine buying habits:
How people really buy wine
Another study agrees: We buy wine on price
What drives wine drinkers? Price, of course

Costco wine and its retail domination

costco wine

Annette Alvarez-Peters

Know three things about this interview with Annette Alvarez-Peters, who runs the Costco wine program:

First, any interview with Peters is worth reading, no matter how technical (and this one is technical), because she doesn’t do many and she is one of the two or three most important wine people in the world. So when Alvarez-Peters says Costco isn’t going to sell wine over the Internet in the U.S., then it’s not likely any other big retailer will, and retail direct shipping will continue to languish in the netherworld it currently inhabits.

Second, it shows Costco’s domination of U.S. wine retailing. It’s not so much that it’s the biggest wine retailer in the country or that it sold $1.69 billion of wine last year, but that it may account for as much as four percent of all the wine sold in the U.S. by dollar volume. In addition, the chain may do as much as $3 million in wine for each store, a gigantic number given that wine isn’t Costco’s reason for being. Kroger, whose wine sales could be close to Costco (parsing these numbers isn’t easy, since not all retailers break out wine revenue), has six times as many stores in the U.S. All of which means Costco has leverage with producers and distributors, even the biggest, that no one else has.

Third, a wine trend at Costco is a wine trend that producers pay attention to because the chain sells so much wine — and that means it’s a trend in the rest of the country that everyone else will be copying. So we are going to see Big Wine brands heavily discounted, lots more sweet red, premiumization, and rose. And Costco is dabbling with wine delivery; it it figures out how to make delivery profitable but affordable for consumers, delivery will become a trend.

We can argue whether any of this is good or bad, but that almost doesn’t matter. What matters is that what happens at Costco changes the way everyone buys wine, even those of us who don’t shop there. Unfortunately, the interview doesn’t do a good job getting that across.

More about Costco wine:
Costco and its role in the wine business

Will Aldi and Lidl change grocery store wine?

Aldi and Lidl

See all this wine? You won’t find it at Aldi and Lidl.

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.

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