Tag Archives: grocery store wine

Why the Kroger wine proposal should terrify anyone who drinks wine

Kroger wine
Spanish chardonnay? Seriously?

Kroger wants to hire the biggest distributor on the planet, which controls about one-third of the wholesale market, to manage the wine departments in its stores. This is such a terrible idea for consumers that even the federal government — which has mostly abandoned its oversight of all but the most basic parts of the wine business, like labels — said it was probably a terrible idea.

There are many reasons why the Kroger plan is terrible (and you can read about them here and read why Kroger finally dumped the plan here). But the main reason is what you see in the photo with this post, which I took at my local Kroger. Anyone who would use it to promote Spain does not care about wine — or Spain, for that matter. They only care about selling wine, which is hugely different. As such, they don’t care about quality, terroir, or value. They care about selling us wine in the easiest way possible, and if that means the wine is crappy or overpriced or not what we want, so be it. Margin, ring totals, and sales per square foot are what matters to Kroger.

Because:

• Verdejo, a Spanish white grape, is sort of like sauvignon blanc — if the sauvignon blanc is soft and lemony. However, many aren’t (like this one and this one) and if I buy a verdejo expecting tropical fruit or minerality, I’ll spit it out and never drink verdejo again. But we’re just Americans who buy wine at the grocery store; what do we know?

• Albarino is not like pinot grigio at all. In any way. That this sign would compare them attests to how little the wine part of the promotion has to do with reality, unless the reality is selling wine.

• No, I do not want to try some Spanish chardonnay. The Spanish do not want to try some Spanish chardonnay. Most Spanish wine producers do not want us to try some Spanish chardonnay. They want us to drink Spanish white wine made from Spanish grapes like viura, verdejo, and albarino, not wine made with an international grape like chardonnay that is only made in Spain to sell to Americans who buy wine at the grocery store; what do we know?

I’m lucky in Dallas, where there are two top-flight independent retailers and two chains that are pretty good. So I don’t have to buy wine at the grocery store, as so many of you do, and as so many more will as supermarkets soon sell the majority of the wine we buy.  I don’t expect Kroger to care as much as an independent retailer, but it would be nice if the chain pretended it cared. That Kroger and its ilk won’t even do that much, that they will treat wine as if it was laundry detergent — and which is the key to the terrible distributor management proposal — shows how difficult it might soon be to buy quality wine at the grocery store. This Spanish nonsense, sadly, might be a sign of even more terrible things to come.

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 U.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.

Winebits 427: Judgment of Paris, grocery store wine

Judgment of Paris ? 40th anniversary: One of the most important moments in the history of wine will be commemorated in May, when the Smithsonian — yes, that Smithsonian — will hold several events on the 40th anniversary of the Judgment of Paris. The judgment, a blind tasting in Paris between the best French and California wines and where the latter won, was the first time the wine world realized that California wine could be as good as it has become. The festivities include a winemakers’ dinner featuring several of the winning California wines, which I’m told by one of the winemakers are still pretty good.

? Supermarket influence: How much do grocery stores affect what wines we buy and what other retailers sell? Quite a bit, says this story by Liza Zimmerman on Wine-Searcher.com. The story is notable for several reasons, not the least of which is that an editor at Wine-Searcher once told me her readers weren’t interested in that kind of reporting. How times have changed, as supermarkets get closer to selling 50 percent of the wine sold in the U.S. The story talks about why grocery stores only carry the biggest brands (because they’re the only ones who have enough product), and how they can afford to sell wine more cheaply than independents. It’s well worth reading and shows that the Winestream Media does have an idea that the world is changing.

? If it works in Canada? The Canadian province of Ontario has decided to allow wine to be sold in 150 grocery stores, a significant move given how tightly booze sales are regulated in Ontario. But, reports the Business News Network, the provincial government is broke and needs the revenue from grocery store sales. The new system is still quite restrictive, though, and includes rules that require the retailers to sell Ontario wines and probably isn’t a model for the 18 or so U.S. states that don’t allow supermarket wine sales.

Winebits 409: Grocery store wine edition

grocery store wine ? Colorado wants grocery store wine: Which is not necessarily news. What’s different, though, is the latest campaign to change the state’s liquor laws to allow supermarkets to sell wine and beer. The arguments are much the same as elsewhere, in which liquor stores say they’ll face economic ruin if grocers sell beer and wine, and grocers talk about convenience and giving customers what they want. One difference, though: The pro-supermarket side has enlisted a former country sheriff on its side. That usually doesn’t happen, given that law enforcement is mostly on the anti-supermarket side.

? Tennessee gets closer to grocery store wine: The Volunteer state, which approved supermarket wine sales to start next July, is already seeing grocers get ready for the change. Said a Kroger manager in Knoxville: “We just finished a center store reset where we were preparing to have wine in the stores and as you can see we have added shelving here for wine and we ?ve added shelving here and we are going to have some refrigerated cases for wine as well.” Tennessee regulators expect 270 stores sell wine in 2016.

? Aldi, Lidl gaining market share: Traditional British supermarkets continue to lose ground to discounters Aldi and Lidl, both of which are known for the quality of their cheap wine. Each company’s sales rose 18 percent in the 12 weeks through Oct. 11, while Tesco and the Walmart-owned Asda saw sales drop in the low single digits. Those of us who are leery of rising wine prices should know that both chains succeed by undercutting their larger competition, and that Aldi is about to move into California and Lidl will open its first U.S. stores on the east coast sometime in the next year.

The continuing grocery store wine revolution

grocery store wine revolutionFirst, Nielsen reported that 42 percent of all wine sold in the U.S. is sold in supermarkets. Then IRI, which also also tracks consumer purchases, reported that wine was the seventh biggest selling item (in dollar terms) in U.S. supermarkets in 2014. Call it one more piece of evidence pointing to the grocery store wine revolution.

Yes, part of that sales ranking is because wine is more expensive than most grocery store merchandise. But even allowing for the higher prices, says my supermarket consultant, this is the kind of change that transforms an industry. The increase in sales in dollars was greater than the increase in the number of bottles sold, which means grocery store wine shoppers are buying the more expensive wine that they used to buy in liquor stores and wine shops. Given that wine sales in the U.S. have been flat for a couple of years, that should terrify every wine shop owner in the country.

More thoughts about the grocery store wine revolution:

? Wine was ranked ahead of cold cereal (No. 8), coffee (No. 11, and also relatively expensive), bacon (No. 17), dog food (No. 27), and diapers (No. 92).

? Keep in mind that wine did this well despite three tier’s sales restrictions — reduced hours for purchase in many states, and that it isn’t sold in supermarkets in key states like New York and Pennsylvania.

? Wine sales were 37th in the number of items sold, despite its higher prices. That may be the most mind boggling fact, given that wine in grocery stores was almost unheard of when I started drinking wine in the early 1980s.

? Wine sales increased 5 1/2 percent in dollar terms, also impressive given its higher price.

For more on grocery store wine:
? How to by wine at the grocery store
? Why grocery stores love wine
? Wine education: Four things you don’t needs to know about wine

Winebits 388: The world hates expensive wine

expensive wineThe cyber-ether has been full of vitriol for expensive wine over the past month, so much so that even the Wine Curmudgeon has wondered what’s going on. Some of these posts make me seem like a “bring on the $100 samples” member of the Winestream Media:

? Damn you, Napa cabernet: Something called Vox Observatory, which is part of the company that owns the chi-chi Eater food site and the SB Nation sports blogs, posted a video called “Expensive wine is for suckers.” The results? Not only is expensive wine overpriced, but many of the tasters said they liked the way the cheap wine tasted better than they liked the way the expensive wine tasted. One even went so far as to say that she was glad she had cheap wine taste. I wonder: Would Eater have run a similar post, citing the cheap and simple qualities of grocery store tomatoes over $15 organic, heirloom tomatoes? Of course not. This post speaks directly to the cliches the wine business and the Winestream Media reinforce about wine, and how their approach intimidates people who aren’t wine drinkers.

? Grocery store cheap wine: The cheapest offers the best value, according to a study done among British supermarkets. Almost two-thirds of the wines sold at Lidl and Aldi, known for their low prices, were called a good value; at least half the wine at six other chains was judged a poor value; and three-quarters of the wine at the bottom grocer was called a poor value. This is an amazing result, and not just because so much wine in grocery stores is so ordinary. It speaks to the concept of premiumization, and that producers and retailers aren’t giving us better wine when we pay more money, but the same wine in better packaging and with more expensive marketing.

? The placebo effect: Think your pricey wine tastes better than the cheap wine I drink? That may be because you want it to, says a study in the Journal of Marketing Research. Says the report: “Expectations truly influence neurobiological responses,” and there are even brain scans to prove it. Again, not a surprising result, and especially for those of us who have spent our professional careers trying to educate people on the differences between cheap and expensive wine.

Winebits 375: Grocery store wine edition

grocery store wineThis week, how grocery stores are changing the wine business:

? Suing the state: Texas doesn’t allow non-residents to own more than five liquor stores, unless the owners are related to each other. This “just us kinfolk” exception (as a lawyer friend of mine calls it) has allowed Texas-owned chains like Spec’s and Twin Liquors to put together hundreds-store operations. It’s also why Walmart is suing the state to overturn the kinfolk law and why it and Kroger are pushing two bills in the state legislature to eliminate the exception. Neither are likely to go anywhere — courts have traditionally ruled in favor of these kinds of laws, citing three-tier and its constitutional protections, and the legislature almost always avoids offending the big Texas liquor chains. Still, that Walmart and Kroger are willing to spend the money on a seemingly hopeless cause speaks volumes about how they think the world is changing. Starting now may give them a chance later to reform beer, wine, and spirits retail sales in Texas.

? Stopping at the supermarket: Nielsen reports that U.S. grocery stores (including Walmart, Costco, and their ilk) sold $8.6 billion in wine in 2014, which accounted for about 42 percent of the country ?s store-purchased wine. In other words, almost half of the wine sold in 2014 came from a grocer. Imagine what that number would be if Pennsylvania and New York allowed grocery store wine sales. We can write about Robert Parker all we want, but that’s not the news in the wine business. The real news, the development that wine writers should be paying attention to, is that most of our readers have no idea (and don’t care) who Parker is, and they want to know what wine to buy at their Walmart or Kroger. Which is why a grad student named Mark Thornton may be the next Parker.

? One more time: Speaking of Pennsylvania, its state house has approved a bill to end the state’s liquor store monopoly. This is apparently as much a tradition in the Keystone State as Punxsutawney Phil, and makes as much difference in changing the law as groundhogs do in forecasting weather. Still, the debate is fun. Said one lawmaker: ?The other side is talking about the No. 1 drug, alcohol, like it ?s milk and bread. We ?ve got to have more of it, more convenience, for the No. 1 drug in our communities.” The other side, that wants to reform the system, didn’t miss a beat, either: “Even Russia and China have given up on the idea of a state-run monopoly.” So you’re a commie if you oppose reform, and a crack dealer if you support it. Politics is a grand business, no?