Tag Archives: wine in grocery stores

Winebits 447: Pennsylvania wine, Judgment of Paris, wine on TV

Pennsylvania wineThis week’s wine news: Pennsylvanians may be able to buy in the supermarket this fall, the 40th anniversary of the Judgment of Paris, and a new wine TV show.

• Maybe by Thanksgiving: Pennsylvanians may be able to buy wine in the grocery store by the holiday if all goes well, reports the Post-Gazette newspaper in Pittsburgh. The well-written piece explains the obstacles to be overcome and the bureaucratic tussle to be negotiated for grocery stores to sell wine for the first time in the state’s history: They need to get a retail license, renovate their aisles to make room for wine, and to work with distributors to make sure wine shows up at the store. For example, since no distributor in the state sells to grocery stores now, wholesalers will have to set up the process from scratch. Again, another example of how cumbersome and outdated the three-tier system is.

• Judgment of Paris: The Wine Curmudgeon mentions the 40th anniversary of the most important event in the U.S. wine business after Prohibition again for two reasons. First, this Jancis Robinson story focuses on Steven Spurrier, the Briton who put the Judgment together, something we don’t see much of in this country. Second, as you read this, I’m in Colorado with Warren Winiarksi, whose Stag’s Leap cabernet sauvignon was chosen best red wine in the blind tasting. Perhaps Warren and I can find time to record a podcast while we’re here if he doesn’t mind recounting yet again how the California wines bested the best wines in France.

• Making wine on TV work: The Wine Curmudgeon has often lamented that wine makes for lousy TV, because an interesting wine TV show could help boost wine’s popularity in the U.S. That may change in August, though, when Hulu airs the English “TV Wine Show” featuring two British actors who apparently make women swoon – Matthew Goode (hope he doesn’t read this) and Matthew Rhys. I have not seen the show, but will watch it and review it. Goode and Rhys are going to have to be very sexy to overcome the plot description, though, which sounds like another wine TV yawner: “[W]ine pros travel the world to experience international wine culture from experts.”

Winebits 443: Three-tier system excitement

Three-tier systemThis week’s wine news features our old pal the three-tier system, but it’s mostly good news – including some of the biggest changes in state liquor laws since Prohibition.

• Well done, Pennsylvania: Pennsylvania wine drinkers, who have suffered for years at the hands of the Pennsylvania Liquor Control Board and its infamous state stores, will soon be able to buy wine at a retailer not owned by the state. Somehow, despite years of political impasse, the legislature passed a bill that the governor signed that will allow hundreds of restaurants, hotels, and grocery and convenience stores that sell take-out beer to sell bottles of wine. As the story notes, passage was almost anti-climactic given how bitter the debate has been for years.

• Wine in N.Y. supermarkets? Perhaps, reports the MPNNow website in the heart of New York’s Finger Lakes wine country. New York remains the biggest market where grocery stores can’t sell wine in the U.S., and attempts to allow it have failed for decades. The impetus this time? Pennsylvania’s new law that allows grocers to sell wine, and which not only may send New York residents across the border to buy wine, but reduce the number of Pennsylvanians going to New York to shop in its liquor stores and visit its wineries. The story is well written, and hints at the contentious debate that will ensue if the issue makes it to the state legislature.

• Colorado signs up, too: Expect to see wine in Colorado supermarkets, as well, after legislators agreed to a law that allows grocers, Walmart, and Target to compete directly with liquor stores and allows each to expand sales to 20 locations in phases over 20 years. Current law limits each chain to sales at one location in the state. The bill, a compromise, faces a court fight from those who want to eliminate all restrictions and allow groceries to sell wine, beer, and spirits in all locations immediately.

Why grocery stores love wine

grocery store wine salesBecause they sell so much of it — and a lot more than most of us realize. Hence the reason for the Great Wall of Wine.

Wine was the seventh biggest category by dollar amount for supermarkets in the 52 weeks ending June 15, recording $6.9 billion in sales. That’s up 3.7 percent from the same period a year ago, and works out to an average of $9.27 a bottle. The figures come from a study &YM_MID=1481439&sfvc4enews=42&cl=article_4_b" target="_blank">by the IRI marketing consultancy and published in the Supermarket News trade magazine.

How impressive are those numbers?

? They don’t include wine sales in New York or Pennsylvania, two huge markets that don’t allow supermarkets to sell wine. Yet, even without those two states, grocers account for about 20 percent of U.S. wine sales.

? They don’t include wine sales at Target, Walmart, and Costco. Throw those in, and that 20 percent total should increase by more than a few points.

? Wine was bigger than a host of established items, including cereal, coffee, bottled water, cookies, and soup. Some of that was because wine is more expensive; we bought three times more cans of soup than bottles of wine. Even so, it’s an impressive total, given the restrictions on wine sales. In Texas, for example, we can buy soup as long as the store is open, but we can’t buy wine on Sunday until noon.

? Wine’s growth was bigger than soft drinks, which lost 3.9 percent, as well as cereal (down 4.3 percent), ice cream (down 0.3 percent), frozen pizza (unchanged), and toilet paper (-0.2 percent). I can’t even pretend to make sense of that. Since when did we need wine more than toilet paper?

These numbers, more than anything else, explain why there is so much opposition to supermarket wine sales in the 19 states where it’s still prohibited. We’re not buying jug wine at the grocery store. That $9 average price means we’re buying many of the same wines we’d buy at wine shops and liquor stores, and small retailers don’t want the competition.

The irony is that, as has been noted on the blog, small retailers may prosper competing with grocers, since they offer something supermarkets can’t — someone to answer questions. The Great Wall of Wine has nothing to do with service.

Photo courtesy of Houston Press food blog, using a Creative Commons license

Winebits 269: Champagne, wine in grocery stores, Amazon

? More bad news for  bubbly: Just when you thought it couldn ?t get worse for Champagne, it did. Sales fell 4.4 percent the 12 months through December, according to the Comit Interprofessionnel du Vin de Champagne trade group. And Champagne shipments to the U.S. were down 25 percent in the first six months of last year, continuing that trend. And to think ? it wasn ?t all that long ago that the Champagne business was considering expanding the size of the Champagne region so they would have more land to get grapes from.

? Never underestimate three-tier: Abut a year ago, a federal judge ruled that a Kentucky law that banned grocery store wine sales was unconstitutional. So what ?s advancing through the Kentucky legislature? A more constitutional version of the ban, reports wkyufu,org. Said the bill ?s sponsor: ?So we would have liquor in convenience stores, dollar stores, wherever they could get a liquor license. And that's something that nobody wanted. ? Nobody, of course, not being the state ?s wine drinkers, who don ?t have the campaign cash to pay legislators to write bills for them. but the state ?s retailers who want to keep grocers out.

? Amazon adds two states: And they ?re not New York and Pennsylvania, which speaks volumes about how difficult it is to sell wine directly to the consumer in the U.S. If you live in Colorado or South Carolina, you can now use the Amazon service, which includes 15 states and the District of Columbia. Amazon usually doesn ?t break out many sales figures, but we should be coming up the first quarter of its wine retail operation. The numbers would be fascinating.

Winebits 264: Grocery stores, wine strikes, sweet red wine

? Ontario testing supermarket wine: Two Canadian provinces, Ontario and Quebec, are famous for their state store liquor system. But even they ?re feeling the pressure to deregulate alcohol sales; Ontario has announced a test program to sell liquor and wine in 10 grocery stores. The National Post newspaper reports Ontario wine drinkers will buy wine at state stores set up inside the grocery stores. This means they ?ll have to pay for their wine separately from their food ? not as dumb an idea as Pennsylvania ?s wine vending machines, but not all that brilliant, either. How much fun will it be to wait in two check-out lines during rush hour?

? South African wine workers on strike: Thousands of of South African farm workers are on strike in the Western Cape wine region, says Reuters, part of a series of violent strikes in which two workers were killed and vineyards were damaged. The farm workers, many of them black seasonal hires employed to pick and pack fruit, suspended their strikes in December.

? Consumers clamoring for sweet: And especially sweet red, says Nielsen ? up 62 percent in the year ending Dec. 8. Sweet red, in fact, has passed moscato, last year ?s sales darling, in annual growth. Where this ends is anyone ?s guess (and horrific fear, if I know the Winestream Media), though I ?m sure sweet red is going to get a lot more popular before it peaks. I was at a consumer wine thing last week, and Cupcake Red Velvet was one of the most popular topics of conversation.

Wine, grocery stores, and dog food

wine grocery storesThe biggest controversy in the wine business (aside from direct shipping) is probably wine sales in grocery stores in the 19 states where it’s illegal. New York gets the most attention, not surprisingly, but it has also been an issue in Oklahoma, Tennessee, and Maryland.

The question seems straightforward: This is the 21st century, so why can’t consumers buy a bottle of wine at the supermarket? The answer, of course, is much more complicated, involving the competing interests among the different parts of the three-tier system; what’s often portrayed as a battle for survival between local, neighborhood wine shops and soulless, money-grubbing multi-national grocery chains; and each state ‘s particular politics and liquor regulations.

Hence the Wine Curmudgeon’s calm, moderating approach. The world will not end for small retailers if wine is sold in grocery stores, and wine in grocery stores is not the panacea that the supermarkets think it is.

For this, we can look at the pet business, which went through a similar shakeout some dozen years ago. That’s when Proctor & Gamble, then widely regarded by independent pet retailers as a soulless, money-grubbing multi-national out to destroy their businesses, bought a dog food brand called Iams. Iams was the leading dog food sold by independent retailers, and was only available in pet stores. The independents were convinced that they would all go out of business the minute P&G started selling Iams in supermarkets, which happened shortly after it bought the brand.

The result? There were about 10,000 pet stores in the U.S. in 2000, when P&G bought Iams, according to the editors of Pet Age magazine, and there are about 10,000 today. And P&G got so disgusted with pet food that it sold Iams 15 years later for more or less what it paid for it, resulting in a loss allowing for inflation and money invested in the brand.

I’m not the only one who sees the parallel between dog food and wine (which occurred to me because I wrote for Pet Age, and covered the Iams switch). Frank Frattini, who owns a very successful New Jersey pet retail operation called The Hungry Puppy, sees it, too. And he should know, because he was one of those retailers selling Iams (and a wine drinker).

“Did we want that to happen? No,” says Frattini. “I understand exactly what the liquor stores are saying. They built up those wine brands, just like we built up Iams. And then someone wants to come and take the brands away after they did all the work to make them successful, just like what happened to us.”

Dog food is the key to profitability for most pet retailers, accounting for as much as one-quarter of sales. Plus, consumers who come in to buy pet food often leave with other items, like toys and treats, that carry higher margins. So, in the short term, says Frattini, the Iams move to grocery stores cost him a lot of money, as his customers bought their food at the supermarket instead of his store.

In the long term, though, the Iams switch actually helped his business — really, he says.

Frattini learned how to be a better retailer. He didn’t have the Iams cushion to depend on, so he had to do a better job in other areas — marketing, inventory management, and the like. That made him money he would not have made if Iams had not switched. In this, he says, he came to the realization that business will always change over time, whether he wants it to or not. So one had better learn how to adapt.

Second, retailers like Frattini discovered they had an advantage that grocers didn’t have, despite Iams. “It was convenience and knowledge,” he says. “When’s the last time anyone could answer a pet food question at a grocery store? And isn’t it easier to stop at a pet store to buy food than to go to the grocery store?”

Which should be good news for any wine retailer terrified about what will happen if his or her state allows supermarket sales. Yes, the short-term shock will be hard, but good retailers will be able to survive that. After all, when is the last time anyone could answer a wine question at a grocery store?