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Raise your glasses, make a toast, and say "Cheers!" to the beer, wine, and liquor department, for it possesses a unique power to raise the spirits of the entire store by attracting new customers. Not just any shoppers, but the affluent, college-educated, most-sought-after customers retailers crave. According to ACNielsen Homescan data, households with an annual income of $70,000 are twice as likely to buy wine as the general populace. The people in those households are more likely to hold professional and managerial positions, live without children, and reside on the West Coast.
Increasingly, retailers are teaming with brewers, vintners, and distillers to develop programs that target prime households, spur impulse purchases, and build sales by cross-merchandising with other departments in the store, especially those in the profitable perimeter perishables areas.
"One of the great advantages of selling wine in supermarkets is that it is being sold in a food environment where people are making meal decisions," says Dan Hansen, v.p., chains, at Beringer Blass Wine Estates, the Napa, Calif. producer of Beringer Vineyards, Chateau Souverain, Chateau St. Jean, St. Clement, and several other domestic and imported labels. "Wine is a natural part of the meal 'solution' that people are looking for when they go to a grocery store," he says. "Additionally, selling wine in supermarkets exposes thousands of people to your products in a friendly, non-intimidating environment."
"The wine shopper is a very valuable consumer, not only because they buy lots of wine, which drives the profitability of the category, but because in almost every occasion they are a shopper who buys other profitable categories," says Steve Sprinkle, v.p., global chain accounts, at E.&J. Gallo Winery in Hayward, Calif. "This is a consumer that trades up very easily and buys complementary items, almost all from the perimeter of the store. They are very occasion-based shoppers."
According to Gallo and ACNielsen Household Panel research, consumers spend 79 percent more—$58.49 versus $32.63—when wine is in their basket. "That $25.86 difference is not only the price of the wine," says Sprinkle. "Almost $15 of that is complementary items—bread, cheese, and meat."
"An issue we have is that a lot of retailers are stuck in their silos within their departments," says Bob Krall, v.p., director of trade marketing, for Brown-Forman Spirits Americas in Louisville, Ky. "Every department manager has their own little piece of space, and often they are not willing to take, say, a spirits display, and move it to some other part of the store where it may be compatible with another product, like cheese."
Wine & Kraft party
But it has been proven that retailers can increase their sales of wine by pairing it with food items, helping to drive the occasion-based selling concept.
"We've had the most success when we've sat down with a retailer and collaboratively put together a comprehensive calendar of food and wine promotions throughout the year," Sprinkle says, adding that Gallo has teamed with such CPG giants as Unilever, Kraft, and Nestle, and gets creative when developing racks and other in-store merchandising vehicles. As a result, a Bella Sera wine rack placed across from the French bread in the bakery will look very different from the Turning Leaf display across from the turkeys at Thanksgiving.
"The chains getting behind this are supporting it not just by putting up some displays in the perimeter of the store, but by developing a comprehensive, specific, month-by-month plan and doing it on a consistent basis," he says.
Other wineries are also teaming up with CPG manufacturers. Columbia Crest Winery has joined with Procter & Gamble's Millstone coffee and noted chef Tom Douglas to develop a spring merchandising program that offers recipes, instantly redeemable coupons for coffee, spring entertaining tips, and links to Douglas' Web site to look for additional recipes or to order one of his cookbooks. "We found working with Procter & Gamble that the consumer base for premium coffee and Columbia Crest wine overlaps substantially," says Brett Scallan, marketing director for parent company Stimson Lane Vineyards & Estates in Woodinville, Wash.
"These added-value in-store campaigns result in a win-win-win situation for the consumer, the supermarket, and the suppliers," says Hansen of Beringer Blass.
Canandaigua Wine Co. also has been stepping up its cross-merchandising efforts. This spring its Talus Chardonnay has teamed up with Act II popcorn and the Netflix online DVD rental service. "On our bottles we will be promoting that you can get a free trial membership to Netflix and save money on Act II popcorn," says Jeff Muller, national promotions manager in the Concord, Calif. office of the Canandaigua, N.Y.-based company. He concedes that at first there was some concern that the Netflix component would hit a sore note in the supermarket video rental department. "Most of the major chains aren't in that business anymore, so that hasn't been a problem," he says.
Chardonnay and croquet
For Vendange, the No. 1 selling Chardonnay in the U.S., Canandaigua has a spring promotion centering on croquet and offering a 60-cent coupon on Blue Diamond almonds. Its Covey Run brand has tied in with Goldy's cream cheese dips as its spring partner. "Where Goldy's is not distributed we have the option for a $2 mail-in rebate for a deli platter purchase," says Muller. "We're trying to stimulate sales in another part of the store that may be overlooked by people when they are promoting wine. With all three of our promotions we're trying to get the grocer at least a dual ring with our wine and a related product," he says.
With Alice White, its Australian import brand, Canandaigua has developed a novel "Outback Pack," a neck-hanger that allows a 187 ml bottle of Alice White Shiraz to be attached to a 1.5 liter bottle of Alice White Chardonnay. "The idea is that Chardonnay is a very big seller for us, and a lot of people who drink white wine may have not tried some of our red wines," says Muller. "This way we basically get a free sample into their hands where legal."
Australian wines are among the hottest things out there right now, and the hottest is the Yellow Tail brand that is imported by W.J. Deutsch & Sons, Ltd. of White Plains, N.Y. Introduced in June 2001, and retailing for only $6.99 a bottle, $5.99 on deal, Yellow Tail has taken the country by storm, moving some 1.5 million cases in 2002. "Our chain business is growing dramatically," says Roy Danis, s.v.p. at W.J. Deutsch. "Our ACV distribution is literally growing daily. As chains learn more about this brand, and see and read the ACNielsen numbers, more and more of them are getting excited about the velocity of this brand."
Wines from the Pacific Northwest are also gaining in popularity, but they are more likely to be found in wine shops, liquor stores, and restaurants than the local supermarket. "In most markets, except for Oregon, we try to steer away from supermarkets," says Alex Sokol Blosser, v.p. of Sokol Blosser Winery in Dundee, Ore. "Supermarket wines tend to be more mass market, and supermarkets like to deal with category management, where they have a Gallo or Constellation help them drive the category."
Sokol Blosser's key product is Evolution No. 9, a blend of Muller-Thurgau and eight other wines that goes perfect with the new Asian fusion cuisine craze. Its current edition is 18,000 cases, while Sokol Blosser's total production is 30,000 cases. "Gallo spills more wine than we make," says Sokol Blosser. "We don't have the power to go into a supermarket and say, 'Let us manage your category for you.'"
Sokol Blosser notices that at least in Oregon more supermarkets are switching from brand to varietal sets, which he says helps smaller wineries. "One of the tricks of the trade is that you always want to be to the right of the biggest-selling wine in the category, because most people are right-handed and that's where your eye goes. That is good for competition," he says.
When it comes to competition, one of the most important areas of the store is the beer aisle, because if customers can't find a six-pack or a case of their favorite brew, they may go across the street to the competition and never come back. The leading brewers are working hard to make sure that day never comes. "Communication between retailers and manufacturers, especially during promotions, is paramount to garnering positive retailer productivity," says George Fuchs, v.p., supermarket & drug store, at St. Louis-based Anheuser-Busch, Inc. "This helps lead to better accuracy in product forecasting and ordering. Also, retailers can help their sales by properly allocating shelf space to better control out-of-stocks and stock surpluses.
"At the same time, Anheuser-Busch can help increase retailer productivity by ensuring that the beer aisle is properly merchandised, specifically at the cooler and at displays," he says.
Like its counterparts in the wine business, A-B finds cross-merchandising to be key in building sales. For January's Bud Bowl 2003 it teamed with a variety of center store brands including Red Baron pizza, Zatarain's New Orleans Style Rice Mixes, Hidden Valley Ranch dip mixes, Snyder's of Hanover pretzels, and Solo Cup.
Retailers should entice consumers with point-of-sale displays and features. "Miller offers seasonal point-of-sale materials that are designed to complement our larger promotions, such as our sports and seasonal promotions," says Eileen Wright, a spokeswoman for Milwaukee-based Miller Brewing Co. "Currently, we are offering special point-of-sale displays to promote our basketball and St. Patrick's Day programs, and we will shortly be offering materials to showcase our spring/summer program."
Retailers may be concerned that offering a case at a special price will cause six-pack sales to go flat down the road, but Wright says that isn't really an issue. "Generally, a person purchasing a larger package is doing so for a specific reason, such as a summer cookout, a holiday party, or a televised sports event, for example," she says. "So we don't see that interfering with the sale of a six-pack, which is more routinely purchased."
Imports are the fastest-growing segment of the beer market, posting sales gains of 8.4 percent in 2002, according to ACNielsen. Canadian imports were up 8.4 percent, European brands 11.8 percent, and Mexican imports 8.5 percent. One of the biggest promotions for Mexican beer is Cinco de Mayo, the commemoration of the Mexican victory over the French army at the Battle of Puebla on May 5, 1862. "When it comes to merchandising for Cinco de Mayo, the retailers should start merchandising it two weeks prior," says Chris Williams, v.p., national accounts, at Labatt USA in Norwalk, Conn., which imports the Tecate and Dos Equis Mexican brands. "We will have a big off-premise display program for both Tecate and Dos Equis, and lots of cross-merchandising opportunities with salsa, chips, etc."
Williams says the two-week-window rule also applies to the Memorial Day, July 4th, and Labor Day holidays, but Christmas displays can go up right after Halloween. "You can realistically say the holiday thought process begins Nov. 1, and the holiday thought goes all the way through New Year's, so it is a 60-day window to have holiday point-of-sale up," he says.
Halloween is a big holiday for merchandising Irish beer. The holiday traces its roots back to the Celtic feast of Samhaim, or All Hallows Eve, which was New Year's Eve on the Celtic calendar. According to legend, a blacksmith sold his soul to the Devil in return for money. When the Devil collected, the blacksmith journeyed down to Hell carrying a hollowed out turnip (pumpkins don't grow in Ireland) with a candle in it to light his way.
"That's where the tradition of carving the pumpkin comes from," says Donal O'Sullivan, marketing manager for Murphy's & Moretti brands at Fischer Beverages International in White Plains, N.Y. "Of course, we're going to encourage people to celebrate Celtic New Year's Eve with our Murphy's Stout and Murphy's Red brands. We're not going to get too caught up in the idea of trying to educate people about the history. It is really that there is a good reason to celebrate and party, and let's do that with Murphy's."
Of course they'll also be partying this month with Murphy's for St. Patrick's Day. "On-premise, St. Patrick's Day is a long weekend, but off-premise it is Feb. 1 to March 17," Sullivan says. "We've developed tailored case-stackers, header boards, price cards, and base wrap which allow Murphy's Stout and Murphy's Red to be merchandised side-by-side, with a seasonal banner encouraging people to get their Irish up for St. Patrick's Day."
Moretti Italian beer was cross-promoted in floral departments for Valentine's Day, and a big cross-promotion is on tap for May. "We're looking to team up with some Italian food partners," O'Sullivan says, adding that Moretti is playing off the romantic appeal of Italian wine.
Women who don't like beer might find a flavored malt beverage a little more romantic. "The consumer for coolers is very distinct," says Fred Gambke, v.p., national accounts/product development, at United States Beverage, the Norwalk, Conn.-based firm that markets the Seagram's line of wine coolers. "They are very loyal, and when it comes to alcoholic beverages they have an appeal for coolers and coolers only. They are primarily 25- to 45-year-old females. When you look at the supermarket industry and who is shopping in the stores, this is the same person."
These consumers don't care for a strong alcohol taste, preferring coolers with mixed cocktail tastes like Margaritas and Fuzzy Navel. "Cooler consumers like things that are new and different, and so every year we bring out two new flavors. This year it is Bahama Mama and Raspberry Daiquiri," Gambke says. "While it is important to bring in new flavors, retailers need to take a look at their mix and stock the top six to eight flavors for that particular year."
It's also important to get the flavored malt beverages in front of consumers in May and June. "That is really the two-month period when you are going to reap your reward on the cooler category for the year," says Gambke. And since cooler consumers aren't big alcohol drinkers in general, it would be smart to merchandise them on the perimeter of the department.
But to entice shoppers down the spirits aisle, retailers might want to make it look a little sexier, suggests Krall of Brown-Forman. "In those areas where you can't display, there is still a tendency to have everything look homogenous," he says. "When you go down any other aisle there tends to be a lot more excitement or offers. The spirits section often lacks that."
He suggests stores be a little more creative, possibly by making a cocktail section, where olives, toothpicks, napkins, and jars of pearl onions can be merchandised next to the vodka and vermouth. "This is an area where they are getting multiple purchases out of the same section, and you're also giving them ideas on ways to consume these brands," Krall says.
That vodka section might want to include Teton Glacier Hand Crafted American Potato Vodka, manufactured by Silver Creek Distillers in Rigby, Idaho and distributed by Niche Import Co. of Cedar Knolls, N.J. Niche imports high-end specialty products, including Asbach Uralt brandy, illy Espresso Liqueur, and Underberg bitters, which is merchandised in specialty food aisles as a digestion aid. "We're looking for supermarket operators who want a little more variety in their stores," says Peter Nelson, president. Niche has a strong presence in upscale chains, including the A.J.'s Market division of Bashas' in Arizona and Bristol Farm in California.
"When you see a supermarket that wants to set themselves aside a little with their regular assortment, then obviously they want to extend that to their wines and spirits section," Nelson says. "Most of the items we have offer full margins. They might have slower turns, but the stores get a certain prestige by carrying them. They are appealing to customers who know that the weird and unusual is available there. That might bring in customers and help with the overall image of the supermarket."
We can all drink to that!