Retail Service: Changing the Fight in Beverage Alcohol

I am in England this week working with a client, and one thing is painfully clear to me as America’s AdultBev consultant: The world is a small place and our place in it is tiny. I am not trying to impart some global wisdom that I have learned, or some passionate message from my travels, but rather the fact that AdultBev retailing is the same here as it is in Des Moines, IA.

I look around and I see trends that I see at home. I look around and I see brands that struggle at home also struggling here at retail. I look around and I see the same retail mistakes that off-premise retailers make in Chicago being made at Knightsbridge Fine Wines or Harrods in London.

I am here with a large, multi-national client that as asked me to look at his retail holdings throughout Europe. He is looking for a retail edge as big, international box is coming from all sides and his gross margin is being hurt by European category killers. Sound familiar?

It should, because it is happening all over the world. Big Box multi-national retailers are coming into your market and making price the only way to compete. That is all fine in fantasy world, but as an independent retailer you have invested in other ways to woo your customer. You probably invested in a nice store experience, or knowledgeable help or a really cool CRM program.

Here is the reality of the US retail landscape. I went to London to affirm it.

Walking through Harrods yesterday, I noticed control label wine. I saw cabernet, chardonnay, sauvignon blanc and pinot noir. What is the big deal, you ask? The big deal is that if you do not know Harrods, please understand that they generate over 1B Sterling Pound in gross sales, (roughly 2B dollars converted in US dollars).

They have fully embraced the private label wine movement. They have invested in it, sell it, market it and spend effort in promoting it.

In our own country we are still slow to embrace the PL movement. As retailers we fall in love with labels, reviews and national ad campaigns. We need to remember that all of those things are not meant for the little retailer, but for large chains and grocery. The little guy is left to fend for himself and find new and innovative ways to compete on pricing. Enter private label wines!

When considering a PL wine program for your off-premise store, it is important to remember three things:

■ The average wine consumer only knows ten labels of wine. That said, to them, 90 percent of the other wine can be or is PL wines.

■ Any investment in a PL wine program comes with risk. The wines need to be hand sold. A big investment while might be good on short term GM% gain might be bad for cash flow, so have an exit and mark down plan.

■ Tastings and more tastings! Selling wine that no one has heard of needs sampling. Nearly 87 percent of tasted wine at market level will have sell-through.

The wine-selling and retail world is changing, and the only way for the independents, some chains, regional players and grocers to compete is to sell PL wines. Have a plan, have a strategy and have an exit. If you follow these simple guidelines, you should be on your way to a higher blended gross margin.

1 Comment

  1. Sonoma M@ Reply

    Great article. One comment on ” The average wine consumer only knows ten labels of wine. That said, to them, 90 percent of the other wine can be or is PL wines.” Unless your saying that the average consumer knows 10 percent of the labels, then, given there are thousands of labels, the average consumer really knows substantially less than 10%. If, indeed, a consumer only knows 10 labels and there are 3000+ labels (conservative trade based figure) in the market, the potential for PL is actually 99.6%.

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