More than ever, your local “wine shop” is likely to be the supermarket — or even the drugstore.
Once mostly the preserve of specialist retailers, wine is an increasing target for chain retailers seeking new ways to lure visitors to stay and shop more, wine industry specialists said this week at Napa’s annual Wine Industry Financial Symposium.
Three of the top four wine sellers in the U.S. are now general-purpose food or retail companies, according to Robert Trone, co-founder of the only specialty wine chain in that group, Total Wines & More. Warehouse-store giant Costco moves the most wine by dollar value, a projected $980 million this year, while Trader Joe’s is second and Whole Foods Market fourth, he told winemakers and audience members at the Napa Valley Marriott.
The challenge to producers and specialty sellers will be to prevent wine from becoming such a commodity as to erode profits if it’s sold at some retailers for less money, said Trone, who launched Total Wines in 1991 with his brother David.
“We don’t want it to become the electronics business, where there’s just no profit margin anymore,” he told the wine symposium audience Tuesday.
A declining profit margin in other food and beverage segments has made wine an increasingly attractive target to national grocery and drugstore companies, according to Danny Brager, a wine industry analyst for the Nielsen Co.
Brager reported sales growth and increasing shelf space at nearly all levels of U.S. retailing, from high-end grocers like Whole Foods down to discounters like Target and the Walgreens pharmacy chain.
Further giving a leg up to chain stores with plentiful display space is the steady expansion of brands, varieties and winemaking countries available in the U.S. market, said Bill Cascio, director of winery relations for Glazer’s, a wine and liquor distributor in 14 states.
Along with ever-rising sales for wines from Australia, South America and other nations, he told the symposium audience, existing brands and traditional varieties are being extended to cover ever-changing tastes — producing pink moscato, orange-infused chardonnay and other former novelties.
One company battling the takeover by groceries and variety stores is Total Wine & More, which has expanded to 88 branches in a dozen states. At the Napa symposium, Trone, the chain’s co-founder, attributed the company’s success to providing more than shelf space, describing his goal as the creation of showcases he called “the Barnes & Noble of wine.”
Breaking from the mold of storefront-size independent shops, the Maryland-based chain operates branches that spread wines and spirits across 20,000 or more square feet. Comparing the layout of its shops to the interiors of Whole Food stores — one of Total Wine’s biggest rivals — Trone pointed to a wide variety of stock, and an emphasis on tastings and special events, as the way for specialists to hold their own.
In Napa, the surge of chain retailing into the wine business contributed to the city’s largest specialty shop, JV Wine & Spirits, shutting its doors in May.
The wine emporium at Silverado Trail and First Street had reported declining sales since the Great Recession began half a decade ago, and JV Wine’s owner, Chris Vallerga Burns, also pointed to an erosion of sales as Trader Joe’s and Whole Foods opened Napa branches and other retailers added more shelf space for wine.