Part 2: Wine

Wine departments are a typical profiling segment for many supermarkets. Ambiance is key. A shop fitter must create within the supermarket an authentic mood where the customer feels at ease, yet interested, perhaps intrigued, by the surroundings - a harmonious, interactive, cosy atmosphere.
Elsevier Food International, Vol. 11, Number 2, May 2008
Karen Willoughby

In the UK, the British buy almost two-thirds of their wine from supermarkets; and more than a third of all wines sold in America are purchased at grocery stores, even though only 33 of the 50 US states allow supermarkets to sell wine. Wine is now the largest supermarket category in New Zealand and supermarket sales represent around 60 per cent of total wine sales. New York vintner, William Sokolin, said that good wine should start and end with a smile. In order to be successful, customers should also enter and exit the wine department with a smile ... and a good bottle of wine.

Click here for extended version of this article.

As with any product promotion, there is no 'one solution' for supermarket wine departments. Unlike staples such as milk or eggs, wine is a luxury item (although many will beg to differ). This is the first hurdle for retailers. The difficulty of overcoming this hurdle varies from region to region. Additionally, retailers must decide how much effort and expense to invest in this part of their store. Decisions on these matters must also take into account the local competition, be it a wholesaler or a new chic wine boutique. First and foremost, know your customers.

What will you have?
Supermarkets, relative newcomers to wine sales, have changed the landscape of wine retail throughout the world. Their influence has seen wine move into the category of fast moving consumer goods, with their pricing and discounting structures encouraging quantity purchases, akin to grocery shopping. While these changes have proved difficult for some sectors of the industry to adapt to, the proliferation of wine into non-traditional outlets has brought about some ‘democratisation’ among consumers. While securing a range with a national retailer can provide a wine label with mainstream status, disadvantages may include a lack of freedom to recommend retail prices, as supermarket retailers ultimately compete fiercely on price points.
As supermarkets refine their operations and increase their influence in wine retail, divides are becoming apparent in the industry. Large wine companies feed large retailers with well marketed, popular brands. Unable to compete with the economics of volume, smaller retailers by necessity are drawn to smaller wine producers who in turn are often unable to meet the supply conditions of national retailers. Short of direct sales through cellar door, the Internet or wine clubs, producers and their distributors or agents need a solid understanding of the different retail options available and the implications and opportunities of each sales channel.

Commodity prices
The British buy the majority of their wine from just four supermarkets: Tesco, Sainsbury’s, Morrisons/Safeway and Wal-Mart-owned ASDA. These stores sell more than 70 per cent of all wine and their buyers favour suppliers who can provide large volumes. This tends to exclude most French producers.  "When you get to the more esoteric French lines, they are not so accessible to the average drinker," says Nicki Clowes, a Tesco wine buyer. Since about 60 per cent of all wine sold in multiple retailers is sold when offered on promotion at a ‘special’ discount, more and more of the buyers’ work is made up of entirely routine agreements with the handful of major suppliers that can afford these discounts.
Some supermarket wines have also joined the legion of commodities bought, without any sampling, via online auctions. According to Laura Jewell, who has just left Sainsbury’s for one of her old suppliers, “There’s been a real change in wine retailing in the last few years. There’s lots more emphasis now on profits, margins and volumes, and a certain homogenisation of the product rather than selling all the nice little things.”

The new world and beyond
According to ACNielsen, US supermarkets account for approximately 40 per cent of the wine sales in the country and some US$3.6 billion a year. Walk into most American supermarkets and you will find a wine department divided into two categories: domestic and imported. Within the two segments you will find a variety of wines in various sizes, in boxes or bottles, whites or reds, and a great deal of wines under US$10 (very cheap by US standards).
Despite restrictions on supermarket wine sales in the US, some chains are bringing the wine department to a new level. Sweetbay, owned by the Delhaize group, asked its suppliers for a case of this and a case of that and said: “We don’t care if all of our stores have the same selection or not. We want to create an advantage in our wine department so people know it is here now but will be gone tomorrow.”
Market Foods has named its wine department The Market's World of Fine Wine and claims to “hand select every bottle of wine.” They also offer the opportunity to taste wine in their café with your lunch or dinner. Some Safeway locations even offer daily wine tasting. Central Market in Dallas claims it is "the greatest grocery store in the world, with the best wine selection." Selections include names from the Rhône – Beaucastel, Chave, Guigal – along with Austrian Grüners, Portuguese reds and a generous selection of southern Italians. The Australian wines section has names like Torbreck, Fox Creek and Elderton as part of the Shiraz section.

Sit back, relax
At the end of the day, basic marketing principles will sell more wine than the most experienced supermarket wine steward. The longer customers stay in the wine department, the more likely they are to make a purchase. That can be encouraged by a tasting, music, or warm lighting. One Piggly Wiggly in Wisconsin (US) features an expansive wine and spirits department that replicates a speciality wine cellar complete with wood shelving with a library ladder and an extensive walk-in cooler. Music can help in more specialist sales settings. Research at Leicester University showed that French music played in a supermarket's wine aisle boosted sales of French wines. The following day, German folk music led to German wines flying off the shelves.