ROSEMONT, Ill. -- George Ubing calls it the $4.5-billion opportunity. Based on the sheers traffic in convenience stores and current consumer trends, E. & J. Gallo Winery’s director of convenience believes c-stores can get their wine sales up to the levels of grocery stores, closing the $4.5-billion gap that exists between the two retail channels today.
Wine continues to lose its snooty attitude and millennial consumers are taking an interest in wine at a younger age than any generation before them. As a result, consumption of wine in the United States is up 9.5% since 2008, and more growth is expected.
Ubing, speaking at CSP’s 2014 Cold Vault Summit in Rosemont, Ill., encouraged retailers to strike at “the explosive growth of wine” while the iron is hot.
And c-stores are slowly making their way there. Wine sales in c-stores grew 19.4% during calendar year 2013. But Gallo Winery’s director of Center of Excellence, John Sokel, said there are four primary barriers that are keeping c-stores for reaching their potential. He also offered tips to overcome those issues.
- Selection. “Optimize product assortment,” Sokel said, encouraging retailers to keep new products in mind for the wine category just as they would any other beverage type. “We’ve seen that 6% of new SKUs can equal 34% of total sales in c-stores. … You only need 15 to 20 SKUs to satisfy every wine occasion, but they need to cover the ‘good, better, best’ spectrum” to appeal to the widest range of buying occasions.
- Pricing. Sokel says he’s seen $29 bottles of wine sell in convenience stores, but added, “$5 to $15 is the sweet spot.” The range avoids the perception of selling “cheap” wine and the perception that the customer is being gouged on price.
- Merchandising. With just 20 SKU, wine doesn’t have to take up a lot of space in the store. Half a door in the cold vault and a couple linear feet for warm product should do it. But like any beverage category, consider adjacencies and bundles. “People who drink craft beer are also wine drinkers,” Sokel said. Connecting the two or bundling wine with an upscale chocolate could help sales. “You need to make wine a beverage, not a stodgy drink.”
- Awareness. “You have an awareness problem with wine,” Sokel told retailers. “The customer doesn’t know it’s there.” With the right signage, promotions and merchandising, “you can make a connection with a customer.”
All of these ideas start with a c-store's existing shopper base. “You have the customer coming into the store,” Sokel said. “They’re just not making a wine purchase.”
Bottom line: “You’ve got to make sure you’ve got the right product in the right place at the right price,” he said. “But then, you’ve got to make that effort to let people know about it.”
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