By Erin Rigik, Associate Editor.
Year after year, the wine category continues to show strong growth as a result of innovative new products, premium price segments and flavor innovation. These new flavor trends and surging interest are positioning wine as a prime opportunity for c-stores.
The U.S. is No. 1 in global wine consumption and wine is No. 7 among top grocery categories, according to E. & J. Gallo Winery. Traditionally a more formal occasion beverage, wine has become a much more casual, everyday drink customers enjoy over their evening meal or simply relaxing while watching TV. Despite this growing demand, the c-store channel has yet to capture its fair share of the $16 billion wine industry.
Boomers have long been major wine category consumers with evolving tastes, but Millennials are now embracing wine as well and are helping fuel the category’s growth. “The Millennial generation offers the wine industry the kind of growth potential not seen in 30 years,” according to E. &J. Gallo Winery.
Millennials are increasingly drawn to different taste profiles than their parents, and are more apt to purchase trendy Moscatos, Malbecs and red or white blends, which are seeing double digit growth. Wine makers are quick to appease the growing demand. Barefoot recently debuted its Refresh line, featuring flavors such as Crisp White (a Chenin Blanc and Riesling blend), Sweet White (a Pinot Grigio and Moscato blend), Summer Red (a Pinot Noir Rosé and Moscato blend) and Perfectly Pink (a Grenache and Moscato blend).
Smaller single serve (187ml) wine bottles are also taking off, allowing consumers to sample new wines.
A Destination For Wine
Believe it or not, wine customers are already in your stores, they just might not be purchasing wine from you—yet.
Roughly 40% of c-store customers are currently wine or beer drinkers but c-stores have only a 4% buyer conversion rate on wine (verses a 23% conversion on beer), according to E. &J. Gallo Winery. One of the big reasons is awareness. “It doesn’t matter how big your selection is—if your customers don’t realize you sell wine, it’s not going to grow your sales. Once customers know wine is in the store and the selection is priced right, you have a better chance of convincing that customer to make your store a destination for wine purchases,” noted George Ubing, national director-convenience channel for E. &J. Gallo Winery.
With c-stores already a go-to location for beer, wine is a natural next step as 46% of first time wine buyers previously purchased beer.
What’s more, wine shoppers spend an average of four times as much time in the store compared to other key category shoppers.
Luckily, even with limited space, retailers can be successful with a small wine selection by capitalizing on flavorization and the shopper occasions that inspire people to buy wine.
“You want to keep your traditional varieties—the Cabernets, Merlots and Chardonnays—but you also want to keep your segment current and interesting,” by offering hot new types like Moscatos and red blends, noted Ubing. Millennials, especially, are looking to experience new wine varieties. New items accounted for 69% of wine dollar growth in 2012.
Price also matters. When customers search for wine, they’re shopping for occasions. A $5 wine may be perfect for a couple planning a night in by themselves, but if they’re having friends over they might need a $10 premium offering, or if they’re heading to a dinner party they might want a $15 super premium. C-stores can maximize sales by offering a $5, $10 and $15 offering in key varietal types of red and white wines. This “good, better, best” pricing model can help drive customers to the “better” or medium-priced option in the middle. When pricing wines, remember many wine buyers are brand conscious and 90% of wine buyers across all outlets said they had previously purchased that brand of wine before. That also means customers today know the prices of the brands they buy, and may not return if they can get their favorite brand at the right price nearby.
To further drive sales, retailers can consider offering market prices for top items. In this channel, the Top 10 brands on an average are 27% more expensive than the rest of the market, according to E. &J. Gallo Winery. When you offer good value and convenience, customers are likely to help your marketing efforts with word-of-mouth endorsements to friends that c-stores are a top destination for wine.