“The Millennial generation offers the wine industry the kind of growth potential not seen in 30 years.”
C-store retailers can gain points with Millennials and Boomers alike by appealing to a growing love of wine that includes a trend toward flavorization.
A breakout session on the wine category, presented by E&J Gallo Winery, at the NACS State of the Industry (SOI) Summit last month noted that new trends are positioning wine as a prime opportunity for c-stores.
E& J Gallo Winery’s Managing Director Brian Crouser, Director for Center of Excellence John Sokel and National Director of the Convenience Channel George Ubing spoke with retailers during a breakfast breakout session on Thursday, April 11, and made a compelling case for the revenue opportunity within the convenience store channel, if it were to capture its fair share of the growing wine category.
Once a formal occasion beverage, wine has shifted to a more casual beverage that is quickly becoming an everyday part of the consumers’ day on any occasion—something to drink while unwinding in front of the TV. Today, wine is everywhere, from Starbucks to Trader Joes where a bevy of flavors and many varieties abound. The U.S. is now the No. 1 country in total wine consumption.
Boomers are already major wine category consumers with evolving tastes, but Millennials are embracing wine as well and are also driving the category’s growth, helping the beverage become mainstream. “The Millennial generation offers the wine industry the kind of growth potential not seen in 30 years.”
Why wine at c-stores?
Some 38% of convenience store customers are currently wine drinkers and are buying their wine somewhere—just not in your store. Convenience stores have only a 2% buyer conversion on wine (verses a 24% conversion on beer)—this translates into a prime opportunity.
Today’s consumer is time starved and seeking simplicity. Time pressed and on-the-go, shoppers are often overwhelmed by the vast wine selection at supermarkets, especially if they’re in a hurry, and would benefit from the quick trip c-stores offer—if they knew you carried wine. As the industry struggles amid declining cigarette, commodity beer sales and gas margins, wine can prove a needed boost to c-stores’ bottom line. With health on the minds of consumers everywhere, wine also offers a heart-healthy image, as well as an image of moderation that differs from that of beer and spirits. 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. Lastly, your competitors are already there—Walgreens, for example, is drawing wine customers away from grocery at rapid pace.
Driving Wine Sales
While your c-store might already carry wine, if you want to capture wine customers, positioning your store as a destination for wine is vital. The good news is this is something you can do even with a small selection by capitalizing on flavorization and shopper occasions. Wine, E&J Gallo pointed out, is an occasion-based business.
Flavorization is a huge trend across all alcohol segments. Flavored vodkas have taken off and flavored whiskies are now infiltrating the market. Wine is also capturing new consumers with new sweeter varietal types like Moscatos, red and white blends instead of just the usual Merlot and Chardonnay.
Millennials, especially, are all about “what’s new” and willing to experiment and embrace the exploding flavor trend. They’re not White Zinfandel drinkers like their parents. In fact, new items accounted for 69% of wine dollar growth in 2012. Keeping your selection current and interesting will help drive sales.
When customers search for wine, they’re shopping for occasions. A $5 popular wine may be perfect for 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 variety.
Unfortunately, c-stores that do offer wine, often tend to cater to the value market—something that could be limiting their sales. Even if c-stores have limited shelf space for wine, they can maximize sales by offering a $5, $10 and $15 offering in key varietal types of red and white wines, so customers can meet any of these wine needs and keep your store top of mind when needing to purchase a bottle for any event. Think of it as a “good, better, best” selection.
Once you improve your selection, it’s vital to market your wine selection and drive awareness. Some 55% of c-store shoppers were unaware of the presence of wine at the c-store, according to a SmartRevenue study. Encourage your employees to mention the wine selection or wear buttons noting the wine offering. Signage in the store or at the pump can also increase awareness, as can an endcap with a “what’s new” wine selection to drive category excitement. It’s also key to offer well-known brands, as 90% of wine buyers across all outlets have previously purchased that brand of wine. This also means that pricing is key, as customers today know the prices of the brands they buy. C-stores have done a superior job pricing the beer category, and would be wise to use the same strategies when it comes to wine.
Becoming A Wine Destination
The best news about marketing your wine category is you can start with where you are today.
To have a good wine section, make your goal simply growing customer awareness about your selection.
To have a better wine selection devote more space for warm and cold varieties, increase your selections around occasions and market it to your customers, perhaps including a display to announce new wine options.
To be the best, consider positioning your c-store as the neighborhood wine store, with an increased selection in a variety of price ranges, with upscale fixtures and increased signage around your selection.
