Murphy USA grows its wine section and store sales through a collaboration with E.&J. Gallo Winery.
By Erin Rigik, Senior Editor
Through a collaboration with E. & J. Gallo Winery, Murphy USA is working towards growing its wine category. The c-store chain is set to expand the number of locations offering wine from 112 to 200-250 by the end of 2015.
“Before working with Gallo we had 47 wine locations. After we began, we immediately expanded to 112, and by the end of this calendar year we’ll be closer to 150, with plans to expand with new licenses,” said John Deichler, category manager for alcohol for Murphy USA, which operates 1,250 gas stations, 350 of which are able to sell alcohol.
Murphy USA had previously offered a regionalized wine program. “Given that these stores are challenged when it comes to space, we felt it would be wise to work with a national wine company to help us establish best in class practices and universal assortments. With Gallo’s universal and consistent plan, we really maximized our opportunity within the category,” Deichler said.
Success In A Small Footprint
Murphy USA is now offering two different wine models. Its 2,700-3,500-square-foot stores feature large cold caves. Inside the cave is a two-foot, four-shelf cold rack. Outside, is a three-foot, four-shelf warm rack, which features red wine. Murphy USA’s 1,200-square-foot stores feature a two-foot, four-shelf warm rack and two shelves in the cold box. This model allowed Murphy USA to bring wine to its 1,200-square-foot stores where it had never offered it before.
In stores with a beer cave, Murphy USA offers a three-foot, four-shelf rack outside, and a two-foot, four-shelf free-standing rack inside, doubling the footprint for wine at those in-store cave locations.
Best Practices
Best practices in assortment and presentation have helped Murphy USA capture sales. “When you’re dealing with a category that typically has been dominated by liquor stores that have aisles of different wines, and you move that same category into a gas station that has 1,200 square feet for all the categories, space is obviously an issue,” Deichler said.
Murphy USA and Gallo used deep dive analytics to select an assortment that would maximize the opportunity for the consumer in a small footprint. Customers can find all the traditional wines they might require, as well as some exciting new offerings. One of those is Gallo’s Barefoot Refreshers line. “It is a blended take on wine that attracts customers at different occasions where they may not have otherwise opted for wine—it’s a very light bubbly experience,” Deichler said. Sweet wines, like moscatos, which Millennials are known to gravitate toward, are also available.
Good, Better, Best
“Gallo presented us with an innovative strategy called ‘good, better, best,’ where a channel strip labels the wine shelves as good, better, best and everyday. So our shelves are united not only in price point, but also in quality and occasion,” Deichler said.
Customers looking for an everyday wine would find a value brand on the bottom shelf. “At the top, there’s ‘best,’ which would be something you could confidently set on your mother-in-law’s dinner table and not be embarrassed,” Deichler said. The labeling system makes it easy for customers to quickly find a wine that fits their occasion—even if they’re not used to shopping for wine. The wines range in price from $5.99 for an everyday wine to $15 for a top shelf brand.
The result has been an increase in wine sales. “Our wine business has nearly doubled in same store sales since working with Gallo,” Deichler said.
Craft Beer Consumer
Millennials are interested in many segments of the alcohol category, including craft beer, liquor and wine. And craft beer consumers tend to also be wine consumers.
Murphy USA places its wine rack in its 1,200-square-foot stores directly opposite its cooler door that features high end, import and craft beers to inspire cross merchandising.
“We’re very happy with what working with Gallo has provided us and what it has allowed us to do within the category, and we’re excited to grow alongside them with this strategy of good, better, best.”