how wine sampling impacts retail sales in grocery stores

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The Changing Wine Aisle Retail & Grocery Store Trends

Webinar

September 5, 2013

Tuesday, September 10, 13

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Welcome!


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Today’s Panelists

Ed CookDirector of Wine, Harris Teeter

Ed Cook oversees the beer and wine selection in over 200 stores, from Southern Delaware to Northern Florida. Harris Teeter stores each carry on average over 2,000 varieties of wine. They also hire knowledgeable wine consultants for select stores to assist customers with wine recommendations, party planning, special orders, and hard-to-find bottles of wine.

Jack RobertielloWriter, Consultant, Wine & Spirits Judge

Jack Robertiello writes about beer, wine, spirits and cocktails. He judges in spirit and wine competitions and speaks at industry conferences and events, leads spirit tastings, teaches about the best way to run a successful beverage program and consults about spirits, spirit trends and the beverage alcohol business.


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http://www.polishedpalate.com/events/som/2010/sd/tastingcompetition.html




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Your HostJayne Portnoy is the Vice President, Marketing and Brand Strategy, Napa Technology. She has led marketing programs for brands such as The Tampa Bay Buccaneers of the National Football League, Outback Steakhouse, Bonefish Grill, Roy's Hawaiian Fusion Cuisine, and the Soho Leisure Group. Portnoy is passionate about creating relevant marketing programs that appeal to women. She can be reached at: [email protected]

Carin OliverChief Innovation OfficerAngelsmith, Inc

Your ModeratorAs the Chief Innovation Officer for Angelsmith, Carin is responsible for developing data-based digital marketing strategies that drive conversions for brands including Gloria Ferrer Vineyards, Rodney Strong Wine Estates, Pinot Patch, Romililly Wines and other packaged products, entertainment, restaurants & gaming.

She is super passionate about great storytelling, awesome wine, mouthwatering food and big happy fat Labradors.


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Who is Napa Technology?Developed in Silicon Valley, Napa Technology is the designer and manufacturer of the WineStation®, an innovative Intelligent Dispensing and Preservation solution for the hospitality and entertainment industries.

First introduced in 2005, the WineStation® now pours nearly 3 million ounces of wine per month from its systems serving restaurants, hotels, cruise ships, arenas, airports, wine bars, grocery stores, and retailers worldwide.

This far reaching presence, coupled with a commitment to ongoing research, means Napa Technology can identify and provide insights on industry trends and changes in consumer behavior and consumption patterns.


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Webinar OverviewAs the economy recovers from the reckless 90’s, 21st century grocers and retailers compete for a smaller dollar from a more savvy and careful consumer.

Grocers are exploring areas once only found in wine retail and restaurant environments. Things like sampling stations, cafe spaces, wine events, and wine-specific staff assisting customers, are all part of the cutting edge grocery store.

For their part, wine retailers are retooling their stores in big ways too. The generic, library-like set-up of wines is being replaced by less snobby, fun and open spaces. New stores have wine designations like “fizzy” or “smooth” and bottles are grouped together by what the customer is looking for, instead of the standard of growing regions that’s quickly losing relevance to the smartphone generation.


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Webinar Overview

Both grocers and wine retailers are looking for a way to capitalize and expand on the shifting behaviors of consumers who aren’t just crossing ‘wine’ off a shopping list, but rather looking for an experience they haven’t had before.

Sampling is the key to an experience-driven customer and the foundation for increased sales of both bottles and cases of wine.

For off-premise businesses things that used to be an afterthought are turning into focal points.

Consumers are looking for easy, memorable experiences in the wine section of grocery stores and on the shelves of specialty shops.


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The Value Of The Marketplace

The current restaurant environment is shifting away from bottles towards glasses. It’s a trend dictated by consumers, who want both variety and economy. The bottle mentality isn’t in sync with today’s preferred restaurant experience. Each diner wants a different wine to match each course. For a table of two that could mean six different wines and that rules out bottles.

According to a survey conducted by GuestMetrics in 2012, wine sales by the bottle have decreased 13% as wines by the glass have risen. Another survey conducted this year by Restaurant Sciences showed a regular increase between 4 to 8% for on-premise sales.

That means the sales are not being lost as much as diverted. Wine sales on the whole have been in the ascendancy, even with the troubled economy, for 17 consecutive years.


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The Value Of The Off Premise Marketplace

People are being more frugal and adventurous at the same time. It’s a glorious cycle for BOTH the consumer and operator.

Guests are taking small but regular risks by-the-glass when dining out, which gives them more confidence to explore in off-premise settings. This makes the relationship between on and off premise competitive, but also supportive. If each location is ready to provide the expected experience.

“I had this type of wine at a restaurant last night and loved it, what do you have here that I can sample? “

“What do you offer by the bottle?”Tuesday, September 10, 13

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"The U.S. is the largest wine market in the world with 19 consecutive years of volume growth. Competition for retail shelf space and consumer attention is intense. Wine Institute President and CEO Robert P. (Bobby) Koch In 2013, the annual growth retail sales will rise 6%. In March of this year, the 4 week total was more than $400 million.

In 2012, the off-premise wine market represented $34.6 billion dollars


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"Consumers have more access to wine throughout the country with wine-selling locations expanding by well over 50,000 from five years ago. Off-premise retail outlets grew 15% to almost 175,000 outlets, while restaurants and other on-premise outlets increased 12% to 332,000 locations in the U.S. Retailers recognize that wine is a large and growing category, even in economically challenging times, and tends to attract upper income consumers, and all legal drinking age groups. Wine also pairs well with food, leading to larger, more profitable shopping baskets." Danny Brager, vice president of the beverage alcohol practice, Nielsen


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The premium wine category with the biggest price reduction enjoyed the biggest percentage gain in sales during the past 52 weeks, according to March data from major U.S. food and drug stores. Domestic table wines priced at $20 and higher came down in price by $3.62 per case, yet rang up sales of $238 million for a 15% increase. Wines at $8-$10.99 were the second fastest growing segment. Their sales increased by 10%.


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Yesterday Vs. Today

The dimly lit, narrow aisles of yesterday are giving way to better lighting, more space, and chances for the consumer to sample more than a cube of cheese.

Today’s consumer is looking for off-premise experiences that equal or exceed their on-premise counterparts. Dynamic environments, fully engaged experiences and convenience are no longer “nice to haves” they are required for profitability.


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When Sampling Happens

once a week41%

daily30%

2-3 timesa week19%

3-5 timesa week10%

According to Napa Technology’s 2013 Retail Study, sampling by off-premise operators, even sampling described as “infrequent,” is provided at least once a week.

Interestingly, the second most popular route is an aggressive daily routine.

83% of those surveyed cite that sampling translates into customers more likely to spend more for a bottle of wine.


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Where is the Price Point Right?

The Lion’s share of bottle sales are happening between $11 and $30.

That range accounts for 78 percent of survey respondents sales, with 56% happening between $11 and $20.

Higher end wine isn’t flat-lining either – when given a chance to sample before making a purchase, bottle prices are exceeding the $100 range.

$11-$20$21-$30 +

= 78%


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Red Or White? No More

On-premise operators are wrestling with wine-by-the-glass offerings reaching into the double digits (25 WBG offerings is average). This same expectation applies to the off-premise operator. If off-premise operators want to compete they have to provide as large a selection as possible in an easy to use, engaging experience for consumers. They have to do this while managing valuable shelf space and growing inventories. 60% of those surveyed reported having a wine director or sommelier on staff to assist customers find new varietals and brands. According to respondents this same supportive sell leads to greater increases in sales.


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Purchasing Influencers

Do retailers believe they can positively impact the purchase cycle?

Most Grocers and Retailers think YES. They’re investing in bigger spaces and offering more variety, more sampling, and more of the established favorites. They’re going high concept on stores and presentation.

Sampling is not met with resistance, but the smaller margin on wine, the staffing required, and the controls necessary for manual sampling make wine sampling less simple than its food counterparts. Wine, unlike a new variety of cheddar, can also be intimidating to the consumer.

Today’s technology is catching up with the wave of demand and need to provide secure, simple and 24/7 sampling. This sampling in turn provides more profits, more often.


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It’s In the Numbers

•89% of Respondents Offer Sampling

•30% offer Daily Sampling

•85% Report that sampling increases overall sales 10-25%

•96% reported an increase in bottle sales of 10-30% on bottles that are sampled.

•Napa Technology customers report a 60% increase in case movement when wines are showcased and sampled.

•Napa Technology also reports a 68% growth in retail installations since 2011


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News From The Front Lines:

How things are changing in the modern grocery store.


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Harris Teeter Case StudyOf the 210 stores located from Delaware through Florida 201 locations offer beer and wine. In 2012 Harris Teeter introduced a higher end concept store called 201 Central, focusing on wine, beer and specialty food offerings.

Aggressive in their approach, wherever sampling is permitted, it isboth in effect and “substantially impacts sales.”

The most important elements of successful sampling are:• store volume• time of day• quality of the item• engagement level of the person curating the event


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Harris Teeter Case Study

65% of sampling events are related to promotions • wines that pair with Thanksgiving favorites• wines that are best for warm summer days• sparkling wines for new year’s

35% are tied to new brand launches

The biggest change is the blurring lines of categories• organization of wine is less about appellation and

more about type of wine• poor performers are most often replaced by red

blends and sweeter wines


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Graduating The Consumer:

Staying on the cutting edge


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How to Sell the Sample – What you need to be doing now.

Today’s consumers are much smarter than they were 5 years ago, but navigating aisles is still a challenge.• Staff knowledgeable employees to assist in selection• Rethink displays by flavor profile vs region• Do what they do: • on-premise operators have been offering wine flights,

pairing suggestions, and winemaker events. Replicate the same experience in your aisles.

• Don’t be a snob. • The attitude of “that’s not the way to do it” is leaving.

Customer interest is high. They want to be educated without being patronized.

• Don’t have an expert? Today’s technology can provide expert and immediate info in the form or kiosks, apps, and digital content.


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Sample Smart

Fight the impulse to set up the event in the front of a store.•People will have to move quickly by or block the flow of normal shoppers

People should be able to mingle, to talk to experts on hand, to nibble something if it’s available, to educate themselves with both digital and printed information

The winemakers themselves make the biggest difference tolong-term loyalty, but an educated and enthusiastic curator is the next best thing.


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Upgrading the Experience:


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Engaging in the Aisles for Increased RevenueSAMPLING PROGRAMS & ON SITE EVENTS

•People want to indulge as much as ever, but they’re focused more on smaller sizes, something that’s easier to navigate and simpler to enjoy.

•Diversity is king. The old favorites are doing well, but making way for lower alcohol wines, for international sparkling wines like Cava or Prosecco, for a variety of new regions and new tastes from established ones.

•The largest segments are casual drinkers, parents, people looking for food pairing information on the bottle. In many ways it’s marketing first, wine second. It’s a new phenomenon.


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EXPERT TIPS & MARKETING SUPPORT•If grocers can track what you tasted, liked and

purchased – they can market to you more effectively.

•Knowledgeable staff make a big difference, but the information itself is key. Even if you don’t have a sommelier or wine director on the floor you can provide consumers with the same information and similar experience in other ways.

Engaging in the Aisles for Increased Revenue


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Questions?


how wine sampling impacts retail sales in grocery stores

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