The Supply Side: Walmart unveils new private brand wine collection

Wine consumption is on the rise, with U.S. sales topping $62.7 billion last year. Walmart wants a part of that market and has spent the past year working to curate a private branded wine collection that appeals to the taste and price values of sophisticated tastes and the occasional drinkers.

In May, Walmart unveiled its Winemakers Selection in 1,100 U.S. stores. The curated selection of wines is sourced from California, France and Italy and includes 10 varieties ranging in price from $11 to $16. The retailer showcased the wine collection to the media at its recent shareholders week festivities.

Jack Pestello, senior vice president of private brands for Walmart, told the media the retailer thinks about quality first on every item because quality fosters trust with the customer. He said the quality focus used in food over the past couple years has also been poured into the wine category with the new launch of Winemakers Selection.

Al Dominguez, senior vice president over beverage and spirits at Walmart, said the true north for Walmart’s private brands is quality at the right value.

“But where we can really hit the market is giving customers high quality and value, and that’s what differentiates Walmart,” he said. “Anyone can make a high quality wine. But to offer it at a good value is not that easy. Our goal was to have wines that outkick their coverage at $11 on average per bottle.”

‘FOCUS ON THE STORIES’
Dominguez said Walmart took a slightly different approach with the collection by shopping the world to see what types of wines were available that could be quick to scale. Walmart said it traveled the globe and met with various winemakers in the U.S. and Europe, and walked the vineyards with families who supply wine to the collection.

Dominguez said Walmart decided to curate a collection and brand instead of giving each wine the same brand. He said it was more interesting to let the family brands stand out.

“We wanted to really focus on the stories behind each winemaker. And we left their family labels on the packaging and simply wrapped the Winemakers Selection logo band on each bottle,” he said. “On the back of each bottle, their stories can be found, and the labels themselves often help tell their personal story. … We think customers will be pleased with the quality of these wines and the super values. If so, they will come back and learn to trust Walmart’s Winemakers Selection, which is our goal with this launch.”

Bella Vista resident Oscar Hansen, a sommelier with 15 years of experience, was hired out of retirement by Walmart to help curate and evaluate the selection. He said the wines compare in taste to brands retailing for $35 to $40 per bottle.

SALES OPPORTUNITY
Wine sales are expected to grow about 6% annually through 2023, and private brands are among the fastest growing segment of wine, according to Kantar Research. The off-premise market for wine has about 78% of the consumption volume in the U.S., according to Nielsen.

Nielsen also reports retail sales volume grew by double digits last year in the $15 to $19.99 price category. Sales of wine that cost $8 or less per bottle decreased last year. Nielsen said Walmart has competition in the wine business, with an estimated 192,000 off-premise wine retailers in the U.S.

Walmart said its Winemakers Selection tastes comparable to the wines sold at restaurants priced at $40 per bottle on average. The retailer is hoping to woo some of that business, which is about 20% of U.S. consumption.

Walmart is not doing direct-to-consumer sales through the selected wineries because state laws vary. With Walmart’s store footprint being within 10 miles of 90% of the U.S. population, the retailer said there is no need for a subscription (delivery) model. Nielsen reports subscription wine sales direct to consumer represents less than 2% of the market consumption, but it’s growing. Between 2016 and 2017, the value of wine sold direct via subscription jumped 15.5%, with 5.78 million cases shipped.

Nielsen reports the fast growing categories of wine are rosé, sparkling and Sauvignon blanc. Rosé led with a 59% increase in value from the previous year. Rosé selections from France garnered 51% of the market, followed by 37% from the U.S. and 5% from Italy.

Two of the wines in the new Walmart collection are in the rosé category and each comes from Italy. Priced around $11 a bottle, the two wines are priced near the top-selling brands of rosé wines ($11 to $15 per bottle), according to Nielsen.

WINE DRINKERS
Nielsen reports 40% of U.S. adults drink wine, 35% drink other alcohol and 24% are non-drinkers. Wine is favored more by women, with 59% of drinkers being female compared with 41% of men.

While the Baby Boomer generation is the largest consumer of wine at 37%, Millennials are also big drinkers, with one in three preferring wine over other alcoholic beverages. About one in five Generation X consumers prefer wine, and 9% of those older than 72 still drink wine regularly.

Generation Z is the smallest consumer of wine with just 3% preferring it over other alcohol.

Nielsen also found 35% of wine lovers drink more than once a week. The majority (65%) said they are occasional wine drinkers.
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Editor’s note: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics and sponsored by Propak Logistics.