Fresh & Easy ramps up wine sales by expanding its offerings of wines from California vintners.
Richard Wherry, category manager for wine and beer at Fresh & Easy Neighborhood Markets, the El Segundo, Calif.-based subsidiary of Tesco, doesn’t have to go far to stock the retailer’s wine departments. “I don’t ever have to leave California to find something new and innovative for my customers,” he says.
“We’ll always have a place for international wines because of Tesco’s strong relationships around the world. It’s just something extra we bring to the table. But California wine is the engine that drives the category at Fresh & Easy and it will continue to grow until it represents the majority of items we carry.”
Wherry, a self-professed wine lover who has been responsible for the category’s phenomenal growth over the past year and a half, says the potential in branded and private label is enormous thanks to the incredible variety of wines available at different price points from vintners across the state.
As such, wine has become a key part of the space allocation and merchandising strategy at Fresh & Easy. “Our stores are about 10,000 square feet and about three or four percent of selling space is devoted to the category. That’s a lot of room for a store our size,” he says.
Traditionally, this means the stores have carried about 184 SKUs. But as of Sept. 5, that number is being bumped up to just under 300. “A little over half of them are private label. But we are expanding our branded offerings as well,” he says.
This expansion is part of the chain’s “exclusive” wine portfolio that was launched in March with products sourced from several premium wine growing regions, including the Napa Valley, Sonoma, Monterey and Santa Barbara. Retails range from $3.99 to $19.99 and three of the new lines—Cloud Valley, Barrel Ranch and Open
Field resulted from Fresh & Easy’s partnership with the Terravant Wine Company in Santa Barbara’s Santa Ynez Valley.
Several varieties of Fresh & Easy’s exclusive line, including I Heart CA and WineWrights, were among the chains’ 39 medal winners at the recent Los Angeles International Wine and Spirits Competition. The chain’s wines were part of the 3,200 entries that were sampled by a 64-member panel. Meanwhile, the chain’s wine reputation is going global. “We’ve been approached by our Tesco operations in South Korea about taking on some of the private label wines that have been developed here. It turns out that South Korean consumers have a preference for California over ‘old world’ wines,” says Wherry.
However, consumers on this side of the Pacific are Fresh & Easy’s main focus. “By having suck a large private label offering, we’re able to put out a better quality of wine for the price. Right now, we compete on both by going directly to the vineyard and buying and distributing it ourselves. This eliminates about 30% of the cost,” he says.
Clearly, the exclusive selections have accomplished one of Wherry’s main goals — adding more California wines to the mix. “They are doing fantastically well and have become the stores’ top sellers,” he says, noting that the chain currently stocks five varietals including Cabernet, Merlot, Zinfandel, Chardonnay and Pinot Grigio, as well as some Muscatos and White Zinfandels. “The Muscatos are really on fire.
“Historically, the U.S. has been a beer drinking country. But this year we beat out France as the top wine consuming nation. People who grew up drinking sodas or mixed drinks in bars are now experimenting with wine and looking for something a bit sweeter. This has really helped put Muscato on the map. Once people try it they really like it.”
But every variety of California wine is having a significant impact on the business and it’s likely this trend will continue, according to Wherry. “All the data I see tells me that about 90-98% of all the wine consumed in the state is grown here. Part of it is due to consumer pride in local products, but also a growing appreciation of appelations within the state.
“But it goes beyond that to stylistic differences. Wine from other countries is not made the same way. Some ‘New World’ wine producers are trying to imitate the California style. But you can usually spot a California wine and I’m getting more requests from consumers to bring in more wines from the Central Coast, the Santa Ynez Valley, Paso Robles and Monterey. You never would have seen interest like this 10 years ago,” he says.
One reason for this interest is the “fruit forward” flavors. “You can taste more of the fruit in California wines then you can in ‘Old World” wines from France and Italy. They are usually drier and have an earthy or leafy taste. In addition to that crisper fruit component, California wines tend to have a bit more residual sugar which can appeal to younger consumers.”
Prices are also boosting consumption. “Over half of our sales are from wines under $10 and 3 are even part of our $1.99 program. These are great table wines and just what people are looking for to accompany everyday meals.”
To boost daily consumption, stores are doing some limited cross merchandising. “In order to keep costs down we try to bring in products and only touch them once. That usually means keeping products in one location. But we are now dedicating some space in the meat and seafood aisle for at least one red and one white wine. It builds a habit among consumers and gives us the ability to recommend wines that complement particular proteins.”
Fresh & Easy is at ways to help customers with wine selection. “We don’t have sommeliers in stores, so we try to guide people to products they will enjoy by placing tasting notes and food pairing suggestions at the point of sale. “We have also launched our first private label line with a QR code for a Fourth of July charitable event. Going forward, that code may be used to take consumers to a page that describes the wine in more detail, how it was rated by critics and even suggest some food pairings.
“We’re still gauging response to the QR code and how we might incorporate it further. But you’ll probably see some new things before the end of the year. Ultimately, Fresh & Easy would also like to capture customers’ opinions about wine.
“We might use Google or Yelp so customers can rate products themselves. For now, the chain is expanding its range of wines at different prices. “We’re well represented in the under-$10 price point so between now and September we’re growing the range in the $10 to $20 bracket and even $30 to $50. We have a good core consumer that’s shopping our stores for the Monday to Friday products. We want to treat them with new wines they can pick up for special occasions,” says Wherry.
Then again, Fresh & Easy model is all about turnover and Wherry does not want to see wine sit on the shelves too long. “But we’ve gained customer recognition and I think we’ll be more successful with the more expensive items because of our track record with the under-$10 wines,” he says.
However, he emphasizes that But the trends in wine consumption is more than a matter of price. “It’s about preference,” he says. “I think we’ll continue to see interest in fruitier wines as more people come to the category. But they are going to branch out from there and a lot of California wines will be a great fit.
“We’re seeing a lot of innovative wines from areas like Paso Robles where vintners are experimenting with great varietals that are traditionally associated with Italy and France—Rhone blends, some Malbecs and Italian Sangioveses. Additionally, winemakers are experimenting with things like French and Hungarian oak. There’s a lot going on that will influence what wines people are drinking in five, 10 and even 15 years from now,” Wherry says.