WINE VARIETY HELPS AND HURTS RETAILERS
Wine is a generally fragmented industry with a lot of brands. Sometimes people say all that variety works in the wine guys’ favor, and sometimes they say it’s a dagger to the industry. Danny Brager of the Nielsen Company says both views are right depending upon the consumer, what they think about wine and the retailer in question. Nielsen’s data includes U.S. grocery, drug and liquor stores and generally covers 2006.
In an assortment of pros and cons, Danny points out that while wine offers much more variety than, say, beer or spirits, it faces productivity challenges in stores. There’s not generally a large degree of brand loyalty because, let’s face it, wine drinkers like to experiment and they have a large assortment at their fingertips.
BUT, THE WINE CATEGORY OFFERS MANY BENFITS TO RETAILERS. Assortment is proving to be a good thing. While the number of wine skews are increasing in grocery (4.7%) and liquor channels (3.2%), wine sales productivity per item is trending upwards as well. Grocery stores in particular are seeing an increase in dollar sales per item (up 3.5%). This means that consumer dollar increases are in step with increased variety, says Danny.
Nielsen data shows that a wine buyer’s shopping basket (average $68.39) is generally more valuable and larger than a non-wine buyer’s basket ($38.36).
It turns out that not only do wine buyers purchase more products at retail outlets, but they also buy more wine when compared to spirits and beer drinkers. In other words, heavy wine buyers account for a much greater percentage of category volume than do heavier beer and spirits buyers. According to Danny, the number of purchase occasions, not the amount purchased per occasion, is what differentiates a wine variety seeker.
The most “developed” wine variety seekers are affluent, older and non-Hispanic white.
Both penetration and buying rates for wine climb substantially with income. This is good news because it is estimated that in 2010 37% of the population will have household incomes of >70K and 22% >$100K.
WINE IS BECOMING MORE FRAGMENTED AS THE TOP BRANDS LOSE SHARE. As new wine brands continue to flood store shelves, Nielsen points out that the top ten traditional wine brands are losing share. Just over 60% of the active brands today in grocery stores were introduced after 1999 and now account for 18% of table wine dollar sales. They also tend to be premium wines and above. Nine of 2002’s top 10 brands are still in the top 10, but all have lower shares and generally make up the lower price tiers. That leaves more of the pie for the new guys.
In the 52 weeks ending January 13, 2007, sales of wines priced $12-14.99 rose the highest at 16.3%.
IN OTHER WORDS, A HEALTHY ASSORTMENT OF WINE, says Danny, can be leveraged by retailers to attract more affluent consumers. Wine assortments are large, and consume valuable space, so too large of an assortment may be vulnerable to responsible rationalization. Danny says to be truly effective, the wine industry really need to understand: who is the consumer/shopper around a particular store; what they think about wine; and what the retailer thinks about wine.
In an assortment of pros and cons, Danny points out that while wine offers much more variety than, say, beer or spirits, it faces productivity challenges in stores. There’s not generally a large degree of brand loyalty because, let’s face it, wine drinkers like to experiment and they have a large assortment at their fingertips.
BUT, THE WINE CATEGORY OFFERS MANY BENFITS TO RETAILERS. Assortment is proving to be a good thing. While the number of wine skews are increasing in grocery (4.7%) and liquor channels (3.2%), wine sales productivity per item is trending upwards as well. Grocery stores in particular are seeing an increase in dollar sales per item (up 3.5%). This means that consumer dollar increases are in step with increased variety, says Danny.
Nielsen data shows that a wine buyer’s shopping basket (average $68.39) is generally more valuable and larger than a non-wine buyer’s basket ($38.36).
It turns out that not only do wine buyers purchase more products at retail outlets, but they also buy more wine when compared to spirits and beer drinkers. In other words, heavy wine buyers account for a much greater percentage of category volume than do heavier beer and spirits buyers. According to Danny, the number of purchase occasions, not the amount purchased per occasion, is what differentiates a wine variety seeker.
The most “developed” wine variety seekers are affluent, older and non-Hispanic white.
Both penetration and buying rates for wine climb substantially with income. This is good news because it is estimated that in 2010 37% of the population will have household incomes of >70K and 22% >$100K.
WINE IS BECOMING MORE FRAGMENTED AS THE TOP BRANDS LOSE SHARE. As new wine brands continue to flood store shelves, Nielsen points out that the top ten traditional wine brands are losing share. Just over 60% of the active brands today in grocery stores were introduced after 1999 and now account for 18% of table wine dollar sales. They also tend to be premium wines and above. Nine of 2002’s top 10 brands are still in the top 10, but all have lower shares and generally make up the lower price tiers. That leaves more of the pie for the new guys.
In the 52 weeks ending January 13, 2007, sales of wines priced $12-14.99 rose the highest at 16.3%.
IN OTHER WORDS, A HEALTHY ASSORTMENT OF WINE, says Danny, can be leveraged by retailers to attract more affluent consumers. Wine assortments are large, and consume valuable space, so too large of an assortment may be vulnerable to responsible rationalization. Danny says to be truly effective, the wine industry really need to understand: who is the consumer/shopper around a particular store; what they think about wine; and what the retailer thinks about wine.
posted at 9:28 AM
<< Home