Lidl's US Entrance is "One of Biggest Events" for Grocery in Years

FILED MAY 18, 2017

Massive European discount grocery chain Lidl is making its way stateside this summer. The grocery chain, which describes its US position as a cross between Trader Joe's and Harris Teeter, will open 20 stores in North Carolina, South Carolina and Virginia next month, with plans for up to 100 locations within 12 months.

Its entrance "will be one of the biggest events in US retail over the next couple of years," Mike Paglia, an analyst at Kantar Retail, tells the Washington Post.

Catering to US consumer tastes and habits, Lidl's leadership has revealed wine will be a big focus of the concept, and unlike its European stores, it will sell chilled beer. Master of Wine Adam Lapierre, will head up wine selection for the chain, telling WP he has tried up to 10,000 wines in the process of setting its shelves.

LIDL'S HISTORY IN EUROPE. Lidl, and its low-cost competitor Aldi, have changed the entire dynamic of the grocery industry in the UK in recent years, sending existing chains into a price war. But unlike in the UK, Lidl will not focus on rock-bottom pricing in the US, per a presentation obtained by Business Insider. Instead, Lidl intends to sell "high-end brands, quality not quantity, best products only."

HOW MAJOR US RETAILERS ARE FORTIFYING US POSITIONS. Major US grocers are already bracing themselves for the new competitor. Wal-mart has made an effort to lower prices and speed up checkout in order to be more convenient, per Fox Business. It doesn't want to see Wal-mart go the same way as Asda, its subsidiary grocery chain in the UK, which has struggled to compete with Lidl and Aldi.

Kroger's Harris Teeter chain also plans to cut prices and beef up its store brands, and Aldi plants to spend $1.6 billion to remodel and expand 1,300 US stores, as well as build 650 more by next year.

But all that price slashing worries some suppliers, such as Procter & Gamble Co., Nestle SA and Unilever PLC. Recode reported in March that Wal-mart had met with some of the biggest names in CPG to inform them that they needed to cut their wholesale price even further (as much as 15%) so Wal-mart could guarantee it had the lowest price on 80% of its sales.

"The pricing pressure has ignited intense wargaming inside the largest CPG companies, according to people familiar with discussions at Procter & Gamble, Unilever, PepsiCo, Mondelez and Kimberly-Clark. There is no one-size-fits-all solution," writes Recode.

No mention of wine or beer cuts (yet), but it gives you an idea of how the company is thinking.

We'll have more as this story develops, but in the meantime: do you have any insight on working with Lidl, or how its competitors are preparing? Send your thoughts to emily@winespiritsdaily.com

BOB TORKELSON PROMOTED TO CEO AT TRINCHERO

Trinchero Family Estates has promoted Bob Torkelson, long-time president and coo, to the role of ceo, as Roger Trinchero retires.

Bob has been with TFE since 1996 when he was hired as vp of sales for the Central Division, then moving up to the role of president in 2004. Roger comments that Bob is the person "most responsible" for the company's success over the last 13 years, per a release.

"I'm tremendously proud of what we've achieved as a family-owned and operated business since my parents founded Sutter Home winery over 70 years ago. Now it's time for me to step aside," he continued.

Roger will stay on as chairman of the board.

FETZER VINEYARDS REPORTS STRONG EXPORT GROWTH IN Q1

Chilean wine producer Concha y Toro reported an overall sales decline of 3.5% in the first quarter ended March 31. Fetzer Vineyards, its US subsidiary, reported healthy sales growth of 5.6% and volume growth at nearly 13% for the quarter.

Fetzer's volume and sales growth were largely driven by exports, with export volumes up 30.9% and sales up nearly 15%. The domestic market also reported growth, with sales up 4.6% and volumes up 11.1%.

Moreover, the success of new premium products helped drive up prices in export markets, per a release. However, that was offset by the appreciation of the USD, which led to a 7% price decrease in export markets.

WSD BRIEF:

GALLIANO EXPANDS PREMIUM PORTFOLIO WITH L'APERITVIO AMARO. Galliano L'Aperitivo is an Italian bitter, with 80% of its ingredients sourced from Northwest Italy and bottled at 48 proof. It will be available nationwide starting May 29 for approximately $17 a 750 ml.

Until tomorrow,
Your Editors

Emily Pennington - emily@winespiritsdaily.com
Sarah Barrett - sarah@winespiritsdaily.com

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