WalMart,

Walmart Uncorks Private Label Wine

June 22, 2018

Walmart Winemakers Selection

Walmart is getting into the wine business. They’ve introduced a new private label wine collection called Winemakers Selection. It includes ten wines sourced from California, France, and Italy.

Each wine in the collection has distinctive labels but shares the Winemakers Selection branding, and similar rear-label designs describing the wine’s point of origin, description and suggested food pairings, making shopping for wine easier.

Al Dominguez, Walmart’s senior vice president of snack and beverages, told ArkansasOnline that most of the wines retail for $11 and “drink like a $30 bottle.”

Walmart has put a sharp focus on private labels as of late, which aims to create customer loyalty, improve with sourcing and of course — add to the bottom line. Sams Club also recently launched their private label Members Mark wine, so that should provide plenty of insight to the private label alcohol market.

The Winemakers Selection launch follows retail grocery brands Trader Joes with their well-known “Two-Buck Chuck,” and Target which launched its line of bargain wines, called California Roots, last fall. Aldi is serious in the spirits business – their private label $17.50 whiskey just won two gold medals at an international spirits award for its Scotch whiskeys and beat out competition which retails at nearly three times the price. Its rosé wine is the proud recipient of a silver medal from international competition, and its gin has been crowned best in the world multiple times as well.

Wine sales are expected to grow by nearly 6% annually through 2023, so Walmart is in the right place at the right time with the new rollout.

The collection will be available at 1,100 Walmarts across the country.

Our Take:

(An abridged transcript from our conversation. Edited for clarity.)

John Suder: Private label is exploding. Private label’s been around for a long time. You remember when generic labeling came out, the thing he used to be, you’d see the private grocery label and it was always looked at as subpar. That is not the case any longer. The quality has really improved. There are some exceptions. I’ll give you a great example. Coffee – if you buy the grocery brand coffee, it’s not gonna be as good, but it’s also probably half the price or a third of the price. That’s a small example, but in general, the private label stuff is generally good or better and you’re going to save money because you’re not paying that ‘marketing tax’ on the product.

Bart Mroz: We’ve seen people like brandless tried to be an “unbranded branded” store. Two Buck Chuck has always been around and now Walmart is really getting into it. Aldi winning the awards – It’s kind of interesting that it’s been crowned the best world.

John: The Aldi thing is really surprising, but you have to realize that they have the European footprint, so they’ve been probably been selling alcohol in grocery stores for, you know, for decades.

So really the point of this is Walmart – we’ve talked about this at length – is that they are trying to up their image. This kind of gives them an image of quality and as we said, they’re chasing that deep-pocketed millennial as I always like to say, while trying to keep pace with a Lidl and Aldi. And I think Walmart’s kind of seeing them in the rearview mirror. Especially because now Walmart’s trying to go bigger and grocery when someone’s got a dollar, where are they going to spend that dollar. At Aldi, I’m surprised how much stuff I can walk out with as opposed to going to Target or Walmart.

Bart: My mom shops at Aldi and honestly she loves it. It’s only certain things she’ll go get there, right? So there’s definitely a few things that you want, but there’s plenty of it and you know, they really stripped it down from no frills, but it still works. It’s unlike the airlines, but you’re not going to walk in there and find brand names. You’re going to find these brands that you’ve never heard of.

John: The one thing about Walmart that I noticed is that they’re pricing their wine a little higher. Target California Roots private label is only five bucks, and Trader Joe’s and Lidl’s wine options, they’re as low as three bucks. Walmarts are 11 bucks across the board. So I’m wondering what, what that price point is about? It comes down to taste and if this stuff is great then people are going to go, “Hey, it’s the new Three Buck Chuck”, it’s the “Walmart $11/$30 bottle of wine”, but it remains to be seen.

The labels on the wine look great. It looks like some high-end stuff. It doesn’t look like something you bought at Walmart. Wine people are pretty particular. And here’s the thing about wine too is that they say if you stock wine in your store: people that run in for a bottle of wine generally never leave with just that bottle of wine, so it’s a smart move for [Walmart] to put wine in. I’ll probably be located next to the grocery department, so it’s like I’m going to run it for some wine, maybe we’ll get some chips and maybe I’ll get a little cheese….

According to Nielsen, the average consumer spends $47 per trip to the supermarket when they don’t make a wine purchase, but it jumped to $75 when the shopper buys wine. So either they’ve already sampled the wine and they were drunk shopping! It’s also a good “cart filler” because if you walk into a Walmart, it’s like walking into Target – impossible to try and buy one thing.

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