Following in the footsteps of rivals Target, Aldi and Trader Joe’s with hipper and tonier bona fides, Walmart is launching its Winemakers Selection of private label wine to 1,100 stores.
The collection, which is sourced from California, France and Italy and will retail for about $11 a bottle, is the latest expression of Walmart’s multipronged push to generate higher margins, in part via private brands that yield fatter profits, from “premium food” like handcrafted caramels and fair-trade certified coffee from is Member’s Mark Sam’s Club brand to new apparel lines like Terra & Ski and George.
It comes as the nation’s biggest retailer works to woo more affluent shoppers who are already buying groceries at the chain, with more up-market fare and services, be it clothing from trendy online startups like Modcloth and Bonobos, which Walmart acquired last year; a partnership with old school department store Lord & Taylor on an e-commerce site; a just-announced concierge service dubbed Jetblack; and now by feeding off the upscale makeover of mass market food.
The Upscale Makeover Of Low-Priced Food
Like fashion and home design before it, highbrow food has been getting a low-price makeover in the U.S. grocery sector, as organic and high-quality fresh foods move from the margins to the mainstream.
Amazon’s acquisition of national grocer Whole Foods Market is the deal that symbolically cemented the trend.
At the same time, supermarkets such as Trader Joe’s and European grocers Lidl and Aldi have been selling award-winning wines at prices that can undercut even Walmart, which is late to the drinking party.
“I think Walmart needs a private brand wine as it is behind the curve, particularly in relation to Trader Joe’s and Costco, two retailers that have long been deep in the wine category,” said Victor Martino, president of Third Wave Strategies, a strategic marketing firm specializing in the food and grocery industries, and a former retail merchant.
“Wine has historically been a weak category for Walmart. With its numerous stores, Walmart.com and Jet.com [purchased in 2016], Walmart has the distribution might to be a major player in store brand wine. The question is if it can execute on the price-value-quality equation, something Trader Joe’s, for example, excels at with its iconic Two Buck Chuck brand.”
With this move, Walmart is also aiming for a swig of the hottest segment of the alcoholic beverage industry. U.S. consumers spend an estimated $62 billion on wine annually, according to the Wines & Vines.
And Millennials have become a key wine-consuming group, which is notable, as they’ve eclipsed baby boomers as the nation’s biggest buying group.