Not just any wine, beer or spirits brand will do for shoppers at Raley’s supermarkets. The company—which operates 122 stores in Northern California and Nevada—goes to great lengths to ensure customer satisfaction. All new products are pre-tasted, and a team of wine stewards leads an innovative customer education program.
Those efforts appear to be working. Total company sales grew to $3.5 billion last year, with beverage alcohol outperforming the overall trend. Raley’s director of wine, beer and spirits Curtis Mann, a wine industry veteran who joined the company in 2013, says product selection and education have been key to growth.
Wine is the biggest driver for beverage alcohol at Raley’s, followed by beer and spirits. Mann and his team make most of the buying decisions, although individual stores have some flexibility for local wine and beer sets. Mann—who holds a diploma from the Wine and Spirit Education Trust and plans to sit for the Master of Wine exam in June—is methodical in his listing decisions. “We taste everything,” he says. “Tasting is more important to me than labels.” Panels of consumers and professionals, including fermentation scientists from the University of California–Davis, blind-taste spirits and beers. Feedback from in-store wine tastings also factors into the listing decisions.
At a typical Raley’s store, the wine selection ranges from 1,500 to 2,000 SKUs. Prices start at $3 a 750-ml. bottle of ForestVille Merlot and top out at $225 for the 2012 Delas Frères Côte-Rôtie La Landonne. Overall, wines from New Zealand and France—including the southern Rhône, Burgundy and Alsace—are trending at Raley’s. In addition, the company is building a private-label program.
Raley’s offers between 300 and 800 beer SKUs, depending on the store. Prices range from $4.99 a six-pack of George Killian’s Irish Red to $16.99 for a four-pack of Dogfish Head’s Palo Santo Marron. Craft brews have emerged as the largest contributor, accounting for more than half of all beer sales. Top-selling brands include Lagunitas Brewing Co., Lost Coast Brewery, North Coast Brewing Co. and Sierra Nevada Brewing Co. “We’re looking at the opportunity to expand our imported beers,” Mann notes, adding that Raley’s might begin to set some of its beer shelves by style rather than brand. And while Raley’s can’t sell growlers in California, Mann says the company is looking into the possibility for its Nevada stores.
Raley’s carries 500 to 800 spirits SKUs, generally priced from $7 a 750-ml. bottle for VIP vodka to $100 for Hakushu 12-year-old single malt Japanese whisky. Overall, whisk(e)y and Tequila are showing the greatest strength. Craft spirits, like No. 209 gin from San Francisco ($34.99) are gaining traction. “Many of our customers want to recreate craft cocktails at home, so we’re offering some interesting cordials and bitters,” Mann says, noting that Raley’s showcases such products in special cocktail displays.
Raley’s is committed to educating its customers about wine, beer and spirits. The company began employing wine stewards in 2014 and now has around 30 on staff. Every steward, as well as some store directors, complete the Wine and Spirit Education Trust Level 2 program.
Shoppers at Raley’s are knowledgeable and curious. “Our customer base is mostly female on the wine side,” Mann says. “Beer and spirits are more male-driven. Our customers tend to be a bit younger, with millennials shopping for wine, beer and spirits. Millennials are adventurous. They want to know about all the Italian or French wines and why a Chardonnay from the Central Coast is different from one from Washington.”
Raley’s aims for innovation in its cross-merchandising strategies. “Beer with cheese is our big push this year,” Mann explains. “A lot of the very hoppy IPAs go great with cheese, especially pungent cheeses. We’re trying to tell our customers that story, and it’s working.” He also notes success in cross-pairing Chardonnay with turkey and Pinot Noir with pork in the meat department. Weekly in-store tastings, usually hosted by the wine stewards, are an important merchandising component, as are beer tastings. California stores charge a small fee for the events. In Nevada, Raley’s also holds occasional spirits tastings.
Now in its 81st year, the privately-held company plans to open three new stores in California in the next year and is exploring other locations as well, with expansion into new markets a possibility. Wherever Raley’s decides to build, beverage alcohol will remain an important contributor.