Single-barrel Bourbons have become somewhat commonplace at liquor stores and even groceries and other trade outlets these days. But at California-based Raley’s, not only does the supermarket chain offer numerous single barrels every year, but individual stores even collaborate on limited barrels, sometimes with lucky customers involved in the process. “We don’t want customers to think of us as just another grocery store that carries X, Y, and Z brands,” explains Cody Thornhill, senior category manager of alcohol at Raley’s, about the company’s approach to beverage alcohol. “Rather, we try to be a bottle shop within a grocery store. We can generate a lot of loyalty that way.”

With 119 stores in California and Nevada—all of which sell beer, wine, and spirits—Raley’s has a well-developed reputation for showcasing beverage alcohol and educating customers on its selection and food-pairing attributes. Privately owned, Raley’s doesn’t release sales figures, but beverage alcohol accounts for 7.5% of annual sales, and ranks among the chain’s top five product categories. According to Thornhill, wine comprises 36.5% of category sales, beer 31.5%, spirits 27%, and RTDs 5%. While still the largest subcategory, “wine is losing share,” he notes, “and beer is trending down. Instead, people are switching to spirits, particularly RTDs.” Indeed, combined share of spirits and RTDs at Raley’s—which also encompasses the Bel Air and Nob Hill Foods banners—has recently surpassed beer.

Raley’s was founded 90 years ago by Tom Raley with the opening of Raley’s Market in Placerville, California. A few years later, he added stores in Sacramento, about an hour’s drive to the east. In the mid 1980s, Raley’s established West Sacramento as its headquarters and Tom’s daughter, Joyce Raley Teel, joined the company. Joyce and her husband Jim Teel took over ownership of the company in 1991, and the following year, Bel Air Markets joined the Raley’s family of stores. Seven years later, Joyce and Jim’s son Michael Teel was named CEO, and the Nob Hill Foods banner was added. In 2015, Michael Teel was named majority owner of Raley’s, launching the company’s third generation of family ownership.

Raley’s expanded into Nevada in 2018, and three years later, growth continued with the acquisition of the Arizona-based Bashas’ chain of stores and the formation of The Raley’s Cos. to oversee both concepts, but with separate operating divisions. Today, the Raley’s operating division comprises 75 Raley’s stores—plus four organic Raley’s market concepts—21 Bel Air locations, 18 Nob Hill stores, and one Food Source unit. Keith Knopf serves as president and CEO of The Raley’s Cos. and Paul Gianetto was named president of the Raley’s operating division earlier this year.

Faith Garrard joined Raley’s in 2018 as the category manager for meat and seafood. With an interest in nutrition, she says that it was Raley’s corporate mission—“Changing the way the world eats, one plate at a time”—that attracted her to the company. Garrard now oversees floral and produce, and earlier this year, she was named executive director of fresh and alcohol at Raley’s.

Wine Waning

Raley’s offers approximately 1,300 wine SKUs, with “everyday schematic items” priced from $2 for a single can to $170 for a 1-liter bottle of Caymus Napa Valley Cabernet Sauvignon, according to Thornhill. The sweet spot for wines at the stores is between $14-$24 a 750-ml., but he concedes, “it’s trending down as consumers trade down,” amidst inflation. Wines by nearby Bogle Family Vineyards ($9), are top sellers. As at other California stores, Chardonnay is the most popular varietal, accounting for nearly a quarter of the chain’s wine sales. Cabernet Sauvignon comprises 14% of wine sales, Thornhill says, and Sauvignon Blanc is gaining share. While most wine segments are on the decline, he notes, “non-alcoholic wine is the only thing that’s trending positive.” Alternative packaging is another bright spot, with 5-liter, 187-ml., and 500-ml. packages on the rise. To merchandise the non-traditional packages, Raley’s stores feature 5-liter box sections and “picnic wines,” such as single-serve cans and wine-based cocktails.

About 1,200 beer SKUs are offered at Raley’s, ranging from $2 for singles to $30 for multi-packs. Thornhill notes that the chain benefitted greatly from the craft beer boom, but with category sales now on the decline, overall beer sales at the chain have been impacted. Craft’s share of beer at Raley’s had reached as high as 40%, but these days it’s down to 35%. Non-alcoholic beer, however, is performing well, and already accounts for almost 5% of beer sales at the chain. Top-selling beers at Raley’s include Coors Light ($30 a 30-pack of 12-ounce cans) and Modelo Especial ($19 a 12-pack), along with crafts from local breweries, such as Sierra Nevada, Lagunitas, and Firestone Walker.

With beer and wine slumping, spirits have become a bigger focus at Raley’s. The stores offer about 600 spirits SKUs, with items priced from $1 for some 50-ml. bottles to $200 for a 750-ml. of Crown Royal XR Canadian whisky. “But we do receive many higher-dollar allocated items,” Thornhill notes. “Recently, we carried Weller Millenium, which retailed at $5,500. We also sold a 25-year-old Eagle Rare for $10,000.” Tito’s Handmade vodka ($38 a 1-liter) is the No. 1 spirits brand at the chain, with whiskies like Jameson ($27 a 750-ml.) and Buffalo Trace ($28) also top performers.

“In general, with spirits, we’re seeing a lot of trading down,” largely to $30 a bottle and below, Thornhill notes. “People are just looking for value right now.” RTDs offer that value and have performed very well at Raley’s. High Noon ($21 an 8-pack of 12-ounce cans) remains its top-selling RTD, but Cutwater ($14 a 4-pack) and Long Drink ($14 a 6-pack) are on the rise. “High-abv RTDs are driving the category as people want bang for their buck,” the retailer says.

Single-barrel offerings are quickly distinguishing Raley’s from other grocery chains. Raley’s partners on about 50 different single barrels a year, Thornhill notes, including the likes of Buffalo Trace and Elijah Craig, and even more obscure offerings, like Holladay Distillery. Raley’s even receives Willet single barrels, which, Thornhill says, is rare for a grocer. Customer response is typically good. “It runs the gamut,” he notes. “Some single barrels sell out in three days and some take a few months.”

A self-described whisk(e)y nerd, Thornhill is proud that Raley’s is receiving increasing access to allocated spirits and is known to mark the products up fairly. “We’re showing our customers that you don’t have to pay secondary market prices to get these products,” he says. Raley’s receives monthly allocations of products like Blanton’s and Eagle Rare, and the supply often runs out in about four days. Like himself, “we have a lot of whisk(e)y nerds in our stores,” the retailer says. “Our goal is to attract more.”

Community Gathering Places

Raley’s “legacy stores” run between 50,000 and 65,000 square feet, according to Chelsea Carbahal, vice president of community impact and public affairs at The Raley’s Cos. Newer stores are in the vicinity of 35,000 to 45,000 square feet. “We’re increasingly working to make our stores places for community gatherings,” she explains, with some locations now featuring cafés with on-premise beer and wine licenses, as well as “gather rooms” for loyalty and community member usage.

In general, the beverage alcohol department comprises about 8% of store space. Wine receives the most space—between 20 and 200 linear feet, Thornhill says, depending on the size of the store and the role that wine plays in that particular store. Beer space ranges between 30 to 70 linear feet, while spirits are allocated about 40 linear feet. Raley’s internally classifies stores by the contribution of wine and spirits sales at each location and manages space and selection accordingly. “A” stores, for example, offer a wider selection of high-end wines and spirits and feature premium wine cases in prominent end caps. While Raley’s stores are generally shrinking in size as some traditional grocery categories fall by the wayside, its beer cases are getting bigger, Thornhill says, as most beer and RTDs are now sold cold.

Eight Raley’s stores boast beer and wine bars. According to Thornhill, they feature brands that consumers may not otherwise be aware of, such as local craft brews only available on draft. Eight different wines are highlighted at the bars each month and are usually tied to wines being promoted in the wine department. The cafés also offer food items that pair well with the featured wines, Garrard notes. “Customers enjoy being in their local grocery store, where they can eat before they shop, or eat after they shop, and have a drink,” she says.

The bars are ideal venues for tastings and demos. While in-department sampling can be somewhat restrictive in California, Thornhill says Raley’s Nevada stores have a lot of flexibility. He points to spirits tastings, for example, that can attract as many as 40 different suppliers and help to drive sales of allocated products. A wine steward program at “A” stores, meanwhile, works to further educate customers and team members. Aggressive cross-merchandising is utilized in a number of stores, which, Thornhill says, “allows for cross-category tie-ins to represent a solution-based feature for our customers.”

A Bloody Mary program, for example, ties in vodka, olives, pickles, asparagus, and glassware in a single location. This summer, the chain will promote wine spritzes, “tying in the wine and spirits categories together,” he reveals. Garrard adds that beverage alcohol is also promoted out of department, where allowed, such as “collaborations in the floral department with sparkling wine, making sure that we’re getting incremental sales for wine within different categories.”

While wine and beer sales at Raley’s are struggling to find growth—as at many other retailers—spirits are bucking the trend, Thornhill notes. He sees continued opportunity for the category, as well as emerging sectors like social tonics. “It makes sense for my department to manage these drinks because they’re replacements for the drinks that people are leaving.” Thornhill plans to also “lean heavily into our allocated whiskey and single-barrel programs,” and be a leader among groceries in its single barrel offerings. Garrard says, “we’re committed to staying ahead of the trends and bringing in new customers before those trends become mainstream, while staying true to who we are.”