Over the course of 2020, supermarket wine sales accelerated significantly as more consumers turned to grocers for a true one-stop shop, forgoing an additional trip to dedicated wine and spirits retailers. In IRI channels, the top 25 table wine brands in supermarkets saw their dollar sales grow to $3.79 billion last year, on considerable growth of 17.5%. Sparkling wine snowballed even faster, with dollar sales of the top 20 bubbly brands up nearly 20% in the supermarket channel to $846 million.
The preeminent victors of supermarket wine sales growth were big-name brands, which benefited from preexisting familiarity among consumers: Throughout the pandemic, and especially at its onset, shoppers have most often gravitated toward labels they had an established connection with. Larger-size formats and alternative packaging too were winners throughout 2020, and they look poised to continue on their upward trajectories this year and beyond.
While major brands benefited from the supermarket sales shift, so did slightly more esoteric labels, as a number of grocers parlayed their wine sales growth into offering broader, more premium selections. In some cases, grocers were able to support smaller brands that had previously relied on higher on-premise volumes, adding more allocated items onto their shelves. Additionally, more supermarkets homed in on their e-commerce presences, working to keep socially distant consumers in the loop.
Of the top ten table wine brands in supermarkets for the 52 weeks ending December 27, 2020, half were available in alternative packaging, either exclusively or partially. These alternatively packaged brands posted some of the strongest growth overall as well, with dollar sales and volume skyrocketing in tandem. Delicato Family Wines’ Bota Box, for example, saw its supermarket volume leap 47.4% last year to 4.57 million cases, with dollar sales up an even higher 48.4% to $252.8 million, according to Impact Databank. Behind Bota Box as the No.-4, -5, -6, and -7 wine brands on supermarket shelves, respectively, were Woodbridge by Robert Mondavi, Franzia, Black Box, and Sutter Home, all of which offer at least some form of alternative packaging. Though each brand experienced slower growth than preeminent boxed offering Bota Box, they all had steady upward momentum over the course of 2020.
Walmart vice president for adult beverage Jason Fremstad points to the familiarity of these brands, as well as the strength of 3-liter boxes and other alternative packaging formats, as key to their growth at the Bentonville, Arkansas-based retail chain. “Customers tended to stick to well-known brands, indicating they wanted to spend their money on the tried-and-true,” he says. “Within that, one of the main wine sales shifts we saw was customers purchasing more 3-liter items like Bota Box and Black Box; while this 3-liter trend is not necessarily a new one, it certainly accelerated [at the onset of Covid-19].” Walmart operates more than 4,700 stores in the U.S. alone, most of which sell beverage alcohol, though the types allowed vary from market to market.
At The Kroger Co., tried-and-true wine brands, particularly those available in larger formats, similarly saw their sales soar, according to director of adult beverage Jason Milburn. “As bars and restaurants shut down, we saw a continued sales lift, with many consumers stocking up on essentials and branching out to try new varieties of reliable favorites,” he says. “Consumers continue to gravitate towards brands they know and trust, but have shifted to purchasing larger packaging sizes across all beverage alcohol categories.” Based in Cincinnati, Kroger operates some 2,800 stores across the U.S., with beverage alcohol selection shifting from store to store based on local laws.
No.-2 supermarket wine brand Josh Cellars—owned by Deutsch Family Wine & Spirits—successfully stayed strong in the channel in 2020, leaping 36.1% to 1.67 million cases. While Deutsch CEO Peter Deutsch notes that considerable effort has been put into building Josh in the on-premise, the brand greatly benefited from the pandemic-related off-premise boom, reaching 4.5 million cases overall last year. Deutsch’s Yellow Tail, a stalwart of the supermarket, also saw steady growth in the channel last year, rising 9% to 2.7 million cases. Other brands filling out the top 25 supermarket wines list include Gallo’s Barefoot and Apothic, Jackson Family Wines’ La Crema and Kendall-Jackson Vintner’s Reserve, and Treasury Wine Estates’ 19 Crimes. Overwhelmingly, the major supermarket brands hail from California and fall somewhere in the $10-$15 price range, though price points have risen in recent years.
Premiumizing Products & Experiences
As more consumers shift their buying preferences toward the higher end, supermarkets have followed suit; while the pandemic lightly stunted the upward-moving trend at times, especially in its early days, grocers have, for the most part, been keen to keep expanding and premiumizing their selections. “We’ve had somewhat of a rollercoaster year; at first, premiumization was in full force, but as job losses and business closures accelerated, the product mix turned to a more modest level,” says Adam Acquistapace, head of beverage alcohol at Covington, Louisiana-based retailer Acquistapace’s, which operates two stores in the area. He notes that domestic wines and non-Champagne sparklers performed well throughout 2020, especially at the mid-level price point. In all, Acquistapace’s carries roughly 6,300 wine SKUs, with the selection reaching as high as $5,860 a 750-ml. for the 2015 Domaine de la Romanée-Conti Romanée-Conti. Acquistapace has made a point of increasing the number of allocated wines in recent years, building relationships with producers in addition to collectors.
As an independently owned, regional retailer, Acquistapace’s selection skews slightly more upscale than at such national outfits as Walmart, even as its prices stay low. Throughout the duration of the pandemic, the store’s smaller scope has also enabled virtual events, which Acquistapace says were launched in the early days of Covid-19. Thus far, they have continued to be popular, mainly focusing on wine and cheese consumer education.
Napa Valley-based Silverado Vineyards has successfully transferred some of its upscale business to supermarkets, particularly the independent variety. “Independent grocery in California is phenomenal,” says Silverado president Russ Weis. “Everybody knows about Safeway and the beautiful wine sections Phil Markert has put together, but they don’t often think about the Bristol Farms, the Andronico’s, the Jensen’s, and so on. They’re really tuned into their consumers, so shifting our on-premise team to go after that opportunity was easy to do.” Prior to the pandemic, the off-premise accounted for just 40% of Silverado’s revenue; through November 2020, it stood at an 82% share, with the surge due to the popularity of the winery’s core Cabernet Sauvignons and Sauvignon Blanc. Silverado is currently leveraging these strengthened retail ties for the launch of its new Borreo line, which features Sangiovese ($30 a 750-ml.), Zinfandel ($45), and Rosato ($27) sourced from its Soda Creek Ranch vineyard.
Elsewhere in Napa, Duckhorn Wine Co.’s Decoy by Duckhorn label has taken off in supermarkets as of late, benefiting greatly from both its parent company’s sterling reputation and the overall move toward everyday luxury. “Retail wine sales are strong, especially at the lower end of the luxury price spectrum versus last year at the same time,” says Duckhorn executive vice president and chief marketing and business development officer Carol Reber. Decoy’s lineup is led by Cabernet Sauvignon ($25 a 750-ml.), with Pinot Noir and Chardonnay (both $25) also playing important roles.
California-based Riboli Family Wine Estates test-drove its new, super-premium Paso Robles-based brand, Highlands 41, within the supermarket channel, releasing it at Texas-based retailer H-E-B late last summer. “We trial-ran Highlands 41 out at H-E-B as a control label in Texas, and had phenomenal success with that approach,” says Riboli winemaker and fourth-generation family member Anthony Riboli. “The consumer was picking up the packaging, liking it, and eventually buying it again, and so we now know that there is going be pull-through elsewhere just from that supermarket success in Texas.” Highlands 41 currently consists of Cabernet Sauvignon and a red blend (both $13-$15 a 750-ml.), and Riboli anticipates the brand will see major success moving forward, in part because consumers are overwhelmingly accustomed to the Riboli name. The winery’s Italian Stella Rosa label was the No.-20 wine in supermarkets last year, according to IRI data, with some 680,000 cases circulating in the channel.
Throughout the pandemic, Costco onboarded a number of brands and wineries that were previously exclusive to on-premise accounts, according to assistant vice president and general merchandise manager Chad Sokol. “I hope that many of these new relationships will continue after the on-premise opens up again,” he adds. Costco’s own selection premiumized considerably over the course of 2020, as customers traded up to higher-quality wines and spirits at home in the face of shuttered restaurants and dining experiences. Kirkland Signature and sparkling wines, in particular, experienced some of the strongest growth, especially at the premium price point. Costco can sell wine in 448 of its stores across the U.S.
Less recently, Bota Box partnered with Kroger in the fall of 2019 for the launch of a Bourbon barrel-aged Cabernet Sauvignon under its slightly more upscale extension, Nighthawk. The wine rolled out to other retailers in early 2020, reaching some 100,000 cases in its first six months on the market. Over the course of the pandemic its growth has held strong, largely thanks to Bota Box’s strong familiarity with consumers.
Aside from expanding the breadth of wine selection at supermarkets, Covid-19 has also spurred growth of e-commerce for many grocers. Walmart’s online presence, which was in the process of being scaled up at the time the pandemic hit, is now more important than ever. “We have and will continue to invest in our digital experience to ensure we’re meeting and hopefully exceeding customer needs across all channels,” says Fremstad. “Right now, especially, we’re focused on the stores where we can offer adult beverage through grocery pick-up or delivery.” Walmart customers in 29 states can now order beverage alcohol on Walmart.com or through the Walmart Grocery app; the retail giant has also started delivering beverage alcohol from nearly 200 stores in California and Florida, and it’s looking to add more to the list depending on local and state regulations.
E-commerce is also important for Kroger, which prides itself on offering the utmost convenience for its consumers. “E-commerce plays a critical role in meeting our customer expectations for convenience, safety, and value in the competitive and dynamic landscape created by the pandemic,” says Milburn, who adds that Kroger is somewhat limited in its online reach as a result of the complex beverage alcohol legalities that vary from state to state. That said, Kroger has expanded its e-commerce platforms and added pickup and home delivery, in addition to offering Kroger Wine, a wine delivery service that launched in 2018. Kroger Wine offers a number of wines from California, Italy, France, and Spain, available in 6- and 12-bottle allotments, with shipments coming out to $70-$100 a 6-pack or $130-$190 a case. Customers can purchase one-time shipments or join Kroger’s wine club and receive a case every 13 weeks. The home delivery service is available in 13 states and Washington, D.C., and is subject to change based on shifting legalities across the country.
Given the rapid expansion of business that Covid-19 has ushered in for Costco, expanding e-commerce opportunities is a top priority for the retailer. “We’re working to expand delivery options to further states as allowable by law as soon as we can,” says Sokol. “We always focus on keeping our Costco warehouses exciting to provide a unique customer experience that keeps people coming in, but we realize that expanding e-commerce will go hand-in-hand in with brick-and-mortar going forward.”