The Beverages, & more! story – or, what’s Steve Boone up to now? – California specialty retail store; store owner – includes related article
There was a bit of irony involved when it was announced early in the summer that the giant Safeway grocery chain was slashing wine inventories on the West Coast. Ironic because a few weeks later, Steve Boone opened the first of a planned 25-plus specialty retail stores in California. The chain is called Beverages, & more! and the more! is an important part of Boone’s strategy to put more bottles of wine and spirits in the shopping cart. Boone is, of course, the man who put together the Liquor Barn chain for Safeway in 1979.
Not only that, but four days before the first Beverages, & more! opened in Walnut Creek, Calif., across the Bay from San Francisco, a study conducted by Nielsen North America for newly-formed Premium Wine Research Coalition (PWRC) shows that wine buyers are a group that grocery stores should be targeting, not turning away.
The year-long study tracked food store purchases among 40,000 U.S. households beginning in February, 1993. The study revealed that wine buyers made 105 annual trips to the grocery store, compared to 96 for non-wine buyers. Wine buyers spent an average of $2,150 for the year in food stores, compared to $1,895 for non-wine buyers. (Wine buyers were defined as those shoppers buying 1.5 liters or more of wine per year.)
Shopping trips, when wine was in the basket, produced grocery bills 15% higher than the average shopping basket sale ($39 vs. $34) and 35% higher than when beer was purchased ($39 to $29). When super-premium wines ($7 and over) were purchased, the average cash register ring was $44.
Marion Minor, president of Wine-Scan, a Nielsen/PIB service which tracks wine sales in scanner stores, said, “It is the super-premium wine buyer who offers retailers dramatic growth opportunities. Not only does the average grocery expenditure increase when super-premium wine is in the cart, but this wine segment is experiencing the greatest growth in the wine industry.”
WineScan reported an 18% growth in super-premium wines for the 52 weeks ending April 23, 1994, while all varietal wines grew 12%. While generic wines fell 6% during that period, buyers of generics still spend 13% more than non-wine buyers on total food store purchases.
(The Premium Wine Research Coalition, which commissioned the study, was formed to pool the resources of several leading wine groups to help retailers market and merchandise premium wine. Current members include Heublein Wines Group, Robert Mondavi Winery, Sebastiani Vineyards and Stimson Lane Vineyards & Estates.)
Boone apparently didn’t have to read that report to know that the time is right for a drinks and specialty food retail chain. Boone, who built Liquor Barn into a 105-store $330 million chain and also put Cost Plus into the wine business in a serious way, felt no one was taking advantage of the increasing consumer demand for higher quality wines and spirits and for specialty food items. “We have an opportunity to fill the vacuum.”
Boone feels that the trends cited by many chains in making their cutback decisions don’t apply to the niche that Beverages, & more! will fill.
“Even though per capita consumption of alcoholic beverages is expected to rise only slightly over the decade, modest growth in the population of drinking age adults and moderate price inflation will result in good overall revenue growth in the alcoholic beverage market over the next several years,” he said.
Boone said that the strongest segments of the $50 billion off-premise market in the U.S. are premium wines, imported and specialty beers and premium spirit categories, such as single-malt scotch.
Also, even though the recession is lingering in California, it remains a good state for wine and spirits sales. For example, per capita wine consumption in California exceeds 165% of rite national average, and that is heavily weighted toward premium wines. California has been the top drinks market in the U.S. for the past ten years, accounting for over 10% of total consumption.
Boone has a string of stats ready to convince doubters:
* Varietal wine case volume grew at an annual rate of 15% from 1985 through 1992;
* Five of the country’s top ten wine markets, and eight of rite top 20 are in California, comprising nearly 20 percent of U.S. wine consumption;
* Chardonnay sales were up 33% in 1993;
* Merlot sales were up 74%;
* Carbernet sales grew 17%;
* The specialty food market (the more!) is expected to grow 10% or more annually throughout the ’90s according to Rod Wilson, the chain’s specialty food buyer.
Wilson said Beverages, & more! will carry over 3,000 food items, more than twice the number found in a typical supermarket.
Boones says that the reason California is an ideal market for premium wine and spirits (and beer) is that 75% of such drinks are bought by customers over 40 years old, with college degrees and annual incomes of over $50,000. Consumption is concentrated in metropolitan areas, where over 40% of the nation’s wine is bought. And that is just where the new Beverages, & more! stores are Opening. Boone knows the locations are good, because he opened most of them as Liquor Barn stores and is now returning with Beverages, & more! Many staff positions have been filled with “Barn” alumni as well, Boone said.
The stores, however, do not look like the old Barn, where the merchandising concept ran to stacks of cardboard boxes and crowded aisles. Beverages, & more! is a store for the ’90s. They are light and airy, with plenty of open space where cooking demonstrations, book signings and other events will take place.
The stores are customer-oriented and will range from 15,000 to 20,000 square feet. Shelves are color-coded so customers can easily find products and island-shelves are set at an angle so large portions of the store are visible from any point in the store. There are natural wood fixtures and bright primary colors everywhere. Against white walls, quotations about wine and food have been displayed and will be changed on a regular basis.
Boone, on a tour of the new Walnut Creek store, said he has seen customers walk all around the store, stopping now and again to pop something into their cart, reading the wall.
Many of the stores will be in strip malls, others will be free-standing, but the aim is always to enable the customer to drive right to the door.
Non-perishable food products will make up about 30% of the items, with the rest wine, beer and spirits. Wine will be about 60% of the total licensed beverage set.
Boone said the Walnut Creek store, with 17,000 square feet of floor space, is typical of the upcoming stores. There are over 300 Chardonnays and about as many Cabernets, plus a good selection of imported wines, roughly 20% of the wine selection, according to Boone. Although the tilt is clearly toward premium wines, there are special bargain selections set up in island displays which represent good buys.
Wine and food are intermingled throughout the store. For example, there might be a selection of Italian wines displayed among the 125 specialty pastas and 85 olive oils on display at the Walnut Creek location. There was a book about tequila in the tequila display and dessert wines set up in the chocolate section.
There are frequent shelf-talkers, most of them comparing the price of the product with specific stores. There are also recipe cards sized to fit into a 4-by-5 inch recipe file, which suggest wine pairings with the food.
The heart of the store setup is the information system, a computer-driven system that performs the usual inventory functions, plus acts as a customer-information retrieval. The system can track individual purchases through a frequent buyer program called Club Bev! The program can pinpoint customers who frequently buy Bordeaux or California Sauvignon blanc, for example, and generate direct mail to those customers, informing them of upcoming specials.
The Club Bev! program will be chainwide, with customers offered various discounts and specials as the program is developed. Boone has made it easy to sign up for Club Bev! There are sign-up cards throughout the stores which can be given to the checker. When the transaction is completed (you can pay with all major credit cards) the customer is handed his or her Club Bev! card, a piece of plastic like a credit card.
There are a few other bells and whistles to the system as well. Boone said there is room for 15 lines of printing at the bottom of the customer receipt. That space can be used to send special messages to the customer. For example, a recipe could be printed out to go with the wine that has been purchased, or wine could be suggested to go with food items. The system can even be fine tuned to wish the customer a happy birthday.
Another high-tech wrinkle for the checkout system is a display terminal which Boone said will be used to present visuals of various items in the store, or whatever fits marketing needs. “We could show a movie on it if we wanted to,” he said.
“It’s really rifle-marketing,” he added.
Boone, who said he is having the time of his life getting the Beverages & more! chain rolling, said it was a great opportunity to come back and put into application things he had learned at Liquor Barn and perhaps correct some mistakes as well.
One thing that came as a surprise was the apparent goodwill felt toward the Beverages & more! team by suppliers. With major wine retailers like Safeway making cutbacks, suppliers realize that the new chain is an important alternative, especially for smaller companies. Beverages & more! does not charge slotting allowances and is constantly looking for esoteric brands.
Steve McLaren, the company’s senior vice president, said, “We’ve been besieged with cooperation from vendors.
“Small wineries loved the old Liquor Barn. Because selection was the key to its merchandising strategy, it was a great place for the little guys to get product trial. Beverages, & more! is essentially a dramatic repositioning of the Liquor Barn concept for the ’90s with the addition of specialty foods.”
One of Boone’s strategies is to put the store manager out in the store, walking the aisles, talking to customers. “With our in-store information system, the store manager is freed of most of the paperwork. He can get out in the store and deal with the customer.”
Boone isn’t above doing a little customer service himself. While walking through the Walnut Creek store with Boone, a clerk hunted him down to ask if he could find a source for Schweppes Ginger Beer. “There is a woman here who said she bought it in Denver and really likes it. I didn’t know Schweppes made a ginger beer,” the clerk said. Boone agreed that he didn’t know that, either, but promised to check it out. A few moments later, the woman herself cornered Boone and repeated her request for the ginger beer. Boone spent a few minutes talking to her and the woman left, satisfied that if it was possible to buy Schweppes Ginger Beer in California, Boone would find it.
INTRODUCING BEVERAGES, & more!
Beverages & more! is privately held. It was founded in January of this year by Steve Boone and Steve McLaren, who had worked with Boone at Liquor Barn and Cost Plus.
Investment capital was provided by management and by Chicago-based Madison Dearborn Capital Partners: L.P. (‘MDCP’): a $550-million investment fund which specializes in companies with strong management teams and the potential for significant long-term equity appreciation.
(Boone is puzzled by rumors that a Sears investment group put up the money for Beverages, & more! “We did talk to Sears at one point, but they have no stake in the company,” Boone said.)
Besides Boone, the rest of the Beverages, & more! team includes:
* Steve McLaren, senior vice president. He is a former vice president-retail operations for Cost Plus and was retail operations manager for the Pak N Save division of Safeway. He was most recently vice president-stores for Office Club, then regional vice president-stores for Office Depot after its merger with Office Club.
* Bill Wiebalk, Jr., division merchandise manager. Wiebalk was with Liquor Barn from 1983 to 1988. He was a store manager and premium wine buyer. He left Liquor Barn in 1988 to join Boone to lead Cost Plus Imports entry into the alcoholic beverages market.
* Rod Wilson, division merchandise manager. Wilson was a store manager, then a spirits, beer and food buyer for Liquor Barn. He, too, worked with Boone at Cost Plus and most recently was director of retail operations at Kendall Jackson Winery.
* Dennis Carroll, vice president and chief financial officer. Carroll is widely experienced in the creation and management of retail financial and information systems. He has worked with Supercuts, Inc. and The Good Guys.
Beverages, & more! will have six stores in operation by the end of September. Coming up will be stores in San Francisco, Jack London Square in Oakland, Albany, San Rafael and San Jose. After pausing for a short breathing spell through the holiday season, the pace will step up in 1995, with perhaps 20 more stores opening in California.
However, Boone has no intention of stopping at the state line. Beverages, & more! could turn up where ever the demographics are right.
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