Sizing Up Supermarket Wine

I have seen the future of wine. It’s on display right now at your local supermarket — unless of course you live in New York or one of the several other areas where misguided state law forbids the sale of wine and food in the same establishment. Your day will come for supermarket wine, my friends, but not quite yet.

I don’t mean to suggest that supermarket wine is the only direction that wine is heading, but it is a very powerful force. As the world of wine broadens and American wine drinking culture becomes more firmly established in the socio-economic mainstream, wine sales seem likely to become even more concentrated in the vectors where everyday consumer purchases are made. Supermarkets aren’t the only important wine selling space, but they are one of the most dynamic.

The Rise (and Rise) of Supermarket Wine

It just makes sense. The U.S. did not achieve its current status as the world’s #1 wine market (ranked by total not per capita sales) because more people are spending time at specialist wine shops or liquor stores, although I am sure that is happening (note the success of businesses like BevMo and Total Wine). The increased availability of wine at supermarkets, Costco and Sam’s Club and now also drug store chains (all included in my broad definition of “supermarket wine”) is driving the market.

A recent article on Shanken News Daily notes that Yellow Tail wines have been able to keep their U.S. sales high despite wine market problems generally and Australian wine problems in particular by increasing drug store sales to offset declining purchases in other retail segments. Drug stores? Wine next to lipstick, baby wipes and band-aids? Walgreens wine? Yes! Walgreens has even launched a house brand called Colby Red, a California red blend supplied by Treasury Wine Estates.

The British led the way in supermarket wine and for good or bad the world has followed their path. Wine is attractive to grocery store owners because of its relatively high retail margins and its ability to sell other goods at the same time.  The British pioneered house brand supermarket  wines and that trend is continuing, too. Here is the U.S., most major retailers have their own wine brands (generally made for them by large scale producers such as The Wine Group) – even Walmart and 7-Eleven.

In Britain, the venerable Oddbins chain has closed its last store, a  victim in part of pressure from Tesco and other supermarket chains. (Tesco is now the world’s largest retailer of wine.)  Supermarket sales are seen as the key to rising consumption in China, too, although they are not the only growth area in this rapidly maturing market. Torres is expanding its Everwines store chain, for example, an indication that specialty shop sales are rising as well.

Half and Half

Supermarket wine is one of those “is the glass half full or half empty” issues. It is hard not to appreciate how much supermarkets have done to promote wine (where they are allowed to do so), especially compared with the dismal selection and service of just a few years ago, but it is also easy to dismiss them as being part of a trend towards simplified wine from corporate makers.  I think both trends exist: supermarket wine is a business and so for the most part it follows established business practices. But wine consumers are complicated people who appreciate diverse offerings, so consumer interests are strong, too.

I wanted to take the measure of a “typical” supermarket wine department and I was fortunate to get some help. Our local business district partnered with my university a few weeks ago to organize a “Spring Zing” festival designed to get students and their visiting families to connect with local retailers.  Our neighborhood Safeway hosted a book signing by my favorite cookbook author Cynthia Nims and invited me to give a talk in their wine aisle.  This was my first supermarket gig (but I hope not my last), so I felt a little like Roger Miller’s “King of Kansas City” – a  #1 supermarket attraction (see video at the end of this post).

About a dozen students, parents and random curious Safeway shoppers met me for the talk.  I briefed them about supermarket wine then turned them loose to do some fieldwork. I had questions for them to answer — a treasure hunt! How big is the wine section (how many different wines are sold)? How many different countries are represented? How many different U.S. states? And what are the cheapest and most expensive wines on sale? How, in short, does supermarket wine measure up?

Big and Small

They found the answers pretty quickly. Total number of wines? About 750 according to two economics majors (economists are good with numbers!). Is that a big number? No — and yes. No in the sense that it is a small number of SKUs compared with the tens of thousands of wines that are available. This is a tiny slice of the pie in that regard. But it is a big number compared with, say, Costco, which stocks fewer than 150 different wines at any one time. And of course it is a big number compared to any other part of the store. Where else in a modern supermarket can you choose from among this many different options?

A lot of the wine sold here comes from a few large producer portfolios — Gallo, Constellation Brands, The Wine Group, Ste Michelle Wine Estates and so on. So in one sense the diversity is less than it might initially appear and that’s why some enthusiasts, who want to see more small producer labels, are disappointed in supermarket selections. But there are also many wines from high quality medium sized wineries (Hedges, for example, and Frog’s Leap at this store) so it would be wrong to say that supermarket wine is only limited to big players. And some of the big dogs offer real diversity, too — the wines don’t all come out of one big vat in Lodi!

Where in the world does the wine come from? This Safeway store had a strong regional bias in favor of Washington and California wines with smaller  selections from other areas. The usual suspects showed up. Twelve foreign countries (Australia, New Zealand, France, Germany, Italy, Spain, Portugal, Chile, Argentina, South Africa, Greece and Japan — if you count plum wine) —  and four U.S. states: Washington, Oregon, California and New Mexico (Gruet sparkling wine).

High and Low

It didn’t take very long for my crew to sniff out the highest and lowest priced wines and the difference was amazing.

Initially they focused on Quail Oak, Safeway’s house brand wine (made by The Wine Group, I believe) that was in Two Buck Chuck range at $2.99. But then they got out their calculators and discovered that they could purchase 5-liter bag-in-boxed Franzia wine for even less — about $2 per bottle equivalent.  That’s the low tide price point at this Safeway.

The high price? A bottle of vintage Champagne was priced at more than $300 (but only about $220 with your Safeway Club Card discount). It is even cheaper if you buy a six-pack and take the extra 10 percent discount. Very expensive for supermarket wine! But it makes the bottle of Dom Perignon sitting next to it in the display case seem relatively affordable.

The most expensive wine is 100 times the price of the cheapest one! What a tremendous range of price points! I think it is probably impossible to find an equivalent gap between low and high price for products in the same overall category anywhere else in the store.

The supermarket wine phenomenon is very interesting to me because it provides clues as to how the American wine scene is changing. While it is obviously wrong to draw general conclusions from a single specific case, I do think this one store is very interesting in terms of the questions that it raises about price, selection … and the future of wine.


Reading over this post it occurs to me that a valid criticism would be that I am not demanding enough of supermarket wine. I seem to accept supermarkets for what they are and not press them to offer even more choice and diversity. I think this is half true — I do accept that supermarkets are subject to economic constraints that define their business model. I acknowledge that, as key wine sales vectors, they have power to shape the wine culture if they want to. I am optimistic that they will do so in response to changing consumer preferences. The typical Safeway wine department profiled here is enormously different from what I would have found ten or fifteen years ago. Who knows what I will find ten years hence?


Thanks to Safeway for inviting me to talk about wine in their store. Thanks to everyone who showed up and participated in my wine treasure hunt game.

4 responses

  1. The supermarket business is crucially important to the future of wine in the U.S., and the Mainstream Wine Media mostly ignores it. Why is the average price of a bottle of wine about $6 in the U.S. (from Nielsen)? Because grocery stores sell a lot of those 5-liter boxes of Franzia.

  2. Thank you for a fun article Mike! Yes, we here in New York are waiting, and hoping, and praying we can make wine in grocery stores happen. As a family winegrape farm, we have lobbied for many years for the cause. We are not giving up, and stories like yours help tell the story. It is truly a no brainer, and benefits all. Whether you are a consumer looking for $2 or $200 wine, and the state is pocketing the tax money.

  3. New York state has 1/3 the fatalities of people under 21 due to alcohol related deaths compared to Fl. Tx. and Ca. The wine industry suffered due to a bad image for years and selling wines in grocery stores and gas stations will not help .

    New York has a better representation of wine brands because each mom and pop retailer is free to sell what they want not what corporate dictates.I would rather support the little guy than let Walmart dictate my choices.

    A family farm/winemaker should understand that his best customers live near his farm and the best retailer for his product is neighboring stores that understand the locals. When the big retailers buy from the big suppliers he will be lucky to get a job stocking the shelves because he wont be able to make a dime growing/selling his wine. A Farmer should know about Corporate farms!

  4. As a person who makes his living selling NY wine, I have followed this issue very closly. The reason the vast majority of wineries are against this ill concieved plan to sell wine in gas stations, groceries and box stores is that it would close many of thier retail partner wine shops. The New York wine industry, under current rules and laws, is thriving! There are new wineries opening evey year. Closing the outlets for these wineries and replacing them with box storesgrocery stores and gas stations that have all but ignored (with the exception of 3 day perishables)local agriculture makes no economic sense. We need to support local, support jobs and foster taxable revenue in NY State. Uncork NY and say no to out of state interests!

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