Random Thoughts After Visiting Several Liquor Stores

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I have been reading about how both Costco and Walmart see great potential sales growth coming from beer, wine and particularly spirits. The WSJ ran a story of how Walmart is trying to grow their spirits sales when their corporate policies dictate a "no tolerance" policy towards alcohol consumption at corporate functions, etc. And Costco is battling several state's laws regarding sales and distribution of beer, wine and spirits. Anyway, I decided to see how Costco was doing it here in Texas. They have taken a big box/small box approach to selling spirits. The big box is their typical store incuding ailes for beer and wine. The small box contains the same beer and wines in the big box plus spirits piled high. The small box has a separate entry and claims it is operated by a different entity......and no Costco membership is required. Selections are limited but prices seemed good. JB White and Black, WT101, and Weller SR dominated the space. Of interest was the ER SB in those attractive 1.75 bottles at $37. Costco often has unique and/or luxurios items in their stores......the liquor store was a big disappointment in that regard.

Secondly, I've noticed how our local shelves are essentially empty of Van Winkle products. I see the occasional ORVW 10/90 or VWSR Lot B, but nothing with more than a single bottle or two on the shelf. The most often sighted product is Pappy 20 in fact. Several retailers said they were probably going to drop the line entirely because the shelves sit empty most of the time....bad for a retailer. It must be hell to have developed a successful brand and not have enough product to fill it. I trust BT and Julian will keep resisting the temptation to just fill orders .... and continue to supply us with top notch whiskey, even if it is in short supply.

Randy

[jburlowski]

Based on Chuck Cowdery's article about the industry-wide shortage of aged bourbon, the "empty-shelf" problem is likely to get worse...

[TNbourbon]

Re Costco in TN: the one closest to me also has recently opened a limited-brand store under the scenario Randy describes. However, while it's true some very good prices exist in that store, about half are also a bit to the high side. Even the little retail liquor store where I work part-time beats them on many items. In other words, they are employing 'loss leaders' -- to the extent the law allows; they can't actually sell below cost, but they can limit their profit -- in hopes of making up the difference elsewhere.

As for Van Winkles: We've been trying to introduce some to our store recently, but the area distributor doesn't have any in the warehouse.

[BobA]

Some grocery stores in FL have had separate entrance liquor stores for, well, over 20 years. Beer and wine in the grocery, that and spirits in the liquor store. Shared back rooms - and names on the front - just have to go outside to go from one to the other.

Bob

[NorCalBoozer]

yes, it does pay (yourself) to check prices. I remember seeing a profile on Walmart and this is what they did, advertise some very low priced items ($99 microwave,etc), then in the store set up all the end caps (end of aisles) and high traffic area with high margin items. People just assumed that since they were at Walmart that they were getting a deal on everything in there.

Re Costco in TN: the one closest to me also has recently opened a limited-brand store under the scenario Randy describes. However, while it's true some very good prices exist in that store, about half are also a bit to the high side. Even the little retail liquor store where I work part-time beats them on many items. In other words, they are employing 'loss leaders' -- to the extent the law allows; they can't actually sell below cost, but they can limit their profit -- in hopes of making up the difference elsewhere.

As for Van Winkles: We've been trying to introduce some to our store recently, but the area distributor doesn't have any in the warehouse.