Grape Expectations

Olympic Oil shares its best practices from the vine

Wine and convenience stores do mix as Olympic Oil Co. in Gainesville, Ga., has come to experience firsthand.

It all started five years ago when Hank Kaiser, chain supervisor and buyer, came on board at the company. Even though he drinks no wine, he had managed a liquor store prior to getting into the convenience channel, and felt "vino" could be a good avenue for revenue. He also had experience managing a c-store in an affluent Atlanta suburb that did well with wine — even regularly selling Dom Perignon, the prestigious champagne that retails for over $100 a bottle.

So, two years ago, when Olympic Oil was specifically looking for new ways to increase sales, Kaiser brought to the table grape experience and expectations. "[I] convinced the powers that be that we could do something with wine," he told Convenience Store News.

The 12-store chain secured wine licenses for the locations that didn't have them, and tested the concept for one year in the majority of its stores. For six of them, it stuck. Today, Kaiser is proud to report that wine sales are "well into the double-digits of overall alcohol sales" for five of its six wine-devoted stores.

"I would say they're bringing in [alcohol sales volumes that fall] between 15 [percent] " he said.

Even though Kaiser had good wine experience prior to selling it at Olympic Oil, he recognized that times — and customers — have changed, so he stayed to figuring out the wine business from a new perspective. Now, he believes the time is perfect for c-stores to sell more wine, given that the economy has forced some customers to trade down, thereby opening up the logic of grabbing more moderately priced wine labels at a c-store.

This also ties in to some of the main points Kaiser has learned for how to best make wine work at his convenience retail chain.

Stay Price Competitive — The wine at Olympic Oil doesn't have to match that of its liquor store and grocery store competition, "but it has to be very competitive," according to Kaiser. "If we're priced one to two dollars higher on wine than the grocery store down the street, it's not going to justify having it because we're not going to move it."

In order to be price competitive, he knew that he had to be willing to accept a lower margin than the typical 30 percent he shoots for on in-store items. "Because the dollar ring is so high on wine, I was willing to live with a higher penny profit vs. a higher margin," he stated.

Shoot for 20- to 25-Percent Margins — This is something Kaiser specifically learned from his liquor store days. "They use a formula around here that aims for 30-percent markup, which translates to a 23-percent margin, so that's usually where I am," he said. "To be competitive, the wine margin needs to be around 20 [percent] to 25 percent."

He tries to buy some of the same deals that liquor stores are offered — whether it's 50 or 100 cases of some wine. He'll buy what he is confident will sell, also knowing that he'll have the same margins on it that the liquor store down the street will.

"That way, when Mr. and Mrs. Smith come to gas up, they'll see the wine display or our cooler prices and realize our wine prices are on par with the liquor store," he explained.

Devote the Proper Cooler Space — While Kaiser has noticed other c-stores that carry wine might have two or three shelves of chilled wine, Olympic Oil has a full cooler door in most stores.

"I want customers to see the devoted cold space to wines that are served chilled," he maintained. "We get so many people that stop in on their way home to get a nice bottle of Chardonnay because they know it's ready to go."

Stock Wines in a Modest Price Range — Despite his days spent at the affluent neighborhood c-store, Kaiser is aware that "wine connoisseurs are not typically going to shop at a c-store for a $50 bottle of wine." So, he tends to buy what he believes to be good wines that are moderately priced in the $5.99 to $9.99 range.

He is willing to go higher here and there, but it depends on the particular wine and his feel for the market. He listens to his managers' recommendations and if they can justify the need for a higher price point and he believes he can turn it over in a "reasonable" amount of time, he will go for it.

Select a Mix for Reasonable Turns — Kaiser's definition of a reasonable turn time for wine is two to three months. But that only happens when the mix is carefully balanced, which he ensures himself rather than turning it over to the individual store managers.

He has learned that he can turn wine over more quickly when he buys a good mix, which is often dependent on seasonality. For instance, White Zinfandel is one wine that does better in the summertime, while Merlot and Cabernet do better during the holidays and colder weather, Kaiser noted. But he also wants Olympic Oil to be known for selection, as well as fair pricing. "It's a careful balancing act," he said.

Keep Abreast of New Wines — One of the latest and greatest wines at Olympic Oil, which is always on the lookout for newbie popular labels, is a chocolate wine from E.&J. Gallo Winery.

In general, new sweet wines are a hit, perhaps because they're attracting a more feminine crowd. "Moscato is really a hot-moving wine in our market right now. There's a Pink Moscato that is aimed more at the ladies and it's doing real well for us," Kaiser reported.

Build an Attractive, Well-Thought-Out Display — While chilled wines (typically whites/ rosés) are merchandised in the cooler, a host of red wine is sold at room temperature in gondolas and other attractive displays that Kaiser had built for each wine-selling store, depending on the individual layout and space available.

With all of them, his aim is for an "eye-appealing" configuration that preserves the integrity of the wine. "I try to make sure we cut the cases in such a way that when we stack them, they look good and not just a bunch of cases up against the wall," he said. He is also cognizant to keep wine away from the windows and direct sunlight.

Carry Out Some Informal Training — Kaiser found this to be imperative initially — making sure store managers and employees knew the difference between wine that needed to be kept at room temperature and wine that could be chilled. Beyond that, merchandising and display techniques were taught, such as cutting the boxes and keeping the wine away from sunlight.

Your Busiest Store Doesn't Equate to Your Best Wine Store — Kaiser stresses the importance of evaluating the sale of wine on a store-by-store basis. "We have 12 stores and I found that I couldn't sell wine effectively in all of them," he explained. "But it doesn't necessarily mean my slowest store couldn't sell wine. My slowest store actually sells wine very well, [while] my busiest store doesn't have wine and it's because of where it is and the turnover. My busiest store happens to be across the street from a liquor store."

For comments, please contact Renée M. Covino, Contributing Editor, at [email protected].