Why E.&J. Gallo Is 2016’s Wine Category Captain

MODESTO, Calif. — As the wine category continues to grow within adult beverage, so do the number of retailers that offer wine. It seems each day a new chain or independent retailer wants to offer a wine selection in their store. However, there is one channel that has offered wine for many years, but still struggles to generate awareness with consumers. RaceTrac Petroleum Inc. recognizes this and is determined to increase wine conversion in the convenience channel.

Since 2008, E. & J. Gallo Winery has been collecting data to understand the convenience store shopper. One striking discovery is, on average, 55 percent of wine drinkers are unaware that c-stores sell wine. Additionally, many current beer customers are also wine drinkers but the majority remain unaware that wine is also sold in convenience stores.

To tackle this, RaceTrac and Gallo partnered in 2015 to grow overall wine awareness with the goal to make RaceTrac the c-store destination for wine. 

For its efforts, E. & J. Gallo Winery was selected winner of the 2016 Convenience Store News Category Captains award in the wine and liquor category.

Now in its third year, the awards program applauds outstanding category management initiatives implemented in the convenience channel over the past 12 months. All entries were judged by product development experts at consumer research firm Past Times Marketing based on the information supplied by participating companies.

With knowledge that the typical convenience wine shopper is male, younger, more affluent and educated, and claims to be very confident and knowledgeable about wine, Gallo started by ensuring RaceTrac was offering the correct assortment of wine. By using a custom weighing system with RaceTrac data and IRI Market+ Convenience data, each item was given an overall score, which was used to make sure the best products from the chain, the market and the convenience channel would be offered in the RaceTrac set.

RaceTrac also utilized internal scan data to provide Top Brand, an “all you need to know about the category” report that used Gallo’s customized systems. Using this report, the partners could quickly analyze the business and make sure to capture the right opportunities.

Once Gallo presented a best-in-class assortment to RaceTrac, a “Power of 3” set philosophy was used to drive awareness at the shelf. Knowing c-store wine customers consider themselves somewhat knowledgeable about wine, Gallo felt this solution would offer shoppers quick guidance using signage, so they could quickly and confidently make their selection.

The set flow revolves around the concept that we are constantly surrounded by things in groups of three. For example, we learn our ABCs and 123s. When we purchase fuel for our car, we decide between unleaded, premium and super premium. The same concept is applied to a wine set displaying good, everyday wines; premium, great quality wines; and award-winning, best wines. With quality signage, this simplifies the decision process for the consumer.

Gallo’s research also revealed that:

• The c-store wine buyer enjoys wine frequently, but they generally buy for immediate consumption, or on impulse;
• They are two to three times more likely to purchase wine on sale or display than any other wine retail outlet;
• Of those buying wine within c-stores, approximately half are finding their wine within the standard wine section; the rest are shopping the cold box and displays.

These findings were used to launch a national programming calendar to include impactful displays. Each program was designed to be merchandised outside the wine section to increase wine awareness.

Substantial sales lifts occurred across all brands programmed. One such program utilized the Liberty Creek brand and its tetra package in Texas. The program ran for 90 days and was displayed in a three-tier wire rack. This particular item saw 477-percent growth over the average 90-day depletion number, immediately making Liberty Creek the No. 1-selling new item and No. 3 growth item in Texas RaceTrac stores, Gallo cited.

Gallo’s strong distributor sales network also helped provide more local expertise, particularly about foot traffic within the stores and factors that affected the type of shoppers. Is it a rural or city store? What other businesses surround this account? Is it near a beach or major theme park? What kinds of nationalities are prominent in that particular area? Such insights allowed for custom programming and even varied assortment if and where needed.

By utilizing these features, RaceTrac’s total revenue has increased, far exceeding the c-store channel’s national growth of 8.7 percent in dollars and 6.3 percent in volume.

“As RaceTrac continues to deliver on our mission of making people’s lives simpler and more enjoyable, it has become increasingly important to offer a number of wine varietals that reflect our guests’ preferences,” said Rich Jacobs, director of packaged beverages and tobacco at RaceTrac. “Gallo has been a valuable partner as we have revamped our adult beverage strategy.”

For more on the winners and their category management initiatives, look in the Convenience Store News Guide to Category Management, published this month.