Big-box booze stores duke it out in Sacramento

02/17/2013 12:00 AM

02/18/2013 8:09 AM

The Sacramento region can't get enough to drink, and big-box beverage sellers are pouring it on.

Total Wine & More and BevMo are in expansion mode, carving out their territories with an eye on coming-of-age millennials and older consumers with increasingly discerning palates where beer, wine and spirits are concerned.

Total Wine, based Potomac, Md., opened its third Sacramento-area location before Christmas in a shopping center along Folsom's East Bidwell Street. BevMo, headquartered in Concord, opened its first local store on Arden Way in 1996, added six more over the years and plans to launch a flagship site in the region in June, said CEO Alan Johnson. That will bring the number of area BevMo stores to eight, including two apiece in Sacramento and Roseville.

The two chains share some obvious similarities: Both boast of undercutting Costco in pricing (though the warehouse chain trumps them in volume), and both are steadily creeping from state to state with a niche strategy – an "affordable indulgence," says industry consultant David Henkes of Technomic – that made it through the recession with little scarring.

BevMo opened 15 new stores in 2012 (10 in California), with similar plans for this year, according to Johnson. Meanwhile, Total Wine, opened 11 sites last year and will surpass that in 2013, said company spokesman Ed Cooper. An Albuquerque Total Wine, the first for New Mexico, opens this week.

Both chains take their market share seriously, with each laying claim to the title of the nation's largest privately held specialty beverage seller. Which one really holds the title depends on how you measure it: BevMo owns 130 stores in three states, compared with 88 for Total Wine. But Total Wine carries more than twice the inventory in most categories and rings up annual revenue of about $1.5 billion, said company co-owner David Trone. BevMo's annual sales are "well over $500 million," Johnson said.

"We have more stores in California than Total Wine has in total," said Johnson, who calls himself the company's Chief BevMologist. "We think local, we buy local, we live local and we hire local. We are your neighborhood beverage store. We're a hell of a lot more fun." He points to the stores' casual décor – with their bright, bold signage – and to employees' requisite "anti-snob" polo shirts as examples.

David Trone, who founded Total Wine with his brother Robert in 1991, begs to differ. "Total Wine is a lot more fun than BevMo, and the reason is quite simple: You get to pay 'mo' at BevMo," Trone said. "More fun is triple the selection. That's more fun. It's a totally different business."

The ambience of the two stores is markedly different. Where BevMo strives for functional and casual, Total Wine's newest Sacramento area stores boast comely faux wood flooring and brickwork in the classroom used for wine tastings and other special events. Employees dress in white shirts and black pants, the men in ties. Flat-screen TVs are mounted throughout the store, showcasing videos of winemakers, distillers and brewers. Total Wine also recently debuted an iPad app that customers can use while shopping to research food-and-wine-pairings.

Sacramento blogger Kristy DeVaney writes about food and wine on her website, cavegrrl.com. She shops and attends wine- and beer-tastings at both stores. "BevMo was the greatest thing since sliced bread at first. Now that this new store has come in, Total Wine, it's kind of edged out the competition," she said.

Still, DeVaney believes the market can accommodate both retailers, especially in light of their similar pricing. In fact, she says, she often shops BevMo because it is closer to her Natomas home.

Retailers and beverage industry experts agree that Americans' per-capita alcohol consumption is generally holding steady. In 2012, about 66 percent of U.S. adults reported that they drank alcohol, according to Gallup, a figure that has changed little in recent decades.

Still, sales of California wine – which makes up the bulk of the U.S. market – rose to 211.9 million cases in 2011, worth $19.9 billion, according to the Wine Institute, an industry research group. That's up from 162.8 million cases, worth $13.4 billion, in 2001. And even though the overall beer market remains relatively stagnant, sales of premium craft beer have soared. A dizzying array of small breweries now produce products featured on the shelves of stores like Total Wine and BevMo.

Other factors besides per-capita alcohol consumption have contributed to increased demand, particularly for premium specialty beverages, explained Henkes, the vice president of Chicago-based Technomic, a food and beverage-consulting firm.

"People are purchasing more for value; not necessarily price only," he said. "If they're spending money on something, they want to buy the best they can."

Suppliers have also become increasingly creative in their product lines, with an emphasis on flavors. That trend runs through all types of alcohol, from the bargain basement André sparkling wine (available in peach and strawberry alongside more conventional blends) to a dizzying host of chocolate-infused spirits.

Henkes says that much of the demand comes from maturing millennials and Gen Xers. John Segale of Precision Public Relations, which counts Raley's, Nob Hill and one or two wineries among his clientele, agrees. "What's happening is, every day of the year, 15,000 people turn 21. They've grown up watching their parents drink wine at the table every day of the week. You see wine everywhere," said Segale, whose office is in Roseville.

"We also benefit from being in the heart of the wine-growing region. If you go on a day trip to Amador County, El Dorado, the Napa Valley, you come into our stores and find that same wine," Segale continued. "There's just this constant connection."

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