I am not a betting man. In fact, when I do bet, I usually lose. I am horrific in betting sports, elections, random things, and I am equally bad at Rock, Paper, and Scissors that is essentially a bet on a chance pull.
But, for nearly 5 years I have written a trends article and for nearly 5 years, I have been mostly correct.
I predicted:
- The end of the flash wine site
- The merger of MillerCoors and Anheuser Busch
- The consolidation of Southern and Charmer
- The death and struggle of the independent retailer
- Paso as the new Napa
- And many other things..
So now, please gather around the laptop as I share the top 3 trends you will see in 2017 for the adult beverage space.
The First Real Threat to the Three Tier
Many have spoken about the end of the three tier archaic model and those words have fallen on death ears until 2017. The blending of legal pressure and technology will allow many producers to go direct to the retailer. We all know the DTC model but in many cases producers, distillers and brewers will send the goods directly on/off premise for consumer sale and consumption.
Craft Liquor Will Become Mainstream
I know we all believe that Craft is here to stay and has a major impact on the average cart at retail. Truth be told, the craft goods that sell in America account for less than 3% of the overall spirits that are sold off premise. The consuming public still relishes in the mundane of Smirnoff and Jack Daniels. It is akin to the DTC metrics, that is to say that DTC sales are growing at a double digit pace, but still account for under 4% of wine sold. Next year, Craft Spirits will account for nearly a double digit percent of sold items at the end of 2017 compared to 2016.
The Continued Death of the Independent Retailer
For clarity, I was an independent retailer, so it pains me to write that sentence. The facts are the facts. There are 7 major regional players in the USA and Wal-Mart, Trader Joes, Amazon, Total Wine and BevMo. The small retailer cannot and will not compete on price. They need to either compete on service or knowledge. The issue with that is that it is hard to communicate service and knowledge to a consumer when you have 2 minutes as a life cycle of the transaction. That said, there will be consolidation, shrinking of average cart, and eventually closing of businesses. You will see over 10% of the wine/ liquor shops that are open today, be closed by the end of 2017. It breaks my heart.
To surmise- the world of adult beverage will keep on spinning. Producers will keep on producing and consumers will keep buying. The places to purchase will shrink, the brands will shrink, the distributors with which to place your orders will shrink, and the world will keep on spinning.
Happy Holidays from Rosen Retail
Expert Editorial
by Brian Rosen, Rosen Retail Method
Brian Rosen is Former CEO of America’s #1 Retailer, Sam’s Wines in Chicago, Former Partner at PricewaterhouseCoopers in Retail and sought after retailer consultant.
He can be reached at @roseretail or brian@briandrosen.com
Brian:
Even here in California where the options are seemingly limitless, your trend is happening. Duke of Bourbon in Canoga Park and Red Carpet in Glendale have both faded away and they were stalwarts of the burgeoning wine industry in California. BevMo is opening stores seemingly as fast as Starbucks, and Total seems to be ramping up although they don’t get the California mentality – customers won’t drive past 10 BevMos to get to a Total….
See this decade old Los Angeles Times article on the subject:
“Eureka, a Wine [Store] Rush!”
Link: http://articles.latimes.com/print/2007/mar/07/food/fo-wine7
Excerpts:
A Los Angeles Times telephone survey of 61 specialty wine stores in Los Angeles, Orange and Riverside counties shows there has been recent, explosive growth in wine retail outlets. Of the stores queried, 14 opened in the last three years and 11 stores expanded. More than half of the stores serve wine to customers while they shop, representing twice as many in-store wine bars as existed three years ago.
The survey did not count the proliferation of Beverages & More warehouse-style stores — 17 outlets in this region with nine more to open this year — or wine departments in grocery stores such as Trader Joe’s or retailers such as Target and Costco.
. . .
Unlike the restaurant business, with its notoriously high first-year failure rate of more than 50%, specialty wine stores are sure bets. In the Los Angeles area, a wine market full of family-owned stores, most places have been in operation for decades and failure is rare. (One chain — Liquor Barn — went out of business. And another chain, Vendome, downsized from more than 50 stores to the four surviving Vendome stores now operated by John Tran and his family.)
Hello. This article was extremely fascinating, particularly because I was searching for thoughts on this topic from the last couple of days. Really very well explained.