Interview: Binstein Talks Specialty Spirits, Forecasts Revenue Rise Of 10% For 2012February 3, 2012
Chicago-based retailer Binny’s Beverage Depot posted revenues of $254 million in its fiscal year ending August 31, 2011 and projects a 10% sales increase to $280 million for fiscal 2012. This month, Binny’s will open its first downstate store, in Champaign, Illinois, as reported by Shanken News Daily last fall. That new addition will be the company’s 28th store. Binny’s is also exploring other downstate Illinois venues as well as looking into the Wisconsin markets of Madison and Milwaukee.
In this exclusive interview, Binny’s owner Michael Binstein talks with Shanken News Daily about market trends and his commitment to the specialty spirits market through his Whiskey Hotline, which was launched in 2003.
SND: How were sales at Binny’s during the fourth quarter of calendar 2011—particularly during the holidays?
Binstein: Sales were very robust. All the vital signs were up. Same-store sales during the holiday season rose by more than 5%. On our busiest day of the year, November 23, we had over 4,400 customers an hour and did over $294,000 an hour. That gives you a sense, across our stores, of the ultimate stress test for a retailer.
SND: What were some of your bestsellers during the holidays?
Binstein: All the commodity brands were strong—Bacardi, Captain Morgan, Johnnie Walker, Smirnoff, Dewar’s. It was pretty much a sale-fueled holiday season and customers were shopping for value.
SND: What about wine sales?
Binstein: Wine continues to be a tale of two cities. The market for under-$7 wine was strong, but we still see strong growth for premium California Cabernets—some of the cult wines—as well as Bordeaux and Burgundy. But across the spectrum, wine sales were healthy. The $4.99 price point is very seductive, at least in Chicago, and I suspect around the country.
SND: And how do you define the high end?
Binstein: If you’re making $8.50 an hour, a $5 wine is a luxury, so it’s always very relative. But by and large, with wines over $16, you begin heading into the higher-end wines.
SND: What about Champagne?
Binstein: Champagne saw some softness. Some of the producers who took price hikes were scrambling at the end of the year. The ones that held price fared much better. We sold a lot of Roederer Brut Premier at $29.99 and less Veuve Clicquot at $39.99.
SND: How have your beer sales been doing?
Binstein: Craft beer continued to surge at double-digit rates over the holiday season—and in fact, month in and month out. The domestic beers, Budweiser and Miller, seem to be sailing against the wind a little bit. Our business (on mainstream domestics) is up, but I’m told that it’s flat or down in Illinois.
SND: How is your whisk(e)y business doing?
Binstein: Some time ago (in 2003), Binny’s developed what we baptized the Whiskey Hotline. It’s a global destination for Scotch, Bourbon and specialty spirits. It’s not just a telephone or computer, but a whole business within the business, manned by three experts in charge of buying all the brands under the umbrella of the Whiskey Hotline.
SND: What do you mean when you say it’s global?
Binstein: We have customers and suppliers from all over the world, and suppliers know we’re willing to invest in product. This isn’t the Wonder Bread of the liquor business—these aren’t items that turn every 3.5 seconds. These are brands that a retailer has to take a position on and sit with for a while and sell. In this industry, people don’t have the patience, pocketbook or perseverance to see that through. Binny’s does, and that’s just one thing that separates us from the competition.
SND: So you’ve made a significant investment in whiskies?
Binstein: The value of our specialty spirits portfolio inventory is approaching $10 million. We also build rare and collectible spirits rooms that are basically for spirits what the cellar is for wine. There’s probably not a more expensive per-square-foot in our store—or in any retail store—outside of maybe a Porsche dealership. We have bottles in this room that sell for $20,000, $30,000 and $40,000.
SND: How many of your stores now have these rooms?
Binstein: Four of our stores now have them—South Loop, Lincoln Park, Highland Park and Lakeview in Chicago. They’re separate rooms, about 185 square feet, under lock and key.
SND: What kind of revenues are you generating in this specialty category?
Binstein: Everybody is going to define that category a little differently. We have a tracking system just for this category. Commodity items are excluded. It’s about $5 million a year.
SND: And how many different items are offered in these rooms?
Binstein: We have about 540 SKUs. Scotch is number-one, followed by Bourbon. But the way I define it, the specialty spirits program encompasses everything from 50-year-old Scotch to some of the better moonshine that’s coming out now, the white whiskies. But I’m excluding anything that’s commodity. I’m not including Dewar’s, Glenlivet or even Johnnie Walker Blue, but I am including the better marques of The Macallan.
SND: How do you account for the growth of the whisk(e)y category after so many years of being in the doldrums?
Binstein: Let me rephrase your question: If there wasn’t a whisk(e)y renaissance, where would these people be and what would they be doing? I think there’s a pretty strong genetic match between the craft customer, the whisk(e)y customer and certain wine customers. They all have differences, but I think in terms of their quest for innovation, things that are interesting, being well-read and schooled in the products, they’re interesting customers. When the Bombay Sapphire customer finishes his Martini, he finishes his Martini. But when the single barrel Bourbon customer samples a product, it’s the beginning of a process of discussion—and sometimes of sharing that discussion with friends, blogging, posting and comparing.