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Battleground Florida: ABC Confronts Wave Of New Competitors In The Sunshine State

July 19, 2016

140-unit retail chain ABC Fine Wine & Spirits ranks among the top drinks retail destinations in Florida, with annual sales of approximately $500 million. In recent years, however, an influx of new retail players in the state has brought markedly increased competition, leading ABC to sharpen its focus on the high end while also boosting selection, service and its private label offerings. SND recently caught up with ABC executive vice president Jess Bailes for an update on developments in Florida’s retail market for wine, spirits and beer.

SND: How is the beverage alcohol retail business evolving in Florida from a competition standpoint?

Bailes: The market is as competitive as I’ve seen it in my 37 years in the industry. The proliferation of chains seems to be accelerating. The major chains that we compete against are Publix, Walmart and Winn Dixie—all of which sell wine and spirits—as well as Total Wine. Back in 2005, those chains had a combined 54 locations in Florida. Today they have 467 locations, and they’re very strong competitors, especially at lower price points. At the higher price points, however, ABC does better. The value side of the business hasn’t been very good—at lower price points people are buying based on convenience. But the high end is doing great, whether it’s Champagne, high-end Scotch, Bourbon or Tequila, so that’s a decent trade-off.

SND: How has that influx changed the modus operandi at ABC?

Bailes: The things we’re doing to compete are working—mainly refining and expanding selection, especially at the high end, and adding services including delivery, which I think eventually will be a big piece. (ABC is partnered with Drizly on delivery in certain markets, and is seeing up to 50 deliveries a day.) We’re also highlighting wine more, but there are many more outlets in Florida that sell beer and wine compared with spirits. In our latest pricing survey, we were about 10% cheaper than our major competitors on wine, but they’re still outgrowing us. We’ve been forced to get more into the private label business. Suppliers, particularly the ones with the mega-brands, don’t really appreciate that, as you could imagine, but it’s a necessary evil based on what the national brands are selling for in this market. If a competitor is selling national brands at a club store margin or less, you still need to make enough profit to operate. One of our most successful private label lines is our Block Wine series (usually about $16-$23). We typically put it on the shelf for 20%-30% less than what a wine of that quality would usually sell for. We’ve got all the price points covered in private label, from $9 up to $100.

SND: Any expansion plans as far as new stores?

Bailes: Our store count has actually gone down slightly, as we’ve closed smaller stores and continued to renovate—either building a new store in the same location, or opening up new locations, like in the Panhandle where we’ve opened stores in the past couple years. We’re all over Florida now. We’re still not in Pensacola, but we’re headed there. We’re a little weak down in what I call the “Super South” near Miami, but we’re looking very hard at some sites down there.

SND: What local legislative issues are on your radar?

Bailes: We and Publix have been fighting Walmart and Target, who are trying to change the law that mandates that grocery stores wanting to sell spirits in Florida must have a separate entrance. Walmart has been fighting that law for three years, and so far we’ve held them off. It’s hard to say how long that will work, but in Florida, Publix is as big as anyone, so having them onboard is critical to keeping that law in place.

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