H-E-B: A Billion-Dollar Retail Force In Wine And BeerSeptember 26, 2017
Family-owned H-E-B Grocery Co. ranks as one of the largest retailers in the U.S., with roughly 330 full-service grocery stores across Texas under its main H-E-B banner, as well as nine upscale Central Market locations.Industry sources estimate H-E-B’s beer and wine sales at around $1 billion (Texas law prohibits the sale of spirits in grocery stores). A 21-year company veteran who’s worked in various departments, Dan Schuette currently serves as director of H-E-B’s wine and beer department, following a consolidation of the two categories about a year ago.
“One of the things we’re known for as a company is that we tailor each store layout and assortment—including beer and wine—to what we think is right for its specific market, from small towns to pocket neighborhoods in large cities like Houston,” Schuette says. “For example, I have about 800 wines in addition to my standard assortment, but we only sell them in certain areas across the state where demand exists.” While some stores cover 35,000 square feet and offer a more limited product selection, others can span 185,000 square feet, space and consumer demand permitting.
Some H-E-B locations see 80% of alcohol sales derived from beer and 20% from wine, but depending on the local demographics, that ratio can be flipped. A typical layout devotes about 60% of space to wine and 40% to beer. As a neighborhood’s average income increases, so does the percentage of wine sales. A standard location will typically carry about 1,300 wines and 750 beers, but those numbers vary significantly from one store to the next. Overall, H-E-B’s beer sales are larger than wine, but Schuette says he expects the two categories to roughly equal each other within the next three to five years given current growth trends.
By adjusting its beer and wine selections and paying attention to small details, H-E-B has been able to remain competitive with independent alcohol retailers. Schuette and his team deliberately seek out products that aren’t on the national radar yet. The beer and wine department also works to match all other retailers’ prices in every market.
H-E-B has been Texas’s largest retailer of wine in sales and volume for many years running. While $10 a bottle is the department’s pricing sweet spot, growth is increasingly coming from wines over $20. Schuette says consumers are getting more comfortable with purchasing high-end wine from a grocery store, which would have been unheard of a decade ago. H-E-B’s overall wine selection is roughly 60% domestic and 40% imports, although imported wine’s share is growing.
As many Texas cities have seen major population booms, H-E-B has expanded right along with them. Houston has been the company’s largest growth market over the past decade, followed by Austin. The company currently has no stores in the El Paso market, and in the Dallas-Fort Worth metro area, it only operates four Central Market stores. However, H-E-B says it has a couple of new stores planned for the fast-growing San Antonio market, where the company is headquartered.Subscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning.