Interview: 22-State Grocer Fresh Market Puts Focus On Premium Wine

Earlier this month, Greensboro, North Carolina-based the Fresh Market was named the best grocery store in the country by USA Today’s readers, based on value, selection, and service. With 172 stores in 22 states and growing, Fresh Market is a division of Chile’s Cencosud. Beverage alcohol features prominently in the stores, with wine accounting for 74% of category sales, followed by beer at 24%, and spirits at 2%.

Fresh Market offers wine in 145 locations—with sales concentrated in Florida, North Carolina, South Carolina, Georgia, and Virginia—beer in 162 stores, and spirits in 12 locations. Veteran beverage alcohol retailer Olivier Kielwasser joined the chain last year as director of merchandising. Shanken News Daily contributing editor Terri Allan recently spoke with Kielwasser about year-to-date trends at the grocer.

SND: Overall, how would you characterize beverage alcohol sales trends at the Fresh Market so far this year?

Kielwasser: Our business is healthy and overall sales, including new stores, are growing. Of course, we’re seeing volume impacted by the overall decrease in consumption nationally, so our same-store sales are slightly down. But we’re tracking better than the industry.

SND: What external factors are responsible for the headwinds in your view?

Kielwasser: The increased use of weight-loss medications in the last year is resulting in some consumers having a lessened desire for beverage alcohol. The emergence of cannabis drinks is also impacting the business. And even though the overall economy is growing, people are really watching how they spend, so there’s been a reduction in disposable income.

Our challenge is to ensure we have the right products for our guests—who tend to have more disposable income and who are generally interested in more premium products. While the average per bottle retail price for wine is about $10-$11, at the Fresh Market our average retail price is between $16-$17. The Fresh Market is known for its upscale offerings—ranging from our meat to floral departments—and we’re taking the same approach with wine. This differentiates us and makes our stores a destination for our guests.

SND: What wine products have been performing best for you this year? What products are underperforming?

Kielwasser: Sauvignon Blanc and sparkling wines have been growing, and we’ve expanded our Champagne offerings. Wines from South America, France, and Italy are also doing well, and Sancerre is a big item for us. Among brands, standouts include Veuve Clicquot, Caymus, and Rombauer. Red wines in general have been underperforming. Merlot sales, for example, have been declining.

SND: The Fresh Market is known for its wide array of private label products across categories. Has the beverage alcohol department expanded into private label brands?

Kielwasser: We have them, and we continue to work on our assortment for private labels. Response has been very good because they offer a value to our guests.

SND: How are trends for beer at the Fresh Market?

Kielwasser: The beer business overall has been under pressure but we’re seeing some good trends with imported beers like Peroni, Stella Artois, and Modelo Especial. It’s been tough for craft beer. We recently expanded our non-alcoholic beer selection and we’re seeing good results.

SND: While spirits account for a small portion of your sales, what category and brand trends stand out?

Kielwasser: We’re seeing good trends for Bourbon and Tequila, along with ready-to-drink products. Tito’s Handmade vodka is our top-selling spirits brand, while among RTDs, leaders include High Noon and Surfside.

SND: Earlier this year, the company opened the freestanding Fresh Market Spirits & Wine liquor store in Ponte Vedra Beach, Florida. What prompted that move?

Kielwasser: We wanted to offer spirits products to our Florida customers, and these guests have been very receptive. This is a pilot store—it’s located adjacent to a Fresh Market grocery—and if the results are good, we’ll look into expanding the model in Florida.

SND: Do you sell THC beverages in any of your stores?

Kielwasser: We started selling THC beverages in the spring and we now carry them in Florida, North Carolina, and South Carolina. Response has been very enthusiastic. We’re getting ready to launch these drinks in Illinois and Indiana. They’re merchandised next to beer, and whenever possible we place them next to non-alcoholic beer.

SND: The all-important fourth quarter is upon us. What are your expectations for the beverage alcohol category for the remainder of the year at the Fresh Market?

Kielwasser: I expect that beverage alcohol will continue to draw guests to the stores thanks to our better selection as compared to other grocery stores. The quality of the wines we offer matches up very well with the quality of our food offerings, and cross merchandising those items will lead to impulse purchases.

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