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Reddic of Green’s Sees Growth In Super-Premiums and Value Brands

August 12, 2011

Green’s Discount Beverage Stores president Lock Reddic reports both a strong revival in super-premium spirits brands and stellar performance in the value priced segment, especially in vodkas, in his 6 stores in Atlanta (2) and South Carolina (4). Reliable industry sources estimate Green’s total company sales are over $60 million. Spirits account for 55% of sales, with wine at 24% and beer 21%. Reddic notes that his best growth indicator is case volume, with bottles sold up 1.5% so far in 2011. Shanken News Daily recently spoke with Reddic about sales trends in his stores.

SND: What are the trends in your markets?

Reddic: We’re seeing a return to super-premium goods selling well. For instance, single malt Scotch is up nicely across all stores, whereas blended Scotch is down. We see consumers just going nuts for all the new flavored rums and vodkas. Anything that comes out they’re willing to try once. You look at something like a Hendrick’s cucumber-flavored gin, and 15 years ago, who would’ve thought? But they can’t get enough of it, so then Effen (Cucumber) takes off in the cucumber-flavored vodka segment. People are really experimental right now. We’ve had a lot of success with the new DeKuyper Pucker vodkas. It seems to be a situation where people are buying for an occasion, not necessarily buying and putting liquor in their cabinet to save for the next time they drink. We’re seeing oftentimes that people will buy a 750-ml. or liter-size of something fun and interesting rather than a half-gallon of something traditional. Cordials have had a nice run. RTDs are absolutely on fire. Vodka continues to be the leader by far; I don’t think anything’s going to change that. But rum has certainly closed the gap, especially spiced rum. We like to see people break out from the pack and drink things that aren’t just the top 10 because we feel like we’re in a position to service that customer better since we carry such a wide range of products. Regarding the wine business, we’ve seen a tremendous resurgence in California Cabernet. People are bonkers for California Cabs. They’re also big on Spanish wines right now. Unfortunately the loser in the scenario has been Australia, especially red. It has just been decimated.

SND: What about Bordeaux wines?

Reddic: We’ve seen a lot of interest in the futures that we’ve offered this year. I was very worried that we might get hung. We bought fewer 2010s than we bought in ’09. But we’ve gone through probably 60% or 70% of what we bought already just on commitments from customers. Usually that’s a 95% sure transaction. If it’s not, we just mark it up to regular prices and put it in our inventory.

SND: So there hasn’t been price resistance on the 2010s?

Reddic: There really hasn’t. Now we were very careful—we didn’t buy a whole lot of the first growths. We bought a decent amount of petit chateaux. People just seem to be happy between $15-$25 on the petit. They don’t feel like they have to spend $30, $40 or $50 for a good bottle of wine from France. So we’re actually seeing the entire French category expand.

SND: So it seems there’s consumer confidence in your markets.

Reddic: What’s really interesting is that the high end—the Grey Goose vodka, the Maker’s Mark Bourbon, the upscale stuff—is actually growing. And it’s almost back to growth rates that we saw three and four years ago when money was just flowing. Beam releases Maker’s 46—it goes through the roof. The high-end Bourbon—the specialty stuff, especially from Sazerac—we can’t get our hands on enough of it. If I had higher allocations, I’d sell more.

SND: How do you explain that, given the amount of uncertainty in the financial markets?

Reddic: We have two fairly unique markets. Atlanta is very much like the rest of the big cities in the country. That is, we’ve seen a big drop in employment. We’ve seen our Latino trade drop precipitously with the economy. And mainly what’s happened there is two things: they’ve gotten much tougher on immigration; and there’s no work around here for a lot of new arrivals coming across the border, so they’ve left Atlanta. So we’ve seen a fairly sizeable drop in that segment. We haven’t seen a drop, though, in the upper end. I think the guy who’s making $200,000-$400,000 isn’t nearly as worried as the guy making $70,000. I don’t know if it’s anything more complicated than that. Of course in South Carolina we have a tremendous rural population. We have unemployment down here that’s about 12%, well higher than the national average.

SND: But even in your South Carolina stores you’re seeing resurgence in super-premium?

Reddic: We are. It really never dropped too badly. We are now selling more in 2011 than we sold in ’07, ’06, ’05 before everything went south. The middle premium segment is where we’ve seen the damage. Anything that falls below $30 for a half-gallon down to about $20 is really seeing some pain. And the $15-$20 vodka area is just incredible. If it’s a half-gallon of 80-proof vodka and it retails for anywhere between $14.98 and $19.98, it’s up double digits. Svedka has taken share from Absolut. Then you’ve got Pinnacle, which is on a tear. Every time they release a new flavor, it goes through the roof. Frïs is on fire. There’s been a lot of trading down to that category, which is fine. As long as you’re profitable on a percentage basis, you don’t really mind. It’s hard to keep the dollar revenue flat when you’re selling much less expensive stuff than you were a year or two years ago. Case volume is solid; dollar revenue is a little off. There’s no real way to fight it.

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