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BevMo Intensifies Focus On Premiumization, Localization Trends

August 8, 2016

Concord, California-based retail chain BevMo recently opened its 160th location in Lafayette, California, marking a significant expansion from about 130 stores three years ago. Last year, BevMo, which operates in the Washington and Arizona markets in addition to the Golden State, named Albertsons Safeway veteran Dimitri Haloulos as CEO. In this exclusive interview with SND senior editor Daniel Marsteller, Haloulos discusses BevMo’s new store format—which aims for a more local, premium feel—as well as private label strategy, e-commerce opportunities and other topics.

SND: What are your goals for BevMo’s new remodeled stores?

Haloulos: There’s a trend toward both premiumization and localization. About a year ago, we analyzed those trends and started experimenting with a remodel, and it’s now seeing impressive growth across all segments. We’re still testing and learning, but as we open new stores we’re implementing the new format. We’re finding that it allows a more customized, localized assortment for each market. There are touches like a chandelier with wine glasses, and other features that make you feel you’re in a specialty beverage alcohol store. There’s a focus on high-end wine, with improved assortment and merchandising features. We also have lighted case displays that feature premium spirits—especially brown spirits and Tequila. Customers feel that it’s a completely different BevMo. By the end of this year, we should have over 20 stores in the new format.

SND: How important is private label to BevMo’s strategy?

Haloulos: It’s critical to our business. I have a background in private label. At Procter & Gamble, I spent my time figuring out how to compete with private label. Then I moved to a major retailer and tried to drive private label (Haloulos led a $10 billion private brand portfolio as senior vice president, Own Brands at Albertsons Safeway). So I’ve seen a good cross-section in retail. There are two schools of thought. One is to drive private label at the expense of national brands. The other is to build brands and grow the category. BevMo is in the latter camp. We’re very focused on wine. Our two top brands are Unruly ($13) and Donovan-Parke ($11-$16). We just launched Unruly Black Pinot Noir, which is performing very strongly. Our Donovan-Parke rosé is also selling very well. We look at a consumer need, and work with our vineyard partners to fill that need and drive it forward. We’ve eliminated some brands that didn’t have a consumer target. So we’re building those products, but we’re not growing at the expense of national brands. That’s an important distinction, especially in the California market, where a lot of consumers are extremely brand-loyal.

SND: How is BevMo attacking the e-commerce space?

Haloulos: It’s a small portion of our business, but it’s growing fast. We’re servicing shoppers both through our own internal systems and with on-demand partners. We’re partnered with Saucey, which is primarily California-based, and we’ve worked with Google Express as well. We’re currently making decisions on multiple on-demand partners. I think we’ll see this part of the business accelerate even faster.

SND: What is your response to the recent class-action lawsuit regarding wine ratings and “vintage substitution”?

Haloulos: Meeting our customers’ needs and expectations is our number-one priority. We don’t comment on pending litigation, but we’re very confident our policies and practices fully comply with the law.

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