Dive Brief:

• Walmart has introduced Winemakers Selection, a new private label wine collection, in about 1,100 stores across the country. The new line includes 10 private label wines sourced from wineries in California, France and Italy. 
• Al Dominguez, Walmart’s senior vice president of snack and beverages, told ArkansasOnline that most of the wines retail for $11 and “drink like a $30 bottle.” 
• This rollout is consistent with Walmart’s focus on private label groceries aimed at bolstering store loyalty, improving sourcing and quality and lifting profit margins. 

Dive Insight:

Sam’s Club, a division of Walmart, introduced its Member’s Mark brand wine last year, and should provide plenty of insight for the retail giant. At the same time, Walmart’s wine launch follows similar rollouts from Trader Joe’s, Target, Lidl and Aldi, which means the retailer also has some stiff competition in the category. 

With this new addition, Walmart leverages a confluence of trends, including increased demand for both wine and private label offerings. Wine sales are expected to grow by nearly 6% annually through 2023, according to Zion Market Research, so Walmart is wise to strike while the iron is hot. Further, Kantar Retail’s grocery analysts predict private label growth between now and 2022 will outpace the previous five years. Within the past year, sales of private label brands have surpassed those of manufacturers’ brands, offering points of differentiation for retailers and boosting consumer loyalty. This is important for Walmart as it tries to keep pace with fast-growing discounters Lidl and Aldi, and as it “reinforces an image of quality,” according to Chief Merchant Steve Bratspies. 

Bratspies told Winsight Grocery Business that the company hopes to “get up to parity” in the wine category. To start, Walmart is creating experiences around its private wine selection. There were no further details on what these experiences entail, but it could mean in-store tastings or pairing suggestions. Customers have noted that they want more experiences from their grocery shopping trips, and a robust wine selection along with corresponding tastings should fit the bill.

Because of its sheer size, Walmart jumping into this space will likely incite other grocery retailers to try their hand at private label wines, and could even threaten some traditional wineries.

However, this launch doesn’t mean Walmart will easily win over new shoppers from its competitors. Walmart’s $11 price tag is significantly higher than Target’s California Roots private label ($5) and Trader Joe’s and Lidl’s wine options, which are as low as $3. Aldi and Lidl have many award-winning varieties and strong connections to winemaking regions through their European footprint.

Walmart no doubt hopes its new line will draw higher-spending customers. It'll also hope generate additional revenue and trips from its loyal customers. According to Nielsen, the average consumer spends $47 per trip to the supermarket when they don’t make a wine purchase, and that amount jumps to $75 when the shopper buys wine.