Target Thinks Outside the Box Wine With interactive displays and its own sommelier, the discount retailer tries to make wine sn0bs out of its frugal shoppers.
By Thomas Mucha

(Business 2.0) – When Wal-Mart launched its own wine label--Alcott Ridge Vineyards, produced by E&J Gallo--in 2000, wine buffs answered with a chorus of snickers about the new "white trashfandel" and "nasti spumante" you could suddenly find at Sam's Club. The decidedly lowbrow strategy eschewed real marketing finesse for brutal simplicity: Sell cheap wine, and a lot of it. Wal-Mart, of course, got the last laugh. Today, Alcott Ridge is a multimillion-dollar wine label, and according to the Wine Institute, nearly 40 percent of all wine sold in the United States reaches American palates through discount retailers and supermarkets.

Now the nation's second-biggest discounter, Target, is jumping on the economical-wine crush with a strategy that makes Wal-Mart's look unimaginatively sober. Last summer it began clearing out cheap chablis and box wines and replacing them with middle-market labels priced from $7 to $10, handpicked by Andrea Immer, dean of wine studies at the French Culinary Institute in Manhattan and Target's new (don't laugh) master sommelier.

If Wal-Mart's wine binge was built around the simple idea that wine doesn't have to be expensive, Target's upscale move adds a new twist. As Immer says, "It doesn't have to be expensive to be good." Simply put, Target hopes to lure thousands of discount shoppers into higher-margin but lower-priced quality wines. How? By making a visit to Target more like a wine-tasting jaunt to Napa Valley than, well, a trip to Wal-Mart. By hiring Immer to lead the effort, Target is playing directly to the baby boomer women who are the chain's core customers. In addition to her official credentials, the cover-girl-attractive 36-year-old is probably the wine industry's most glamorous spokesperson and one of just 11 female master sommeliers in the world.

Immer designed the large display cases that serve as the stage for more than 100 respectable labels, such as Beringer and Redwood Creek, 90 percent of them priced under $10. The centerpiece of those displays, now installed at more than 80 SuperTarget stores, is a kind of "wine for dummies" exhibit, in which giant posters guide shoppers through Immer's four-step process to understanding wine--fruit flavor, body style, color, and oak flavor. To give a clear frame of reference, the displays include graphic explanations of various wine tastes, with pictures of tart or sweet foods beneath wine styles, from sauvignon blanc to port.

Those who need more help can experiment with a "wine wheel," which matches varietals with workaday meals like canned soup or boxed macaroni and cheese. Above it all is Immer's reassuring face, smiling down on shoppers and her best-selling wine books (those are for sale too). Immer has also agreed to host a number of wine tastings and book signings at SuperTarget stores throughout 2003.

What isn't on display is the main reason that Target green-lighted the overhaul: While profit margins hover near 20 percent for typical $5 "trashfandel," they easily pass 30 percent for the higher-quality wines in Target's new range--even after they're discounted. (A bottle of Kendall-Jackson chardonnay that goes for $12 or more at most boutique wine shops can be had at SuperTarget for about 10 bucks.) Better yet, Immer believes, purchasers of $10 wines will eventually gain the confidence to pop for the occasional $20 or $30 bottle, where margins can hit 50 percent and above. And, yes, SuperTarget stores now stock some of those pricier brands too.

Target won't divulge its goals for wine sales, but industry trends certainly point in its favor. Sales of bottles in the $7-to-$10 range have been growing at double-digit rates for the past several years, while those of bargain-priced and box wines have fallen flat. Even better, the prototypical American wine drinker is a married white woman in her 40s, with a college degree, who drinks wine at home--in other words, your average Target shopper. "It's a phenomenally good idea," says Vic Motto, a Napa Valley wine industry consultant. "They should have done this years ago." --THOMAS MUCHA