Big-box wine stores make for spirited competition

  • Article by: JOHN EWOLDT , Star Tribune
  • Updated: November 3, 2013 - 12:26 PM

Wine connoisseurs across the Twin Cities are about to get a taste of a new kind of store that is bigger and bolder — with perhaps a bitter aftertaste for the competition.

Total Wine & More, a national superstore with prices as low as Costco’s, plans to open five to eight stores in the metro area within the next year or so. Haskell’s is opening its first “Super Cellar” next month. And already, a large discount liquor store that opened a year ago in St. Louis Park appears to have nudged a nearby full-price store out of business.

“The trend is larger stores, wider aisles, bigger carts and expanded selection,” said Beau Farrell, vice-president of Internet sales at Haskell’s, which has 12 Minnesota locations. “Those stores have seen success. Bigger is better.”

Just as supermarkets, hardware and discounters morphed into supercenters in the suburbs, so follows the liquor market. The number of U.S liquor superstores has grown 15 percent in the past five years, about twice as fast as the number of conventional stores, according to Nielsen data.

With more than 1,200 big-format stores nationally, including such behemoths as BevMo on the West Coast and Total Wine on the East Coast, the trend is putting pressure on smaller stores. Some of the Twin Cities’ municipal liquor stores are already responding with renovations and efforts to highlight community ties.

“We’re doing a better job of promoting the community aspect now,” said Steve Grausam, director of operations at Edina’s liquor stores.

David Trone, president and co-owner of Maryland-based Total Wine, sees the Twin Cities as an underserved market. One of the reasons the company chose Minnesota as its first foray into the Midwest is the relative lack of competition from grocery stores, which are formidable presences in states that don’t require liquor stores to have separate spaces and entrances.

“We believe the pricing is too high [in the Twin Cities],” he said, “without much competition.”

The nation’s largest independent alcohol retailer, Total Wine, plans to open what will be its 100th store Dec. 5 in Bloomington, an 18,000-square-foot superstore. That’s nine times the size of the average conventional liquor store, according to Nielsen data.

Whereas warehouse club liquor stores offer a few hundred wines, Haskell’s and Total Wine will display about 8,000 wines and several thousand spirits and beers in a refined setting.

Total Wine features a brewery district with 12 rotating taps featuring locally brewed beers, iPod stations with tasting notes, gourmet snacks, gift items, walk-in cigar humidors, and wine-education centers. Haskell’s, which will debut its big-box prototype in Maple Grove with a 20,000-square-foot footprint, is promising a high-tech experience that will include a wine education center and kiosks.

Total Wine plans to add a Rose­ville location in the spring, with five to eight additional stores later. Will shoppers embrace the concept? “Sounds like too much of a good thing to me,” said Delores Lutz of Eden Prairie. But Chip Combs of Edina said that with only three liquor stores in his city, he’s happy the superstores are arriving. “It’s about time,” he said.

Ready for a battle

With the arrival of bigger, cheaper stores, oenophiles can expect a new era of intensified competition.

Already, the arrival of discounter Liquor Boy in St. Louis Park proved a bad omen for Cedar Lake Wine & Spirits, which was less than a quarter-mile away. That store closed this week. John Wolf, who opened Liquor Boy a year ago, said the store has had twice the revenue he expected since it opened. He thinks some of the city-owned stores in the metro area also will come under pressure since their markups are often higher. He describes the Twin Cities market as having a lot of stores but no dominant player, making it easier for superstores to gobble up market share.

“I’d be nervous if I were a municipal store in Edina, Burnsville or Lakeville,” Wolf said.

Older stores are reacting

Existing liquor stores are already reacting to the changing landscape.

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