Doug Due, our Director of Wine and Beer, recently traveled to Australia for a big wine buying trip.  Grocery Outlet's purpose is to provide quality products at extreme bargains, and sometimes we have to travel around the world to do that!

 

 Vineyard in Australia's Barossa Valley

 

Here's my interview with Doug about his trip:

What locations did you visit? Sydney, Hunter Valley, Gold Coast, Griffiths/Riverina, Melbourne, Adelaide, Barossa and McLaren Vale Valleys.

What's the best growing season in Australia? 
Australia is on the Southern side of the world so they are just the opposite of our growing seasons.  They harvest in February and March, we harvest in September and October.

What's unusual or specific about Australian wines?
Australia wines are very similar to California in style—Australians are the best producers of Shiraz in the world and they also do well with Chardonnay, Merlot and Cabernet Sauvignon.

Are there any wines coming down the chain from Australia that you're excited about?
We're bringing in Barossa and McLaren Vale Shiraz that we can sell at $5-6 a bottle. Other retailers are selling the same wine for $18-30 a bottle. I'm excited to provide that value to our customers!

Do other countries provide better bargains than the U.S.?
The simple answer is yes. Producing wines in California can be more expensive than Australia or South America—the cost of land, building a winery, and hiring employees can all be more expensive. That's a very general statement and there are always going to be exceptions, but overall, Australia and South America can offer better bargains because their cost structure is less.

The extension of that question is how does that benefit our customers?  The more competition we have for our shelf space the better.  By working with other countries, our California partners have to provide as good if not a better value to earn shelf space.  Some countries do a better job with a specific varietal, for example Argentinian Malbec, Chile Carmenere, Australian Shiraz, and New Zealand Sauvignon Blanc are all top varietals, and that's reflected in their value.

What's your strategy in regards to traveling to different countries to buy?
We want to buy the best wines from the best regions in the world.  With our buying power and efficiency of supply chain, we can offer varietal and regionally correct wines beating our competition on quality at the same price point or beating them on price while matching their quality. We're very proud of that.

Thanks Doug! And welcome home.

A couple weeks ago, our Wine Director, Doug Due, and VP of Purchasing, Steve Wilson, traveled to Chile and Argentina to source some fantastic South American wine.  South America is a current "hot" region to buy wine from, given the increasing quality of the wine, plus the still inexpensive price of the wine.

Chile is now the fifth largest exporter of wines in the world, and the ninth largest producer. The climate has been described as midway between that of California and France. The most common grapes are Cabernet Sauvignon, Merlot and Carmenère.  

Argentina is the fifth largest producer, and has a rich wine history, dating back to the 16th century, when the Spanish imported grape vines to the region.  Argentina is best known for its Malbec and Torrontés wines, though Cabernet Sauvignon, Syrah, Chardonnay and other international varieties are becoming more widely planted.

 

Doug and Steve’s first stop was in Santiago, Chile.  They visited several wineries, cherry-picking great wines.  One of the more exciting finds was Carménère wine, made from a grape found almost exclusively in Chile, although its origins are the Bordeaux region in France.  For more on Carménère, click here.
 
On Wednesday, Steve and Doug flew to Mendoza, Argentina and met with 19 wineries on Thursday and Friday.  Doug is especially excited about the Malbec wines he found.  Malbec is celebrated as an Argentine varietal, though like the Carménère, it traces its origins back to Bordeaux.  Malbec is a very intense wine, so it is also commonly used in blends, such as with Merlot and Cabernet Sauvignon to create the red French Bordeaux claret blend.  For more on Malbec, click here.

On Saturday, our intrepid adventurers were scheduled to fly back to Chile, but the Chile earthquake woke them up at 3:34 am!  Mendoza is 105 miles from Santiago, which is itself 100 miles from the quake’s epicenter.  The Andes dampened the effects of the quake—Mendoza shook, but did not receive anywhere near the devastation that Chile encountered.  Still, Steve said, it was quite scary to be woken up by the hotel rolling and shaking.   Instead of flying back home through Santiago, Doug and Steve transferred to flights out of Buenos Aires.  We’re happy to have them back safe and sound!

Doug says that we will be planning a South American wine promotion in a month or two.  Since the earthquake damaged a lot of the export infrastructure, we’re still waiting for the wine to show up.  Still, when that wine comes in, it’s going to be fantastic!

“Look for quality and pricing on par or better than what we had for Australia,” Doug says.  “We’re very excited to bring you top-quality wines at bottom-of-the-barrel prices.”

It’s not a stretch to say that Grocery Outlet has the best deals on wine in town.  Our process for sourcing fantastic wines at incredible deals is a little out of the ordinary, so we’d like to shed a little light on it for you.

The 3-Tier System

99% of total wine sold in the U.S. is moved through a 3-tier system, and wineries are the first tier.  While wineries put their heart and soul into the wines they make, they do not have the ability to sell all of their wine direct to the consumers, so they work with importers and distributors to market, sell, warehouse and deliver their product to the local wine shops, restaurants and liquor stores that sell most of the wine in America.

The second tier in the 3-tier system is made up of the importers and in-state distributors.  Importers and distributors choose the wineries they represent, and develop a ‘Book of Brands’.  Most large importers and distributors will offer all varietals from the most famous wine growing regions of the world.  Smaller distributors are usually more specialized in what they offer, sometimes only selling wines from a specific country or region.  

All importers and distributors bring wine into their warehouse and have salespeople that visit the wine buyers at the local wine shops, restaurants and liquor stores.  These salespeople take samples to the wine buyers, who taste the current vintages available for sale.  Wine buyers try to pick and choose wines that fit their customers’ taste or flavor profile.  The only wines offered are those represented by the importers and distributors.  As a result, buyers only have access to wines represented by importers and distributors within this system.

The third tier in the 3-tier system is the retailer or restaurant that sells the wine to the consumer.  There are many different reasons why wine buyers chose one wine over another, but most are knowledgeable about wine, their customer base, and what they can sell.  This is why you see a large difference between a grocery store selection and a fine wine shop, from a Steak House wine list to an Italian restaurant.  

How does Grocery Outlet come in?

The 3-tier system is very inefficient: there’s a lag from when the winery releases the wine to when the importer and distributor have the wine available to show and sell, so sometimes they miss the window of opportunity.  Also, importers and distributors sometimes buy wines and find they cannot sell the wine at a certain price or in a specific market.  All of these inefficiencies create opportunities for non-traditional retailers like Grocery Outlet.

The industry average is 90-95% efficiency.  In most years, importers, distributors and wineries will sell most of their wines, but almost always there’s some wine remaining.  If a winery produces 10,000 cases and is 95% effective as selling their wines, they have 500 cases at the end of the year; if a winery produces 5,000,000 they have 50,000 cases.

These overstocks are most of what Grocery Outlet buys.  The wine can be from the winery, importer or distributor.  Past vintages are opportunistic buys, because once a vintage has been replaced by a newer vintage, the salespeople stop showing the older vintage.  Older vintages become a storage expense, not a sales opportunity.  Wineries, importers and distributors have money tied up in this stock.   To quickly move through non-performing inventory, wineries, importers, and distributors will sell the wine at cost or even a loss.

This is why Grocery Outlet can offer wines that were sold 6 months ago at 20-35% of regular retail.  This is the first of several postings that will help you understand who we are and how we find you such great deals.

Cheers,
Doug

Wine Buyer for Grocery Outlet

Great news for wine collectors and enthusiasts: we have the collectible Marilyn Merlot 2005 at a Grocery Outlet near you!

Classic Queen of the Silver Screen, Ms. Monroe’s namesake bottle aims to please. Lush and fruitforward, this Merlot has 12% Cabernet Sauvignon to add some punch. You’ll love the blackberry, cherry, dark chocolate and smoke flavors to accompany a wide range of cheese or meat dishes or to liven up a home screening of “Some Like it Hot”.

The best news of all? This wine normally retails at $27.99 elsewhere. We have it for $14.99, almost 50% off the retail price!

Collectors: don’t miss out on this golden opportunity to take home Napa’s Marilyn Merlot at a great price. Enjoy a classic!