Starbucks Expands Wine Sales to More Cities
Wineries enjoy exposure as coffee giant expands by-the-glass wine program to potentially thousands of cafés
The giant chain is introducing a new menu of small bites with wine and beer after 4 p.m. in selected stores, and the company has hinted that “several thousand” of its 12,000 cafés may eventually be affected.
Shawn Byrnes, vice president of marketing at Ste. Michelle Wine Estates in Washington state, said, “Just do the math. They expect to offer wine at about 2,000 stores eventually. Multiply a couple of glasses a day by 365 days by 2,000 stores. They could become the largest on-premise wine seller in the country.”
A slow start
After conducting a trial at a Seattle store in October 2010, Starbucks expanded the program to about 25 locations in Chicago, Ill., Atlanta, Ga., and Southern California in January 2012.
More recently, the company rolled out the Starbucks Evenings program in the Seattle and Portland, Ore., areas as well as Washington, D.C. The company may be moving especially carefully after its $100 million acquisition of La Boulange bakery was met by consumer objections to the new selection of pastries.
Expansion to other areas will take several years. “We’re very picky about locations,” said Clarice Turner, Starbucks’ senior vice president and general manager of U.S. licensed business. She continued, “We want to choose the right locations with the right atmosphere, lighting and music. Not all stores will be suitable.”
Turner noted than she expects the new offerings will extend Starbucks Evenings in places where people come out of movies and clubs. “Many neighborhoods in America, particularly in the suburbs, don’t have restaurants and clubs with this atmosphere,” she emphasized.
It’s not just wine and beer
The experience isn’t just about wine and beer, however. Starbucks doesn’t want the cafes to be like bars. It will offer trendy light bites like bacon-wrapped dates and truffled mac and cheese to accompany the wine, which will be sold by the glass and bottle. The beer will be sold in bottles.
Starbuck’s chief operating officer Troy Alstead recently told Bloomberg News: “We’ve tested it long enough in enough markets; this is a program that works,” he said. “As we bring the evening program to stores, there’s a meaningful increase in sales during that time of the day.”
Turner, who grew up in the wine world near Ukiah, Calif., said she’s been particularly pleased with the acceptance of higher end wines—perhaps not surprising, since no one ever accused Starbucks of competing on price. “The wines sell so well that we found we don’t even need preservation methods.”
Starbucks vice president of concept innovation Rachel Antalek, formerly the wine buyer for the Red Lobster chain, researches and selects the wines for the Starbucks Evenings program. “She tries to find a variety of wines that are interesting and approachable,” Turner said, adding that quality was a prime criterion.
Varied menus of wines
Starbucks has different wine lists in different areas, with Alamos Malbec from Argentina and Brachetto sparkling red from Italy sold at all locations, but other wines offered in only some regions. A number are from Italy, and one is from New Zealand.
The chain attempts to serve the local market, so it sells wines from Washington and Oregon in the Northwest, for example, and Central Coast California wines in Los Angeles.
No list has been announced yet for future San Francisco Bay/wine country Starbucks stores.
Enthusiastic acceptance from wine suppliers
Not surprisingly, Starbucks did some of its early tests with nearby Ste. Michelle Wine Estates in Woodinville, Wash., and features a number of its wines in the Northwest stores plus Ste. Michelle Riesling in other regions.
Ste. Michelle’s Byrnes said his company started working with Starbucks three years ago, when it tested the concept at two cafes in the Seattle area that didn’t even have a Starbucks name, then rolled out the Starbucks Evening experience at its Olive Way branded café.
Byrnes pointed out that this program helps fulfill Starbucks’ original strategy of providing the “third place”—an alternative to home and work—in communities across America and more. “They look at the Italian caffe as the inspiration; it sells coffee and pastries in the morning, and morphs into a comfortable bar at night.”
Byrnes agrees with Starbuck’s Turner that some of the biggest potential is in suburban areas where there aren’t inviting locations to gather in the evening. “It’s a comfortable, casual place to go without a bar setting.”
Small wineries participate, too.
Some of the wines Starbucks will sell are from other large companies like E. & J. Gallo (the popular Apothic red blend and Louis M. Martini Cabernet Sauvignon) while others come from smaller producers. Terlato Wine Group represents at least two wineries: Markham Vineyards in Napa Valley and Sanford Winery & Vineyards in Santa Barbara County.
Bryan Del Bondio, the president of Markham, says that Terlato handles his winery’s sales and marketing, and that he’s not really sure how they negotiated the deal. He does note that Markham makes a somewhat rare reasonably priced Cabernet from Napa Valley. “Not many Napa Cabs would probably work in Starbucks,” he said.
The program is so new that Del Bondio can’t report much in the way of results. He admitted, however, “It’s really cool to have your brand featured in Starbucks. We’re very happy for the exposure and sales.”
Perhaps the smallest winery represented is 8,600-case Amavi Cellars of Walla Walla, which has a Syrah on the list in Seattle and Portland.
Winemaker Jean-François Pellet is also delighted but not sure why his wine was chosen. He doesn’t expect it to have a big impact since the winery doesn’t make much Syrah, but he is anticipating a visit from the Starbucks representative shortly. Depending on how the meeting goes, he may want to make more Syrah next year.