Fresh & Easy Neighborhood Market to Offer Alcohol Beverage Tastings in Some of its California Stores

Breaking Buzz

Fresh & Easy Neighborhood Market has applied for a license to hold wine and beer tastings at its store in the Willow Glen shopping center at Bird Avenue and Minnesota in San Jose, California. San Jose, which is the largest city in Northern California with over 1 million residents, is located in the South Bay Area region.

The photograph at top, taken today by a Fresh & Easy Buzz correspondent, shows the alcohol beverage tasting application sign on the front window of the store. The application is for a tasting license, as is noted on the second subject line. The store already offers alcoholic beverages for sale. You can click on the photo at top to enlarge it.

Employees of the store tell us the Willow-Glen neighborhood Fresh & Easy store plans to start holding tasting events as soon as the license application is approved by the California Alcohol Beverage Control Department.

Additionally, we've learned via our reporting that Fresh & Easy Neighborhood Market  plans to apply for alcohol beverage tasting licenses for some of its other 134 stores in California.

United Kingdom-based Tesco, which is the third-largest retailer in the world after number two Carrefour of France and U.S.-based Walmart Stores, Inc., currently operates 183 Fresh & Easy grocery markets in the Western U.S. The other 49 Fresh & Easy stores are in Arizona (28 units) and Nevada (21 stores).

Fresh & Easy Neighborhood Market hasn't publicly announced its plans to begin holding alcohol beverage tastings at its Willow Glen-San Jose store, or at any of its other grocery markets in California, or elsewhere.

New California law

Last year the California State Legislature passed a legislative bill (AB 605) that then-Governor Schwarzenegger signed  into law which loosed the restrictions on how alcohol beverage tastings are required to be conducted in retail stores in the Golden State.

The new law, which went into effect January 1, 2011, allows supermarkets, mass merchandisers and large liquor stores to host free wine, beer and distilled spirits tastings as long as the area where the tastings are conducted are separated out from the rest of the store by a temporary barrier of some sort, such as a rope, fence or chain.

Previously retailers were required to dedicate a permanent section of the store for the alcohol beverage tastings if they wanted to hold such events.

One retailer that's had such dedicated areas in its stores for a number of years is Northern California-based Beverages & More (BevMo), which is a category-killer format, specializing in the wine, beer and spirits categories, along with specialty foods.

However, besides BevMo, few grocers with stores in California have created such dedicated spaces in their stores in order to hold the tasting events.

Whole Foods Market and West Sacramento-based Raley's Supermarkets have in-store restaurants and cafe's in many of their respective stores in California. As a result, a number of the two chains' stores hold alcoholic beverage tastings in the restaurant/cafes, which not only qualified as a dedicated area under the old law but is a natural place to hold tastings because there's seating and food available.

For example, the Raley's store at 255 South Tracy Boulevard in Tracy, California holds alcoholic beverage tasting events in the store's restaurant/cafe every Wednesday from 5:30-7:30 p.m. Think happy hour. Tracy is in California's Northern Central Valley, about an hour's drive from San Francisco.

The restaurant and cafe, which is attached to but separate from the store's deli department, features prepared food and drink items in an eat-in area that has a seating bar, a lounging and eating area with tables and chairs and a big screen television set.

Pictured above and below: A recent wine tasting event at the Raley's superstore in Tracy, California. The photos were taken by a Fresh & Easy Buzz correspondent who attended the event, which also featured a full-spread of food, which you can see in the photo above.

Under the new law Raley's and Whole Foods Market, like all other grocers, can now hold the tastings elsewhere in the stores if they choose. But in those stores with dining and drinking-in areas - Whole Foods' has numerous stores in California, for example, that have either in-store wine or beer bars (and often both) where the drinks are available for sale by the glass - it makes good sense for a variety of reasons to do the tasting events in them.

Most of these Whole Foods' stores in California that have such in store features, which are attached to in store restaurants or food bars, hold alcoholic beverage tastings.

For example, the patio wine bar at Whole Foods' store in San Francisco's Potrero Hill District, where the grocer holds regular tastings, has become a neighborhood hangout and a third place, where people eat - food is available in the attached in-store restaurant - drink wine and catch up on what's happening with each other and in their neighborhood. Home and the workplace are the first and second places for most of us.

But most grocers in California haven't set up the dedicated spaces because square-footage is an extremely valuable commodity in a supermarket. Therefore it's difficult for a grocer to justify setting aside even 500 square-feet to be used only for alcoholic beverage tastings, particularly when that space can be used as merchandising space to produce sales on a daily basis.

The new law that went into effect in January of this year has opened the door for grocers to offer the tastings because they need only to temporarily rope off a section of the store, say in the beer, wine and spirits department, when they hold a tasting, rather then permanently dedicate valuable square-footage for the events, as was required under the old law.

Grocer interest growing

Not much application activity took place during the first few months of this year following the new law's taking effect. However its been picking up considerably over the last few months, according to a spokesperson for the state Alcohol Beverage Control Department.

We've also discovered a spate of recent activity among grocers in our reporting. For example, a number of Whole Foods' stores in Southern and Northern California have started conducting tastings, under the provisions of the new law, over the last few months, as have some stores operated by Southern California-based upscale grocer Bristol Farms.

Also in Southern California, Albertsons, which is owned by Supervalu, Inc., has applied for tasting licenses for some of its 200-plus stores in the region.

Mollie Stone's begins tastings

In Northern California, Mill Valley, California-based Mollie Stone's Markets, which operates nine stores in the San Francisco Bay Area, began its first alcohol beverage tastings - after recently receiving licenses at the stores - at six of its nine stores - three units in San Francisco and the stores in Burlingame and Greenbrae - on Friday, October 28.

Friday's Halloween-themed tasting, which was held from 3-6 p.m at the six supermarkets, featured Hornsby Hard Cider.

A spokesperson for Mollie Stone's told us the grocer is waiting to receive its tasting licenses for the other three stores, which are in San Bruno, San Mateo and Palo Alto, and that once it receives them from the state it plans to hold tasting events at those stores as well.

Mollie Stones has a number of  upcoming tastings planned. Some of the adult beverages a spokesperson for the grocer tells us will be sampled include wines from Ghost Pines, Edna Valley, Frei Brothers, Barefoot Bubbly, Red Rock and Dancing Bull. The grocer is also planning some upcoming spirits tastings, including having a mixologist create cocktails using Ketel One Vodka and Limoncello di Sonoma. Limocello is a popular Italian distilled spirit that's been catching on in the U.S. over the last few years.

The new supermarket tasting law is particularly advantages for grocers that operate small-format stores, like Tesco does with its Fresh & Easy Neighborhood Market chain. The Fresh & Easy stores average about 10,000 square-feet of selling space.

Were it not for the loosening of the regulations under AB 605, a small-store chain like Tesco's Fresh & Easy would be extremely hard-pressed to even justify dedicating a couple hundred square-feet for the tastings on a permanent basis. It needs every square-foot it can get for merchandise.

More on the new law

The new law is also particularly advantageous for upscale and foodie- format-oriented food retailers, like Whole Foods, Bristol Farms and Mollie Stone's, for example, that do a lot of specialty and gourmet food sampling in-store. Now, for example, under the new alcohol beverage tasting law in California the grocers can offer wine and food pairing-type demonstrations, as long as the sampling takes place in the temporarily designated area required by the law.

The law has a number of requirements that retailers must follow in order to hold the alcohol beverage tastings in-store.

In order to qualify for the tasting license, retailers must already have an off-sale beer and wine permit, to do beer and wine tastings, and an alcohol beverage license, if they also want to conduct spirits tastings.

Then retailers must apply for and be granted a license from the state Alcohol Beverage Control Board, like Fresh & Easy is doing for the store in San Jose.

Retailers must pay a $300 application fee and $261 annual renewal fee for a state license to hold the tastings, which can only be conducted by alcohol beverage manufacturers or wholesalers. Significantly, store employees are prohibited from conducting the tastings, as are any other employees of the retailer holding the event.

Of additional significance, cities and counties have the right to restrict the alcohol beverage tasting events under the state law. That means retailers must follow any and all local regulations that may be in place in addition to the state law.

There are also a number of restrictions on how the tastings can be conducted in-store.

For example, participants must be 21-years-old or older, and it's the retailer's responsibility to verify that they're of legal age, even though the alcohol beverage manufacturer or distributor is conducting the tasting.

Only one type of alcoholic beverage can be offered per tasting event - either beer, wine or distilled spirits. But there can be no multiple combinations. Tequila shot with beer-chaser tastings are prohibited, for example.

The alcoholic beverages sampled at the events must be given free to the participants.

The free tastings cannot occur before 10 a.m. or after 9 p.m.The manufacturer or distributor representatives conducting the tastings are allowed by law to serve a person no more than 8 ounces of free beer in a day, which is 4 ounces less than a standard 12-ounce can; and up to three samplings of wine or distilled spirits, at maximums of 1 ounce and a quarter-ounce per sampling, respectively.

If tasters ask more alcohol they the law allows to be offered at the tastings the manufacturer or distributor conducting the tasting is instructed to explain the legal limits to them. If they persist, the retailer can ask them to leave the event and the store.

Fresh & Easy

Fresh & Easy Neighborhood Market sells beer and wine in all but two of its stores in California. The grocer offers distilled spirits (hard liquor) in a number of its stores in California but not in the majority of the 134 units.

The Fresh & Easy store in San Jose's Willow Glen neighborhood has been one of the grocery chain's top-three sales performing stores, out of the 15 units opened so far this year in Northern California, since it opened on March 2, according to our sources.

The store, along with the unit in Danville, were the first two Fresh & Easy stores Tesco opened in Northern California.

The wine category is a major focus for Tesco with the Fresh & Easy stores; more so than beer or distilled spirits. Therefore, it's our analysis that wine tastings will comprise the majority of alcohol beverage testing events held at the store on Bird Avenue in San Jose, although not exclusively, as we expect some beer tasting to go on as well.

Tesco Launches Fresh & Easy Neighborhood Market-Developed 'The Big Kahuna' Brand Wine in United Kingdom, South Korea Stores

"The Big Kahuna" on the shelf at a Fresh & Easy store in California.

Private Brand Showcase

El Segundo, California-based Fresh & Easy Neighborhood Market's "The Big Kahuna" proprietary or private brand wine has been launched in Tesco-owned stores in the United Kingdom and South Korea, along with being offered for sale by the case on the UK-based retailer's Tesco.com website.

Tesco-owned Fresh & Easy introduced "The Big Kahuna" as its in-house value-priced wine brand over three years ago, following a path blazed most successfully in the U.S. by Trader Joe's with its super-popular $1.99 per bottle Charles Shaw brand wine, more commonly referred to as "Two-Buck Chuck," the huge success of which has spawned similar priced value brand copy-cat versions from nearly every major food and grocery retailer in the country.

The Australian-produced "The Big Kahuna" comes in two varieties: Cabernet Shiraz (at top) and Chardonnay.

Fresh & Easy sells the wine in its stores in California (127 units) for $1.99 (750-ml bottle), and for 2.99 per bottle in its Nevada (21 units) and Arizona (28 units) grocery markets.

The wine is being offered at a higher price-point in the UK than at Fresh & Easy Neighborhood Market in the U.S.

For example, Tesco is offering Fresh & Easy Neighborhood Market-developed "The Big Kahuna" wine brand for a considerably higher price on its Tesco.com website in the UK. The current price per case is £22.80 (£3.80 per bottle), which is about $37.18 per case, or $6.19 per bottle, based on today's British pound to U.S. dollar conversion rate. The per-bottle retail in the stores it's currently in is a bit higher.

Tesco has a long history of offering Australian wines in its stores in the UK and in Asia, particularly South Korea. In fact, the British retailer is the largest customer of wine produced in Australia, largely based on the numerous Tesco proprietary or private brand wines produced for the retailer in the country.

It's a logical and smart move for Tesco to offer Fresh & Easy's "The Big Kahuna" brand wine in its UK and South Korea stores as well as online via Tesco.com. Doing so expands the number of points-of-distribution - and thus increases total sales - for the brand, which in turn should allow Fresh & Easy Neighborhood Market to obtain a lower cost of goods for "The Big Kahuna" from its Australian producer.

A lower cost of goods means a better gross margin on the wine for Fresh & Easy, which is important because at $1.99 and $2.99 per bottle retails, along with the shipping costs from Australia, there isn't much gross margin in "The Big Kuhuna," or any other wine with similar overseas origin and the same points.

But even a few pennies cost savings per bottle can add up to nice little profit boost on the wine for Fresh & Easy Neighborhood Market because the value-priced "The Big Kahuna" is a high volume brand for the grocer.

Additionally, since the Australian producer of "The Big Kahuna" also produces additional proprietary wine brands for Tesco, it makes good top and bottom line sense to us to maximize the brand opportunities across all its chains globally for UK-based Tesco whenever it makes sense.

"The Big Kahuna" is the second private brand developed at El Segundo, California-based Fresh & Easy that Tesco is distributing in its stores in the UK, where it's the leading retailer of food and groceries.

The first brand, which we broke the news about in these two stories - June 26, 2011: Tesco Bringing Fresh & Easy Neighborhood Market's 'goodness for kids' Brand to the UK - With a 'Tesco' Twist; and June 27, 2011: Tesco Introduces First Items in Fresh & Easy Neighborhood Market-Developed 'Tesco goodness for kids' Brand in United Kingdom Stores - is "Tesco Goodness for kids", which is based on the "fresh&easy goodness for kids" brand developed in Southern California.

The Australian-produced wine brand with the Hawaiian name, "The Big Kahuna," is the first Fresh & Easy Neighborhood Market-developed private brand product to be sold in Tesco's stores in Asia we're aware of, in this case the country being South Korea.

Interestingly, we suggested in this March 8, 2011 piece - March 8, 2011: Tesco's Fresh & Easy ♥'s California With 27 New Varieties of Proprietary Brand Wines From the Golden State - that Tesco should take a few or all of Fresh & Easy's then new proprietary brands of California wines to the United Kingdom and South Korea.

Perhaps a few of those brands of wine produced in California will be the next ? Stay tuned.

Related Stores

Read more about wine at these links: California wine competitions, Fresh and Easy proprietary wines, Fresh and Easy wine, fresh and easy wine category, liquor wine beer categories, wine awards, Wine Category Report, wine merchandising,  Side by Side wine, category wine

Additionally, you can read past stories in our Private Brand Showcase feature here.

The Wisdom of the Crowd: Fresh & Easy Neighborhood Market's Wines Won 39 Medals in the L.A. International Wine Competition; Will it Motivate Your Purchase?

Fresh & Easy Neighborhood Market's marketing and public relations people announced via a press release today that the 175-store fresh food and grocery chain has won 39 medals at the 72nd annual Los Angeles International Wine & Spirits Competition for a variety of its proprietary brand wines.

The annual wine and spirits competition is part of the Los Angeles County Fair, which takes place September 3-October 2 this year. An olive oil tasting and judging is also conducted in conjunction with the annual wine competition.

The wine competition judging took place in May. The competition's officials announced the winners June 7.

Among the wines Fresh & Easy won medals for (18 out of the 39 medals) were its new line of proprietary or private brand California wines, which we wrote about in this March 8, 2011 story: Tesco's Fresh & Easy ♥'s California With 27 New Varieties of Proprietary Brand Wines From the Golden State. The new California wines were introduced in the stores in March.

You can see which Fresh & Easy wine brands and varieties won medals here, along with viewing all of the award-winning wine brands and varieties from others. The competition also has a Facebook page here.

El Segundo, California-based Fresh & Easy Neighborhood Market is one of just a few food and grocery retailers that enter its private or proprietary brand wines in this and other competitions.

The pioneering grocer in doing so is another Southern California-based chain - Trader Joe's - which has been entering its various private brand wines in the Los Angeles and other competitions, often winning first place in on or more varietal categories, for many years.

It's important to note, however, that not many U.S. grocery and mass merchandise chains offer a moderate-to-extensive assortment of private brand wines (many have a value brand though), although that's beginning to change. As such, there's not much in the way of proprietary brand wine for the majority of grocers to enter in these competitions at present, even if they wanted to.

Tesco-owned Fresh & Easy followed Trader Joe's lead in entering various wine competitions, starting in 2007, and has to date won 275 medals overall.

Fresh & Easy Neighborhood Market also promotes wine regularly in its 175 stores in California, Nevada and Arizona and attempts to use the category, particularly its private brand wines, as a leader in terms of hoping it is a lure to bring shoppers into its stores.

We've written extensively about the wine category at Tesco's Fresh & Easy (and other grocers), including its participation in various wine competitions, along with merchandising, marketing and promotional aspects.

[You can read our stories by clicking on the following links: Fresh and Easy proprietary wines, Fresh and Easy wine, wine awards, wine merchandising, California wine competitions, wine awards, Fresh Easy wine category review, The Big Kahuna brand wine, wine marketing, wine promotions, liquor wine beer categories, alcoholic beverage sales-merchandising, wine retailing, Charles Shaw Wines, Mike Samii, Trader Joe's, Robert Parker, Beverages and More.]

As we noted earlier, the majority of U.S. food retailers don't offer much in the way of private brand wines.

Trader Joe's and Fresh & Easy have the most extensive proprietary wine programs we're aware of among U.S. grocers and mass merchandise chains, although as noted numerous big chains like Costco, Walmart and even regional grocers like Save Mart Supermarkets in California offer a value-based (think Trader Joe's Two Buck Chuck) proprietary brand wine. Fresh & Easy's value brand is called the The Big Kahuna.

Fresh  Easy's parent, United Kingdom-based Tesco, has long had a proprietary brand wine program in operation and offers numerous own brand varieties in its stores in the UK particularly, but also at its stores elsewhere in Europe and in Asia.

What interests us about these wine competitions as they pertain to grocers like Fresh & Easy Neighborhood Market, Trader Joe's and others, is if winning medals at the events has any influence on shopper purchases of the winning wines in the stores.

This question is important because the primary reason wine-makers and marketers enter their wines in competitions is to sell more of it. Secondarily is the prestige of winning - or what some folks (not us of course)  might even call the "snob appeal factor."

The Wisdom of the Crowd: Reader Questions

Since Fresh & Easy Buzz has some of the smartest and most-inquisitive readers on the planet, we thought we would put the question to you.

So here's the question: Does a wine brand/variety winning a medal (Gold, Silver, Bronze and the like) at a well-known wine competition influence your decision to purchase it?

Further, will you be motivated to try and buy any of the 39 Fresh & Easy proprietary brand wines - there will be signs on the wines at the shelf in the stores designating them as "medal winners" and you can see the various wines from Fresh & Easy that won here - because a given wine won a medal at the Los Angeles International Wine Competition?

Share your response and opinion with your fellow readers using  the "comments" link below. Just click it and tell us what you think.

A Fresh & Easy Neighborhood Market Tasting of California Wines: Live Via Twitter

One of the 27 varieties of California-produced wines being tasted tonight at the Fresh & Easy Neighborhood Market event at the SmogShoppe is Barrel Ranch Cabernet. Barrel Ranch is one of the seven proprietary brands the grocer has launched. (See the story linked below for the others.) Here's how wine taster-eater-blogger-tweeter @Oakmonster, who took the photo above, scored the wine via a tweet on Twitter after tasting it a few minutes ago: "@fresh_and_easy barrel ranch cabernet. Chugability: easy to drink, fav of the evening. #fesmog." Fresh & Easy Buzz likes "Chugability" as an evaluative criteria. Perhaps it should be used in all wine tastings and competitions.

On Tuesday we reported that Fresh & Easy Neighborhood Market is this week introducing 27 new varieties of California wines under seven proprietary (or private) brands at its 167 fresh food and grocery stores in California, Nevada and Arizona. Read the story - March 8, 2011: Tesco's Fresh & Easy ♥'s California With 27 New Varieties of Proprietary Brand Wines From the Golden State.

On Wednesday, the PR department at Tesco's Fresh & Easy distributed a press release announcing the new California wines.

Tonight Fresh & Easy Neighborhood Market is holding a tasting of the 27 varieties of California wine at the SmogShoppe in Los Angeles/Culver City.

The SmogShoppe is a former automobile smog-check shop that's been turned into a 6,500 square-foot, solar powered, plant-filled indoor/outdoor event space. It even has a verticle garden. You can learn more about the space here.

Tesco's Fresh & Easy has invited a group of foodie and mom-oriented bloggers and Twitter-tweeters to the wine tasting this evening. The tasters are currently tweeting their impressions of the various California wines as they taste the 27 varieties one at a time.

You can view the taster-tweeters' wine note tweets in real time on Twitter here.

The tasters are being "dined" as well as "wined" by Tesco's Fresh & Easy, as evidenced by this tasty tweet from the @artmuse:

"@theartmuse: Beef & vegetable skewer, artichoke heart w goat cheese, shrimp ceviche, lobster ravioli #fesmog we approve. 3 minutes ago via TweetCaster."

The Lobster Ravioli (above) is one of the many foods the wine tasters are dining on right now. Photo live-tweeted by @dananner

And another taster, @OakMonster, appears to approve of the evening so far, tweeting: "@OakMonster @vianessa i approve of what is happening this evening." Word, girl. Word! #fesmog."

Numerous other tweets - all here in real time - suggest a pretty good time is being had by all.

We have just one editorial suggestion for the tasters - designated drivers please.

Tesco's Fresh & Easy ♥'s California With 27 New Varieties of Proprietary Brand Wines From the Golden State

Wine Category Merchandising & More
News/Analysis/Commentary

In a series of stories over the last few months, we've reported in detail and offered analysis about why Tesco is banking on California with its Fresh & Easy Neighborhood Market, not only for most of its new store growth this year but also as the place it hopes that growth will translate into break-even and eventually turn at least a slim profit for its money-losing Fresh & Easy chain of 166 small-format food and grocery stores.

[See the following stories, for example, to learn more about Tesco's banking on California with Fresh & Easy. January 14, 2001: Tesco 'Banking' on California in 2011 For Fresh & Easy Neighborhood Market USA; and January 11, 2011: A 'New York State of Mind': 'The Insider' On Walmart, Apollo Global Management, Tesco's Fresh & Easy and the NRF in New York City. Also see - January 23, 2011: Tesco's Fresh & Easy Neighborhood Market Looking For Locations For New, Smaller-Format 4,000-to-5,000 Square-Foot Stores; and February 16, 2011: Fresh & Easy Neighborhood Market Celebrates Three-Store Opening Trifecta Today in Southern California.]

Tesco's Fresh & Easy Neighborhood Market is signaling its focus and commitment to California, along with in a symbolic way confirming our reporting, this week by its introduction this week of 27 varieties of California wines under seven proprietary or private brands.

The seven private brands of California wines are: " I ♥ CA," "Wink," "Pacific Coast Highway," "Cloud Valley," "WineWrights," Barrel Ranch" and "Open Field."

All of the new wines, a mix of reds, whites and blends, come from noted California grape-growing and wine-making regions such as Napa, Monterey and Santa Barbara. You can view a list of all 27 varieties with tasting notes here.

The "Cloud Valley," Barrel Ranch," and "Open Field" brands were developed for Fresh & Easy by Terravant Wine Company, which is located in the Santa Barbara area, which is where the grapes for the red and white wine varieties under the three proprietary brands originate from, according to Richard Wherry, a wine buyer at Fresh & Easy Neighborhood Market.

The new private brand wines are hitting the shelves of all 166 Fresh & Easy stores this week and, according to our sources, some of the 27 varieties will appear tomorrow in Fresh & Easy Neighborhood market's advertising circular at promotional prices.

Tesco's Fresh & Easy is using as one of its promotional tag-line's for the new California wines: "Wine as golden as the state it's from," a clear local appeal since a whopping 117 of its 166 stores are in the Golden State, as are all of the new stores (11 units) opened so far this year, along with all the new Fresh & Easy markets - nine new stores in Northern California and one unit in Southern California - set to open in March and April. There are 28 Fresh & Easy stores in metro Phoenix, Arizona and 21 units in metro Las Vegas, Nevada.

Also look for the slogan..."We wish they all could be California wines" in advertisements and in-store signage.

As we've noted in past stories in Fresh & Easy Buzz, in our analysis the wine category is one of Fresh & Easy Neighborhood Market's strongest in terms of product selection and merchandising. As we've also noted in past stories, it's been our analysis that one of the weak aspects of the wine category at Fresh & Easy has been a shortage of proprietary brands and varieties of California wines, particularly since the Tesco-owned chain is based in California and as noted above has all but 49 of its 166 fresh food and grocery markets in the Golden State.

The addition of the 27 new California wines under the various private brands goes a long way to improving this weakness, in our analysis. We also like a number of the brand names, as they speak to various aspects of the state of California and its wine-growing regions, represented by the various varieties.

And, as for the " I ♥ CA brand," it has a double meaning, in that not only is it a proprietary wine brand for California-based Fresh & Easy Neighborhood Market, it's also a pretty could expression of where Tesco is putting its fortunes with its Fresh & Easy chain - which is in the Golden State. Doing so warrants a whole lotta' love.

Sidebar - Synergy Time: The World ♥'s California Wine

Tesco would be smart to look into exporting its new California wines to its other divisions throughout the world, particularly to the United Kingdom but also to Asia, where in places like Japan, South Korea and China, all countries where Tesco has stores, wine consumption is growing by double digits.

Why? Tesco needs to create much more synergy between its global operations and its Fresh & Easy outpost in the U.S.

Since Tesco's new (as of March 2) CEO Philip Clarke's previous job was as head of Tesco's European and Asian retail operations, he should see the value of the "California" brand when it comes to merchandising wine, particularly in the emerging Asian markets, but also in Europe.

Selling the 27 new varieties of Fresh & Easy's proprietary California wines in various Tesco global divisions also would be a nice boost for wine category sales volume for the U.S. operation. And the more volume when it comes to private brand food and drink products, the better cost of goods a retailer can get - which translates to higher margins on those items for the retailer.\

Importing the new California wines to various Tesco global retail divisions outside the U.S. would be fairly easy. Containers come and go from the two major ports in Southern California and in Oakland in Northern California on an hourly basis.

Additionally, Fresh & Easy could get some nice street cred in California (political, agricultureal, consumer circles), exporting wines produced in the state to its retail operations in Asia and Europe.

Lastly, exporting the new California wines to other Tesco global outposts would be a good test towards creating better synergy between the mothership in the United Kingdom and its U.S. operations, along with those in other parts of the world. After all, Tesco is the third-largest global retailer, after Walmart and France's Carrefour.

As our 'The Insider' columnist suggested in this column last year - October 8, 2010: 'The Insider' - Incoming Tesco CEO Philip Clarke Needs to 'Imagine' When it Comes to Fresh & Easy Neighborhood Market USA - its' going to take imaginative thinking and strategy, and in our analysis nomore than banking on California, for Clarke and his deputy CEO Tim Mason, who runs Fresh & Easy, to make a success out of Fresh & Easy Neighborhood Market USA.

Readers

Fresh & Easy Buzz has written extensively about the wine category, wine merchandising and retailing at Tesco's Fresh & Easy Neighborhood Market. For a selction of those stories, click on the links here: Fresh and Easy proprietary wines, Fresh and Easy wine, fresh and easy wine category, Fresh Easy wine category review, liquor wine beer categories and wine merchandising. Use the "older" and "newer" links at the bottom of the linked pages for additional pages/stories.

Integrated Retail & Twitter Wine Promotion Rates Fresh & Easy Neighborhood Market A Gold Medal

Wine & Beer Category Report: News/Analysis/Commentary

Tesco's Fresh & Easy Neighborhood Market today launched a full-line-drive, mix and match wine category promotion in its 159 fresh food and grocery stores in California, southern Nevada and Metropolitan Phoenix, Arizona.

In the promotion, which runs from June 23 -to- July 6, 2010, customers get 20% off the total of any six or more bottles of wine they purchase.

Additionally, Fresh & Easy is giving away a reusable cotton wine bag with all single-customer wine purchases of $25 or more.

In and of itself there's nothing particularly unique or special about the promo as grocer wine category promotions go, although we like the free wine bag addition. It adds an additional layer to the promotion, beyond just the 20% price focus.

But Fresh & Easy Neighborhood Market is kicking off the wine promotion with a "Twitter Wine Tasting" this evening, starting at 7 pm pacific time.

This is the grocer's second such "Twitter Wine Tasting," in which participants purchase the wines to be tasted and pondered in the comfort of their homes at a Fresh & Easy store, and then share their questions, comments and evaluations on the various varieties of vino via Twitter.com.

The first such tasting was on February 9 of this year. Read our story about Fresh & Easy's first "Twitter Wine Tasting" - February 8, 2010: 'I Taste Therefore I Tweet': Fresh & Easy Set to Hold 'Twitter (Wine) Tasting' Tomorrow Night.

Tonight's wine tippling tweeters will be tasting three of Fresh & Easy Neighborhood Market's proprietary wines. The three brands-varieties are: Napa Family Vineyards Chardonnay, which retails for under $12; The Vine Yard Late Harvest Riesling, which sells for under $8; and Re del Castello Chianti Classico, which goes for under $10 at Fresh & Easy Neighborhood market stores. Fresh & Easy is featuring two of the varieties, along with a few others, in its "Friends of Fresh & Easy" e-mail promo which it sent out late yesterday. That's what we call "positive, practical, promotional merchandising integration," or PPPMI for short. More on that concept a little later below.

In order to participate in the virtual wine tasting event (virtual on twitter but real at home) people with a Twitter account - those who don't already have one can create one in a couple minutes - simply sign up at Taste Live, send an RSVP here, buy the three wines at a Fresh & Easy store, and then log-in back at Taste Live, at 7 pm tonight.

According to the grocer, Fresh & Easy Neighborhood Market wine category manager Karen Fletcher will be tweeting, answering questions and following the tasters' evaluations at its Twitter.com account - @fresh_and_easy - starting at 7 pm. The tippling tweeters need only to use the Twitter hashtag #FreshEasyWines in order to be able to view the wine tweets of their fellow tasters on Twitter tonight.

Positive, practical, promotional merchandising integration

As regular Fresh & Easy Buzz readers are aware - and non-regular readers of the blog will soon become aware of - we're big advocates of integrated promotions that tie-in what happens on the store floor (merchandising and promotional merchandising) with various forms of media, particularly forms of interactive social media like Twitter, Facebook and the like.

We've been suggesting to Fresh & Easy Neighborhood Market in our strategy session-oriented posts since about mid-2008 that the grocer needs to focus much more on doing integrated promotions across all categories. One of the Fresh & Easy's problems or challenges, in our analysis, has been a failure to integrate; to use multiple platforms, integrating on the store floor merchandising with various forms of media. For example, we liked this recent promotion at Fresh & Easy. But the grocer failed to take it beyond the stores; to integrate it with other media in a meaningful and significant way.

Merchandising and media-related promotions such as the wine promotion-twitter event, which tie-in the stores and the larger consumer world, are something Fresh & Easy needs to do more regularly in order to create excitement, drive sales into the stores, build brand, and create new, much-needed customers.

In terms of the various categories, in our analysis the best merchandising and promotional activity Fresh & Easy has done thus far is in the wine category.

Wine category manager Karen Fletcher has been in her position at Fresh & Easy Neighborhood Market from the very beginning. Therefore we give her the primary credit for this development.
Fresh & Easy's wine and beer category has flipped-flopped between the directors of the grocer's two buying and merchandising departments, fresh and grocery - and not totally against Ms. Fletcher's objection - three times since 2007.

The wine and beer category was originally (and logically) under the grocery department. But it later was moved to the fresh department for internal reasons. Then in the summer of 2008 the category was switched back to grocery, under the supervision of Sean McCurley, who made a lateral move at the time from director of fresh foods to grocery director - and who recently returned to Tesco in the UK - replacing Charlotte Maxwell, who departed Fresh & Easy to return to Tesco in the UK, which she left the employ of shortly after. (Yes, Sean McCurley and Karen Fletcher had a strong working relationship. They both also came to Fresh & Easy from Tesco in the UK.)

Tweet, drink and be merry

While a Twitter-based wine tasting doesn't have the glamour and excitement of a live tasting, say at a Napa Valley winery, it certainly offers some advantages. Among those advantages include: being able to dress comfortably - although we don't want to hear about participants wearing boxer shorts or old sweat pants while wine tasting and tweeting tonight - relaxing on your couch at home with a laptop computer nestled close by or a smart phone in hand, and being able to stock the fridge with one's own choice of foods to cleanse the palate between bottles of wine.

From a marketing and merchandising standpoint for Fresh & Easy the tasting offers the grocer a chance to get people into the stores to purchase the three bottles of wine, and then hopefully buy additional food and grocery items. But much more than that, as we said earlier, it integrates what is happening at retail - the June 23 -to- July 6 wine promotion - with a wider social media-based promotion, thereby helping over time (with repetition and other different integrated promotions added on) to create a story around the wine category at Fresh & Easy Neighborhood Market.

Doing this - integrating what goes happens on the store floor with media promotions and events - and doing it regularly, comprehensively and in a creative yet practical manner (need to sell product as well as create buzz) is what good merchandising and promotions are all about, as in creating and telling a good story, which in many ways is the essence of a potentially successful marketing campaign.

Salute! In 140 characters or less of course.

Readers: Click here to read a selection of past posts in Fresh & Easy Buzz on wine category merchandising and related topics.

Fresh & Easy Kicks Off Three Week 'From Grapes to Gold Medals' Wine Promotion Tomorrow

Tesco's Fresh & Easy is launching a big wine promotion in its 147 stores in California, Nevada and Arizona starting tomorrow, March 24. The promotion runs through April 13, 2010.

The theme of the promotion is: "From Grapes to Gold Medals," (see the shelf-talker above)which is in reference to the fact a number of the wines featured in the promotion, including Fresh & Easy's proprietary wines, have won gold, silver or bronze medals at a number of wine judging competitions.

The wines in the Fresh & Easy promotion are sale priced, like the $1.99 bottle Saludas Tempranillo from Spain, pictured at left and described above. Additionally, shoppers get a 10% discount if they buy three or more bottles in a single purchase.

A couple of the other wines to be offered in the promotion tomorrow are: Ogio Prosecco, an effervescent wine from Italy ($6.99 on sale, regularly $8.99) and Small Wonders Chardonnay, from California's Russian River region ($9.99 on sale, regularly $13.99).

Fresh & Easy will be touting the March 24 -to- April 13 wine promotion in all of its stores, as well as in its new advertising circular, which comes out tomorrow.

Today, Fresh & Easy sent out an e-mail to the members of its "Friends of Fresh & Easy" frequent-shopper group offering the members a sneak peak a day in advance of the promotion.

We first wrote over two years ago that the wine category would be and is a major focus for Tesco with Fresh & Easy. This multi-week promotion is another example of the emphasis and focus the grocer it trying to put on its wine selection, particularly its proprietary wines.

[Readers: Click here for a selection of past stories from Fresh & Easy Buzz on Fresh & Easy's wine program, wine category merchandsing, and related topics and issues.]

'I Taste Therefore I Tweet': Fresh & Easy Set to Hold 'Twitter (Wine) Tasting' Tomorrow Night

Tesco's Fresh & Easy Neighborhood Market has teamed up with the online wine tasting community Taste Live, and is holding a virtual wine tasting event tomorrow evening (February 9, 2010) from 7:00 pm -to- 8: 00 pm (Pacific Standard Time).

Fresh & Easy is calling the virtual wine tasting a "Twitter Tasting" because the event will focus on tasters' tweeting their evaluations of the three wines being tasted on the social media site Twitter.com.

Tasters will be sampling three of Fresh & Easy's proprietary wines during the one hour virtual and social media wine tasting tomorrow night.

The three wines are: Montcadi Cava Rose from Spain, which sells for under $6; Boro Hills Sauvignon Blanc (from New Zealand), which sells at Fresh & Easy for about $11; and Matuco Malbec 2007 (Argentina), which retails for under $10.

Tasters can buy one, two or all three of the wines at a local Fresh & Easy market for the tasting. Here's a brief description of each of the wine varieties.

Taste Live often holds these virtual wine tastings in partnership with various wineries like Kunde Family Wines and others.

Here's how the virtual "Twitter Tasting" works:

>Those interested in participating first need to register at Taste Live using their Twitter or Facebook account, or by creating an account at the tastelive.com Web site here.

>Once registered, event participants then need to RSVP their intended participation to Tesco's Fresh & Easy here.

>Tasters then buy one or more of the three wines being tasted during the one hour "Twitter Tasting" at a Fresh & Easy store.

Karen Fletcher, Fresh & Easy Neighborhood Market's category manager for wine, is hosting the "Twitter Tasting" tomorrow night, according to Fresh & Easy.

During the one hour event Fresh & Easy will be tweeting at its @fresh_and_easy account on Twitter.com.

The grocer's social media team has created a Twitter hashtag - #FandEWine - which it wants tweeter-wine tasters to use after each of their tweets in order to be able to track the one hour "Twitter Tasting."

Such hashtags used on Twitter allow for users to search particular topics on the site by entering the hashtag into its search function.

Fresh & Easy wine merchandising & marketing

First, Fresh & Easy Buzz likes the concept of the "Twitter Tasting." We give Tesco Fresh & Easy's marketing team, particularly its social media folks, a thumbs up for giving it a try.

The reason we like it is because it's different, is a bit out of the box, and fits in well with the much improved job (since about mid-2009) the grocer's social media team has been doing using Twitter, Facebook and YouTube.

We also like it because although it's virtual, it's also participatory - it brings tweeters and others together in a form of community around a common event - wine tasting.

Such uses of social media can over time build up a strong core of Fresh & Easy wine shoppers-consumers if done well.

It's using social media for marketing purposes but the event emphasises the "social" over the "marketing" aspect because of the focus on the wine tasting. Participants can be as critical as they want about the wines in their tweets, which means Fresh & Easy can't control the marketing message, like a retailer can do with paid advertising and the like.

One of Tesco's goals with Fresh & Easy is to build the Fresh & Easy retail brand in part through making its proprietary wines and wine merchandising program "famous." In fact, this is one of the charges the grocer gave to the marketing-oriented public relations firms it interviewed in March-April 2008.

Additionally, the fantastic success of wine sales at Trader Joe's hasn't been something lost on Tesco. It's no accident Fresh & Easy's wine and beer program looks very similar to Trader Joe's in terms of product selection, merchandising and marketing.

Fresh & Easy's wine program or wines aren't famous yet. But creative marketing programs like the "Twitter Tasting," combined with good product selection and merchandising, can go a long way in brand building, in our analysis.

Of course, key to tomorrow night's "Twitter (wine) Tasting" being a success is the fact that it has participants. The more tweets the better. Also, the more critical - not just pro the wines tasted - tweets during the tasting the more interesting it will be.

After all, when it comes to criticism (and even a bit of whining), some of the best involves wines.

[Readers: Click here for a selection of past stories from Fresh & Easy Buzz on Tesco Fresh & Easy's wine program, wine category merchandsing, and related topics and issues.]

In Vino Veritas: Tesco's Fresh & Easy to Introduce 25 New Wines as Part Of Wine Category Makeover We First Reported On in October, 2008

Wine Category Merchandising

Tesco's Fresh & Easy Neighborhood Market will introduce 25 new wine SKUS in its stores over the next three months, 15 of which will be proprietary wines exclusive to Fresh & Easy, according to wine category manager Karen Fletcher.

The 25 new wines will be a mix of domestic and imported varieties, Ms. Fletcher says, and will range in price from a low of $1.99 a bottle -to- $40 a bottle.

"Fresh & Easy's new selection of wines will be perfect for summer drinking and includes traditional favorites such as a California Cabernet from Sonoma. Unique imports will also be added to the company's range including a Malbec from Argentina, sparkling wines from Italy and a Tempranillo-Shiraz and Ribera del Duero from Spain," Fresh & Easy corporate wine category manager Fletcher says.

"We're always hunting for new wines so our customers have something new to enjoy. We have some great picks coming from California, Washington, Argentina, Spain and Australia. "Now that we're offering all of our wine at 20 percent off 6 (bottles), which is our best deal yet, it's a great opportunity for our customers to try something new, or to buy their favorite wines at a great price."

Tesco Fresh & Easy's Fletcher is referring in the quote to the retailer's just-launched 20%-off purchases of six bottles of wine or more promotion, which we reported on and wrote about in this piece yesterday: In Vino Veritas: Tesco's Fresh & Easy Kicking-Off 20 Percent-Off Six Bottles Or More Wine Promotion This Week; Promotion Runs Until April 25.

In October of 2008 Fresh & Easy Buzz reported exclusively about the wine category review led by category manager Fletcher taking place at Fresh & Easy corporate headquarters in El Segundo, California. [That story: Category Management Report: Fresh & Easy Conducting Wine Category Review and SKU Rationalization; We Offer Some Analysis.]

Additionally, in this November 11, 2008 piece [Wine Category Report: Tesco's Fresh & Easy Kicks Off New Merchandising and Promotional Efforts Designed to Grow Wine Category Sales.] we wrote about Fresh & Easy's plans to grow its wine category sales.

The introduction of the 25 new wines over the next three months, along with the 20%-off deep-discount promotion launched this week and running until April 25, are a direct result of the wine category evaluation we wrote about in October of last year and the merchandising and promotional plans we reported on in November, 2008.

Own brands

Proprietary brands and wines are a major part of Tesco Fresh & Easy Neighborhood Market's wine category merchandising strategy.

The strategy comes directly from United Kingdom-based Tesco, which is one of the top retailer's of wine globally. Tesco creates and merchandises numerous varieties of proprietary wines in its stores in the United Kingdom, where its that nation's leading food and grocery retailer, and elsewhere throughout the world where it has stores.

Tesco also is the number one retail buyer of Australian wines, and as a result is able to get excellent bargains on Australian-made wine to use in its various proprietary wines. For example, the Fresh & Easy Neighborhood Market proprietary value brand, Big Kuhuna, which it sells for $1.99 a bottle in California and for $2.99 in Nevada and Arizona, is an Australian wine. There are two varieties of Big Kahuna, a white and a red.

Fresh & Easy Neighborhood Market wine category manager Karen Fletcher is familiar with this system since she came to Tesco's Fresh & Easy from Tesco in the United Kingdom.

Master of Wine

Tesco's Fresh & Easy also uses a Master of Wine, who works with Ms. Fletcher and the wine category buyers to create the proprietary wines for the stores.

According to the Masters of Wine Institute, there currently are only 274 Masters of Wine, located in 23 countries. The designation requires rigorous testing in order to earn it. [You can learn more about the Masters of Wine designation here.]

New wines: pricing

Tesco's Fresh & Easy isn't saying what percentage of the 25 new wines to be introduced over the next three months are in what price ranges; just that the retail price-points will range from $1.99 -to- $40. However, according to a source, we're told that the majority of the 25 new wines will be in the value-price range, which generally means under about $12 a bottle.

Right now wines selling for under $10 a bottle make up the vast majority of the volume being sold, with wines priced at about $6.99 and below comprising the highest percentage of the under $10 segment.

In other words, with wine as with most all else at present, value is ruling among shoppers.

SKU rationalization

Tesco's Fresh & Easy also doesn't say if it's discontinuing any wine SKU to make room for the 25 new varieties. We can report that the retailer is eliminating some slower moving wines as part of its category evaluation and the introduction of the new SKUS. Out with some old, in with some new -- that's what a category evaluation and SKU rationalization is all about.

As part of its strategic objective to increase wine category sales, look for additional new category developments and promotions in the coming months, in addition to the introduction of the 25 new wines over the next three months, and the 20%-off promotion which lasts until April 25.

Below is a linked selection of a few wine category pieces from Fresh & Easy Buzz:

>March 26, 2009: In Vino Veritas: Tesco's Fresh & Easy Kicking-Off 20 Percent-Off Six Bottles Or More Wine Promotion This Week; Promotion Runs Until April 25

>October 27, 2008: Southern California Market Report: Beverages & More to Join Trader Joe's and Fresh & Easy to Form Manhattan Beach Food and Beverage Retailing Triangle

>March 22, 2008: In Vino Veritas: No Whining About This 'Parker-Point' Rating for a Fresh & Easy Proprietary Spanish Wine

>July 22, 2008: Obituary: Innovative Trader Joe's Head Wine Buyer and Popularizer of Value Wines Robert Berning; 73

>March 4, 2008: In Vino Veritas: Fresh & Easy Store Brand Wines Win Two Silvers and Lots of Bronze Medals; Trader Joe's 'Two-Buck Chuck' Chardonnay Wins a Double-Gold

>July 9, 2008: In Vino Veritas: Fresh & Easy Announces 63 Wine Awards to Date; Will Face Off Again Against Wine Award Winning 'Big Kahuna' Trader Joe's at State Fair

>September 22, 2008: Fresh & Easy Buzz Strategy Session: Trader Joe's and the Key to Enlightenment?

>November 11, 2008: Wine Category Report: Tesco's Fresh & Easy Kicks Off New Merchandising and Promotional Efforts Designed to Grow Wine Category Sales

>October 27, 2008: Category Management Report: Fresh & Easy Conducting Wine Category Review and SKU Rationalization; We Offer Some Analysis

>April 25, 2008: Tesco's Fresh & Easy to Launch A Marketing-Oriented, Brand-Building Consumer Public Relations Campaign For its Store Brand Products and its Wines

>April 30, 2009: Raising Arizona and Getting Local in the Neighborhood: State's First 100% Locally-Produced Wine Offers Win-Win for Tesco's Fresh & Easy Arizona Stores

>July 14, 2008: Breaking News & Analysis: CA Assemblyman Introduces 'Tesco Fresh & Easy Law' to Ban Stores With Self-Checkout-Only From Selling Alcoholic Beverages

>November 10, 2008: Competitive Retailer Wine Category Report: First Person Singular - 'How I Sold 37 Bottles of Wine in 45 Minutes at Trader Joe's'

[Reader Note: You can follow Fresh & Easy Buzz around on Twitter.com at www.twitter.com/freshneasybuzz.]

In Vino Veritas: Tesco's Fresh & Easy Kicking-Off 20 Percent-Off Six Bottles Or More Wine Promotion This Week; Promotion Runs Until April 25

Promotional Merchandising: Wine Category

Tesco's Fresh & Easy Neighborhood Market is kicking off a three week deep-discount wine promotion in its stores in California (Southern and Bakersfield), southern Nevada and Metropolitan Phoenix, Arizona, in which it's doubling the 10% discount it offers shoppers on purchases of six or more bottles of wine to 20% off.

The 20%-off six bottles or more promotion, which started this week, runs until April 21, 2009, according to Fresh & Easy Neighborhood Market.

Fresh & Easy started offering 10%-off purchases of six or more bottles of wine in November, 2008, following retailers with stores in California, Nevada and Arizona like Safeway Stores, Raley's, Trader Joe's, Cost-Plus World Market, Target, Beverages & More and others that have been offering 10% -to- 15%-off purchases of six or more bottles of wine for quite some time.

The 20%-off promotion ups the ante in the highly competitive retail wine markets where Fresh & Easy operates its 116 combination grocery and fresh foods markets.

BevMo's five cent wine promotion

But Tesco's Fresh & Easy isn't the only wine retailer promoting aggressively at present. Wine, sprits and beer beverage category killer retailer Beverages & More (BevMo), which has numerous stores in California, Nevada and Arizona, is currently in the midst of its annual "buy one bottle of wine at the regular price get a second bottle of equal value for 5-cents" spring wine promotion.

BevMo conducts this annual promotion in all of its stores, which feature wine, spirits, beers, snacks, specialty-gourmet foods and more, each year starting right before spring and on into the spring season months. It's a very popular promotion and results in a huge volume of wine sales for the retailer. [You can learn more about the BevMo 5-cent wine sale here.] [Related reading: Southern California Market Report: Beverages & More to Join Trader Joe's and Fresh & Easy to Form Manhattan Beach Food and Beverage Retailing Triangle.]

Mix & match at Fresh & Easy

Shoppers can mix and match the six or more bottles of wine -- different varieties, different price-points -- and receive 20% off the total during the Fresh & Easy 20% wine promotion between now and April 25.

Yet another value-based move

The wine promotion is another example of how Tesco's Fresh & Easy is moving closer to the value proposition positioning Fresh & Easy Buzz suggested for the grocery and fresh foods chain about one year ago. [Read more here: March 26, 2009: News, Analysis & Commentary: Tesco's Fresh & Easy Continues Moving Closer to the 'Value Propostion' Positioning; This Time in Prepared Foods Category.] [And here: March 2, 2009: Fresh & Easy Buzz Redux: Much of the Value Proposition-Based Analysis and Suggestions We've Been Offering Now Being Adopted By Tesco's Fresh & Easy.]

Wine category efforts at Fresh & Easy

In October and November of 2008 we reported exclusively on efforts then in progress at Tesco's Fresh & Easy Neighborhood Market to conduct a complete wine category review and SKU rationalization [this story on October 28, 2008: Category Management Report: Fresh & Easy Conducting Wine Category Review and SKU Rationalization; We Offer Some Analysis] and on the grocery chain's new program designed to increase wine category sales through new promotional efforts in its stores in this [November 11, 2008 piece: Wine Category Report: Tesco's Fresh & Easy Kicks Off New Merchandising and Promotional Efforts Designed to Grow Wine Category Sales.]

The 20%-off discount promotion is a direct result of those wine category activities led by Fresh & Easy's wine category manager Karen Fletcher, who came to Fresh & Easy from Tesco in the United Kingdom.

Additional wine category developments are following, including the introduction of a number of new proprietary brand wine varieties by Tesco's Fresh & Easy, with an emphasis on value-priced varieties.

The 'Big Kuhuna'

Fresh & Easy sells a value-based proprietary wine from Australia called the Big Kuhuna for $1.99 a bottle in California and $2.99 in Nevada and Arizona. The wine is similar to Trader Joe's famous "Two Buck Chuck" value wine. Trader Joe's "Two Buck Chuck" is a California wine.

Under the 20%-off six bottles or more promotion, a shopper can get six bottles of Big Kuhuna for under $10. That's a good buy in these recessionary times.

Promotional product in-stock key

As a result, we suspect Fresh & Easy will see some high volume sales in the next three weeks on the Big Kuhuna wines, along with a number of other varieties.

We do hope that unlike was the case when it promoted a dozen red roses for $9.99 for Valentines Day in February, 2009 (a hot price), when it ran out of the roses every day in most of its stores and was out of stock days before Valentines' Day in many of the stores, that the grocer has prepared itself with plenty of wine inventory, particularly the two varieties of Big Kuhuna, so that shoppers aren't let down by out-of-stocks when they go to their neighborhood Fresh & Easy market to cash in on the good value deal being offered in the 20%-off promotion until April 25. [Click on the comments link and read the comments in this piece: The Valentine's Day (Retail Promotional Price) War of the (Dozen Long-Stemmed) Red Roses: And the Winner Is... Tesco's Fresh & Easy.]

If the retailer has plenty of wine inventory (particularly Big Kuhuna), thereby pleasing shoppers rather than alienating them, the promotion will be a positive one in that it should move some significant wine volume, generate new customer trial, and introduce new shoppers to the store's wine departments and selections. If all works, that's a triple-win.

There's no reason after all to let Beverages & More get all the wine action this month and next month in California, Nevada and Arizona with its 5-cent wine sale.

Below is a linked selection of past wine category pieces from Fresh & Easy Buzz:

>October 27, 2008: Southern California Market Report: Beverages & More to Join Trader Joe's and Fresh & Easy to Form Manhattan Beach Food and Beverage Retailing Triangle

>March 22, 2008: In Vino Veritas: No Whining About This 'Parker-Point' Rating for a Fresh & Easy Proprietary Spanish Wine

>July 22, 2008: Obituary: Innovative Trader Joe's Head Wine Buyer and Popularizer of Value Wines Robert Berning; 73

>March 4, 2008: In Vino Veritas: Fresh & Easy Store Brand Wines Win Two Silvers and Lots of Bronze Medals; Trader Joe's 'Two-Buck Chuck' Chardonnay Wins a Double-Gold

>July 9, 2008: In Vino Veritas: Fresh & Easy Announces 63 Wine Awards to Date; Will Face Off Again Against Wine Award Winning 'Big Kahuna' Trader Joe's at State Fair

>September 22, 2008: Fresh & Easy Buzz Strategy Session: Trader Joe's and the Key to Enlightenment?

>November 11, 2008: Wine Category Report: Tesco's Fresh & Easy Kicks Off New Merchandising and Promotional Efforts Designed to Grow Wine Category Sales

>October 27, 2008: Category Management Report: Fresh & Easy Conducting Wine Category Review and SKU Rationalization; We Offer Some Analysis

>April 25, 2008: Tesco's Fresh & Easy to Launch A Marketing-Oriented, Brand-Building Consumer Public Relations Campaign For its Store Brand Products and its Wines

>April 30, 2009: Raising Arizona and Getting Local in the Neighborhood: State's First 100% Locally-Produced Wine Offers Win-Win for Tesco's Fresh & Easy Arizona Stores

>July 14, 2008: Breaking News & Analysis: CA Assemblyman Introduces 'Tesco Fresh & Easy Law' to Ban Stores With Self-Checkout-Only From Selling Alcoholic Beverages

>November 10, 2008: Competitive Retailer Wine Category Report: First Person Singular - 'How I Sold 37 Bottles of Wine in 45 Minutes at Trader Joe's'

[Reader Note: You can follow Fresh & Easy Buzz around on Twitter.com at www.twitter.com/freshneasybuzz.]

Category Management Report: Fresh & Easy Conducting Wine Category Review and SKU Rationalization; We Offer Some Analysis

Tesco's Fresh & Easy Neighborhood Market has been conducting a category review and sku rationalization in its wine, craft beers and liquor category, Fresh & Easy Buzz has learned from sources involved in the process. The focus is primarily on wines, which is a key product category for the Fresh & Easy stores.

All of the current 96 Fresh & Easy stores, except two in Southern California we are aware of (Hollywood and Van Nuys), sell wine and craft beers. A number of the combination grocery and fresh foods markets sell hard liquor along with wine and beer. Not all of the units offer the spirits for sale however. The Hollywood and Van Nuys stores don't have permits to sell alcoholic beverages of any kind.

The wine category sku rationalization process is being led by category manager Karen Fletcher, who came to Fresh & Easy Neighborhood Market USA from Tesco in the United Kingdom as part of the start-up team. Ms. Fletcher is a native of Britain.

The category review also comes not to long after Fresh & Easy Neighborhood Market went through a series of changes in its grocery merchandising department, which found former director of grocery Charlotte Maxwell, also a British national, leaving Fresh & Easy corporate headquarters and her position to return to Tesco in the UK to accept a director position at corporate headquarters there, as we've thus far been the only publication to report.

Ms. Maxwell was replaced as Fresh & Easy's corporate director of grocery merchandising by Sean McCurley, who previously was director of fresh foods. That position was equal to Ms. Maxwell's in terms of the company structure. Mr. McCurley also is a British citizen.

As part of the wine category review and sku rationalization, Fresh & Easy is looking at reducing the overall number of skus the stores carry in the category, focusing on fewer items and maximizing total sales per item count, according to our sources. Some slow moving wine skus have already been discontinued.

There also has been some merchandising-related discussion as part of the category review involving flipping the wine and beer aisles towards the store's freezer case sections from their current locations, although our sources said they aren't sure of the current status of this previous discussion.

When Fresh & Easy Neighborhood Market USA was first organized, the wine and beer department was under the grocery department, which is normally the case with food retailing companies. However, sometime later category manager Karen Fletcher requested her category be placed in the fresh department and that she report to Sean McCurley, who ran fresh at the time, rather then Ms. Maxwell, who then was in charge of grocery.

Fresh & Easy's senior corporate directors approved of the change. Following Ms. Maxwell's departure back to Tesco in the UK and Sean McCurley assuming her grocery director position, the wine, beer and spirits category was moved back over to grocery with Ms. Fletcher's blessing, according to our sources.

Wine primarily, but also beer and spirits, is a major focus for Fresh & Easy, as it is internationally for Tesco. Karen Fletcher was brought over to the U.S. to build the category as an integral part of the Fresh & Easy merchandising mix. Part of that strategy includes having numerous proprietary, specialty-blended wines produced for the grocery chain, including numerous wines from Australia. Tesco is among the leading retail buyers of Australian wines in the world.

Wine category analysis

The wine category hasn't yet been all that Tesco has expected it to be at the Fresh & Easy stores. Our analysis is this has to do with a number of factors, most notably the fact California wines, which Fresh & Easy stores are short on compared to its competitors, are much more popular than foreign wines in California, Nevada and Arizona, where the current 96 Fresh & Easy grocery and fresh foods markets are located.

Even more so, it has to do with the highly competitive nature of wine, beer and spirits retailing in each of these markets. Not only are major supermarkets like Safeway Stores, Inc. major wine retailers in the Western U.S., for example, but there are category killer retailers like Beverages & More and Cost-Plus World Market, along with Trader Joe's and many others (including scores of independents), that have been selling wine in these markets very successfully for decades. These retails know the market, the customer base, and the wine producers almost as much as they know their own family members in many cases.

As a result, Fresh & Easy has far more competition in its Western U.S. markets than say Tesco has in its home market of the UK when it comes to wine retailing.

The wine category product mix at Fresh & Easy also lacks proper regionalization, sub-regionalization and localization. Perhaps this has been recognized and is one of the reasons for the category review and sku rationalization?

Like it has done with its entire product mix, Tesco basically has tried to merchandise its Fresh & Easy stores in many ways like they are British small-format stores (read Tesco Express) in the UK, merely transplanted to the Western U.S. This has resulted in lots of failures, lost sales and missed opportunities.

Additionally, when it comes to the wine category, there arguably isn't a category that it's more important to regionalize, sub-regionalize and localize. Wines that do extremely well in Northern California, for example, often sell poorly in Southern California. The same regional differences hold true in Nevada and Arizona. Wine brands in the U.S. are regional and even sub-regional. What sells well in San Francisco often isn't what sells well just 80 and 90 miles away in the Central Valley cities of Stockton or Modesto, for example.

Further, since Fresh & Easy has so many proprietary brands, wine brands consumers have never heard of, they have had to hope shoppers might merely like the price or how the bottle looks and give them a try. That's a tough way to sell wine, especially in California.

A number of the proprietary Fresh & Easy wines have done well though, particularly its $1.99 a bottle ($2.99 in Nevada and Arizona) Big Kahuna brand, which is a clone of Trader Joe's famous and super-successful "Two Buck Chuck" value-priced wine brand and line. Big Kahuna is an Australian wine. TJ's "Two Buck Chuck," which last year won the top award in the California State Fair Wine Competition, is a California wine. It's produced by Ceres, California-based Bronco Winery.

In terms of the wine category review and sku rationalization, Fresh & Easy needs to add more California wines, sub-regionalize and localize its wine brand and item selection and merchandising program if it wants to be a successful wine retailer in its respective markets, in our analysis.

This is especially true in California, which is a bigger wine sales market than Nevada and Arizona combined are. (Southern California alone and Northern California alone are both respectively even bigger than both states combined. Since California is the major U.S. wine-producing state, as well as one of the top wine regions in the world, consumers are much more familiar with wines then elsewhere in the U.S. The state also has the highest per capita wine consumption in the U.S.

It also follows that the state has the most competitive and generally the best wine retailers in the country.

California wine consumers are big on sub-regional differences. For example, consumers in Southern California want lots of wines from the Santa Barbara region (a major local wine producing region) want lots of wines in stores from that region, along with from elsewhere in California, the U.S. and the world.

In Northern California (which is the main wine-producing region in the state) consumers expect to see lots of Napa and Sonoma-produced wines on store shelves, along with wines from the coastal region and the Central Valley and Foothill regions. Farther up north it's important to add far Northern California and even some Oregon and Washington State-produced wines.

In fact, in the Central Valley, a good wine retailer also merchandises as many wines from that home region and the nearby Sierra Nevada foothill region than he or she does from Napa and Sonoma.

And in coastal Northern California (the Monterey-Big Sur wine region), good wine retailers there will put a major focus on wines from that wine-producing area.

It's all about localization -- and California is full of local, micro wine regions.

Having a basic selection of proprietary, branded wines is fine for Fresh & Easy. However, as long as that is the major focus in the stores it won't be a top wine retailer in its respective markets. There are too many good wine retailers doing the right things for that to happen.

However, if as part of this category review the retailer focuses on the three things we outlined earlier, it has a far better chance of improving its current wine category sales and eventually joining the ranks of the top wine retailers in the markets it has its stores in.

When it comes to wine merchandising and retailing in the Western USA, especially in California, everything is local, despite the fact imports have an important place in the overall category product mix.