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.

Will France's Gas Station-Like Self-Serve Wine Pumps Make A Splash in U.S. Grocery Stores?

Fill'er up with ... red, white or rose wine.

The big red gas station-style tank pictured above is just that - a self-service pump that dispenses wine. And it's showing up in an increasing number of supermarkets in France, such as in the Cora supermarket in Dunkirk, which was the first store to get one of the self-serve vino dispensers in late 2009. The tanks come in 500 and 1,000 liter sizes. They also come in a brushed chrome color, as well as in the red colored version.

The in-store, self-service bulk wine dispenser's inventor, Astrid Terzian, and her French company, La Cuve, Réserves Précieuses, are looking for grocery chains and store owners in the United States that would like to give the vino pumps a shot in their stores.

The unit, called La Cuve, operates in a straight-forward way - just think self-service gas pumps. Shoppers bring their own containers, such as gallon water jugs or any others they choose to use, to the store, go to the pump, decide on the varieties of wine offered they want and - just like at the self-service gas station, pump the wine into the container, instead of the automobile gas tank.

Once a shopper has finished filling the reusable container with his or her wine of choice, the machine prints out a label with the price, so the store's checkout clerk knows what to charge. The price labels can also include a bar-code.

The La Cuve wine pump's inventor says she came up with the idea for it in late 2008 because she was focusing on two growing consumer trends, environmental awareness and frugality. The elimination of single-use packaging, glass wine bottles and wine boxes, makes the bright red pumping unit not only a big bulk-wine dispensing machine, but a big 'green' one as well, in the environmental sense of the word.

Additionally, since the wine for the machines is shipped in bulk rather than in glass bottles or cardboard wine boxes, both of which are then packed in cardboard case boxes for shipping and store distribution, it's carbon footprint is much lower than individual bottle or box wine SKUs.

Currently, in France, the price of a gallon of wine from the in-store wine pumps is 1.45 euros per liter, which is about $2.

The wine pump seems to us like it might be ideal for certain natural foods chains, independents and retail cooperatives, along with certain supermarkets in the U.S., that do a lot with bulk food and beverage merchandising. Most of these retailers also have bulk units in their stores that turn peanuts into peanut butter, for example, a concept not unlike dispensing bulk wine.

On the natural-organic format side of the street, we're thinking chains like Whole Foods Market, the PCC Co-Op chain in Washington state, Sprouts Farmers Market and its cousins, Henry's Farmers Market and Sunflower Farmers Market, along with a number of other grocers. The 'green' street cred of the bulk-wine dispensing machines, combined with the price savings aspect, just might be a solid concept for these grocers and numerous others with similar formats.

There also could be room in the discount grocer segment for the wine pumps. For example, the fast-growing Idaho-based WinCo Foods chain has massive bulk foods sections, which include the peanut butter grinders mentioned above, in its 90,000 -to- 100,000 square-foot discount supermarkets. The wine pump is a logical extension to such merchandising.

Smart & Final's new SmartCo Foods discount stores also have big bulk sections, which are an element of the store's supermarket/warehouse-style/farmers market combination format.

We could even possibly see the wine pumps in small-format hard discount stores like Aldi, for example, as well as in beverage superstores like the BevMo chain.

Lastly, the machines might be a big hit in membership warehouse stores like Costco, Sam's Club and BJ's Wholesale, where bulk, in the form of buying in bulk but generally packaged goods - as well as shoppers' motivation to save money - is the norm.

The merchandising of bulk, or un-packaged foods, which is how it all began centuries ago, is growing significantly in consumer popularity currently in the U.S. It never went away. Many grocers have featured it continually, in updated forms for decades. It's also more than a retro fad. Bulk merchandising is increasingly popular because of the cost-savings - bulk flour, nuts and oatmeal, just three examples, are generally much cheaper than the same packaged products - as well as the 'green' attributes, less packaging, it offers.

Numerous U.S. natural foods stores, along with some supermarkets, also offer various liquid products, like spring water, olive oil and vinegar, in bulk. Customers bring their own container to the store and fill' er up.

There are also companies that operate stand-alone, coin-operated spring water vending machine kiosks in numerous cities and towns. Customers put the money, usually about 50 cents a gallon, in the coin box, put their re-usable container under the spout, and fill up.

The only major drawback we see with the wine pump is the potential for frequent in-store customer self-service sampling; the grabbing of the hose, tilting back of the head, and tasting away directly from the source. This could particularly be a serious problem with minors.

In fact, if the wine pumps are to make it to the U.S., its likely some sort of locking device would have to be installed on the machines in-store so that only shoppers of legal age could have access to them.

Of course, one can make the argument that it's just as easy for a customer, of legal age or under age, to grab a bottle of wine or other alcoholic beverage off the shelf, open it, and give it a taste. Interestingly, this doesn't happen very often in most grocery stores. And in terms of purchasing the bulk wine at checkout, the process is no different than a customer's purchasing of alcoholic beverages in a bottle, can, keg or box. If the checkout clerk has a question as to the customer's age, she asks for their identification.

On a closing note, were we to offer a grocer who decided to test one of the wine pumps in his or her stores a bit of marketing advise, it might be to name the wines dispensed from the machine using the jargon from a similar form of liquid dispensing which is very familiar to consumers - the gas pump. The wine names: How about ... Regular, Premium and Diesel?