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.

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.