The way Yosemite Road can win

Articles
November 23, 2009

The way Yosemite Road can win

Fewer people than ever are intimidated buying wine today, since the beverage was popularized by health studies suggesting polyphenols in red wine (drank in the right amount) might serve as antioxidants.

Fewer people than ever are intimidated buying wine today, since the beverage was popularized by health studies suggesting polyphenols in red wine (drank in the right amount) might serve as antioxidants.

Along came Costco, Trader Joe’s and other retailers with their own low-priced house labels to capitalize on the trend. The latest entry is 7-Eleven’s new Yosemite Road brand at $3.99 a bottle ($4.99 in Florida because of state taxes).  

However, there’s a difference between the other private labels and the 7-Eleven wines – particularly the Charles Shaw label of Trader Joe’s – the perception of good value, and a sense that the wine nicknamed Two Buck Chuck is worth triple its price ($1.99 in California, up to $3.49 per bottle as distribution moves eastward). 

Indeed, if the line is the nation’s best-selling wine, as Trader Joe’s claims on its website, its huge consumer acceptance was likely driven by its in-store surroundings: private label foods abound on every shelf and endcap. These are some of the biggest reasons people shop there – the constant product innovation, the possibility of finding a new favorite item, and generally consistent value. Why wouldn’t they trial the Charles Shaw label?

While Trader Joe’s is in the sweet spot of this recession – offering many staples for people eating more at home – we see a very different premise of food on the run for 7-Eleven. By comparison, there are far fewer items in the 7-Eleven mix that would help drive sales of the Yosemite Road chardonnay and cabernet sauvignon California-grown varieties.

In that sense, Yosemite Road will stand pretty much alone. We understand this is another aspect of the value push by 7-Eleven, which also recently expanded its 7-Select private label line to include 15 packaged bakery items. The chain said these baked goods were preferred on average three-to-one over its national brand counterpart in blind taste tests.

If the value-priced wines could build a following because of taste or quality, that would be powerful. But winners in the low-priced range have been few and far between. Maybe 7-Eleven has ideas to sell more logical companion items with the wines—cheeses and crackers, or prepared meat and seafood choices perhaps. If they don’t, we suggest it. If they do, we think that’s the right (Yosemite) road to go.