Dive Brief:
- Colorado-based Natural Grocers is expanding its Cottage Wine and Craft Beer section, which debuted in August in Denver, to half of its stores in Oregon, according to Progressive Grocer.
- The selection aligns with the company's branding to offer local and organic products. Shoppers can choose from a range of specialty alcohol, including gluten-free beer, biodynamic wine, hard cider and alcoholic kombucha, among others. The wine and craft beer are all produced in the Pacific Northwest, are non-GMO and are certified USDA Organic or gluten-free.
- The expansion will happen throughout the summer at stores in Medford, Gresham, Beaverton, Portland and Warrenton.
Dive Insight:
By expanding its alcohol business to Oregon, Natural Grocers looks to better compete in a retail environment where most grocers are now offering local and organic products, a slice of the market once primarily fulfilled by specialty stores.
During its most recent earnings call, Isely said the company is focused on initiatives that help generate transactions and traffic, and that is exactly what booze does. According to Nielsen, the average consumer spends $47 per trip to the supermarket when they don’t make a wine purchase and that amount jumps to $75 when the shopper buys wine. Specialty alcohol, in particular, is a good place to start. According to the Specialty Food Association, the specialty category jumped 15% from 2015 to 2016, driven by the coveted millennial demographic.
Natural Grocers is curating selections that fit its overall strategy of carrying local products that are certified. Some of these selections may seem very niche — biodynamic wine, for example — but they fit the brand’s positioning and will be attractive to its loyal customers. Natural Grocers, however, does not have a guaranteed advantage simply because it’s been focused on local sourcing longer than the competition. Competition has caught up, with mainstream retailers selling more craft and local booze selections in response to growing demand.
Since Natural Grocers is late to the alcohol game, it will likely need to emphasize its products' differentiators to compete for new traffic, especially as the craft beer industry starts to show signs of maturation. Retailers have found success by providing personalized experiences, such as local food and wine pairing events or in-store sampling to familiarize customers with niche selections.