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US: Will new Sam’s Club wines change the market?

Wal-Mart-owned wholesaler Sam's Club hopes that launching its own range of wines will shake up the US market and attract more people 'who like fine wine'.

In a move to cater to a higher-end demographic the Bentonville, Arkansas-based Sam’s Club, which is part of Wal-Mart, launched its first private label wine late last year and has now expanded the line-up.

The brand now includes a Chardonnay, a Riesling, a Cabernet Sauvignon and a red blend. The reds were added this year and a sangria and a Prosecco are slated to be launched shortly. The current wine selection is priced between $7.98 and $10.48 for 1.5-litres of the Mosel Riesling and is available in 37 markets.

The wine brand launch is part of an overall relaunch of the chain’s ‘Member’s Mark’ line which includes everything from patio furniture to electronics. The target market is ‘people who like fine wine’, said Sam’s Club spokeswoman Dianna Gee.

So, what next?

The extension of the Member’s Mark line into wine has been seen as a play for market share of Costco’s Kirkland wine brand, but not everybody thinks it will succeed.

There is ‘very little overlap between Sam’s and Costco, particularly because of their demographics’, said Barbara Insel, president and CEO of the Napa-based Stonebridge Research, a wine data analyst firm.

She added that a couple of years ago, ‘the median household income for Costco’s customers was $110,000, versus $80,000 for Target and $55,000 for Wal-Mart. Sam’s Club is somewhat up on Wal-Mart but nowhere near Costco’s [average household income].’

Because of its ties to Wal-Mart, according to Insel, Sam’s has very different merchandising practices: Costco focuses on a smaller number of premium products, while Sam’s has a large number of low-cost products. It has a ‘much more down-market demographic.’

As a result the trust of private label products that Costco’s customers have is unlikely to spread to Sam’s Club private label wine, she added.

Not everyone was negative about the new wine label. ‘Sam’s dive into wine will be a positive for the industry,’ said sommelier Sean Beck of Houston’s Backstreet Café.

‘It’s encouraging an audience that has yet to ‎really embrace wine, hopefully making it a part of their daily life.’

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