Wal-Mart’s Sam’s Club Gets Into Wine Business
Wholesale club chain Sam’s Club, a division of retail giant Wal-Mart Stores Inc. (WMT), is introducing its first-ever private brand wines this year, a move that could challenge Costco Wholesale Corp.’s (COST) position as the leading wine retailer in the U.S.
Wholesale club chain Sam’s Club, a division of retail giant Wal-Mart Stores Inc. (WMT ), is introducing its first-ever private brand wines this year, a move that could challenge Costco Wholesale Corp.’s (COST) position as the leading wine retailer in the U.S.
Sam’s Club, which recently introduced a chardonnay wine from California's central coast for $8, said Wednesday that it would bring a cabernet from Napa Valley, a Champagne and a prosecco to its stores this year. The wholesale chain plans to launch the wines under its private label Member’s Mark. Sam’s Club currently sells wines from other brands.
Costco has already been successful with private brand wines, which, according to Forbes, contributes significantly to the roughly $4 billion worth of wine that the warehouse stores sell yearly. Sam’s is now looking to catch up with Costco. Costco has the advantage of price, with the average wine sold at its stores 20% lower than at other retail stores, according to Forbes.
Sam’s Club is also working to add more private label products other than wines — gourmet foods such as olive oil from Italy as well as handmade caramels, for instance. Fortune noted that Costco’s Kirkland Signature brand, which features respected wines and an assortment of products, generates about 20 percent of Costco’s annual sales and has been one of the main reasons it has routinely beat Sam’s sales growth over the years.
Sam’s Club, which has about 650 stores in the U.S., would be hoping that its latest focus on private label products would help close the gap on Costco. CEO Doug McMillon said during the company’s recent fourth-quarter earnings call that comps grew at Sam’s Club during each quarter of 2016.
Wal-Mart also got some Wall Street love on Wednesday, with Karen Short at Barclays writing in a research note that Wal-Mart’s acquisition of Jet.com is improving the retail giant’s e-commerce position, adding that the acquisition might be “poking the bear” of Amazon. Barclays currently has an $82 price target on WMT. The shares closed today at $74.07.
Read more at Source: Investopedia
