THE NEW WORLD ORDER

For some supermarket chains, the modus operandi for resetting wine departments these days could be "Out with the Old World, in with the New."New World wines -- varietals from vineyards in the Americas, Australia and South Africa -- are making a big splash in supermarkets, and sometimes at the expense of traditional Old World producers in France, Italy and Germany, according to retailers in markets

For some supermarket chains, the modus operandi for resetting wine departments these days could be "Out with the Old World, in with the New."

New World wines -- varietals from vineyards in the Americas, Australia and South Africa -- are making a big splash in supermarkets, and sometimes at the expense of traditional Old World producers in France, Italy and Germany, according to retailers in markets across the country where wine is merchandised in supermarkets.

In addition, newcomers from Eastern European nations such as Romania are making their mark in the supermarket racks and displays.

According to Impact Databank, a New York-based newsletter published by Shanken Communications that tracks the wine business, case shipments of wine from Italy, France, Germany, Greece and Portugal all exhibited double-digit drops from 1992 to 1993, while wines from Australia, Brazil and Romania showed double-digit increases for the same period.

The action is focused mostly in the 750-milliliter varietals segment of the business, which is the fastest growing part of the supermarket wine business.

Retail wine merchandisers said the appeal in some cases is price. Indeed, most said the quality of many domestic and New World varieties has improved enough to make them a much better value than before. They also said familiarity and more "approachability," in comparison with traditional European imports, is helping.

In any event, the New World influence on store inventory and sales is becoming more pronounced in many markets. The ascension of domestic varieties was mentioned the most.

"We have been beefing up our selections of American wines," said John Wiggins, manager of Byerly's Wine & Spirits Shop, Bloomington, Minn.

"A number of years ago, when chardonnay took off, we really upped the number of selections we had in chardonnay. Now, we are upping the number of selections that we have in merlot. Merlot is very hot in our stores," he said.

"American wines have been gaining in share for years, especially when the European wines went up in price during the 1980s. There is no question in our stores; we don't have to worry about the California wines. We can set them out on the shelf and they are going to sell," he said.

A&P, Montvale, N.J., is giving domestic varietals a more prominent position in its latest department resets.

"We are very heavy into category management right now, and we have been adjusting our stock in favor of the American wine," said Thomas Quinn, vice president of beverage alcohol marketing at A&P.

"The biggest increase has been within the 'fighting varietals' -- the major categories and the major brands like Sutter Home, Glen Ellen, Sebastiani and E&J -- and we have to spread our selection of them, because that is where the action is. This is a strong category that is still showing growth. American wines have held up quite well in our stores."

The traditional imports, meanwhile, are showing signs of weakness. "They are basically showing decreases, and we have to adjust," Quinn said.

European wines are having particular troubles in California, according to some retailers operating in the state.

"We have definitely seen American wines increasing in sales, at the expense of European wines -- especially in California," said Lewis Santoro, vice president of liquor operations at Hughes Family Markets, Irwindale, Calif. Imports are only about 8% of the chain's business, and space is allocated accordingly, he said.

"Years ago, imports were the big factor, and now it is totally reversed. Riunite, Lancers, Mateus and Blue Nun were the biggest hitters and just flew out of our stores. Now they are almost nonexistent," he said. "And there have been a lot of experimental grape types out here. There is a broader selection of domestic wines today.

"We always had a good selection of wine, but the shift has been a downsizing of the imported section, and an increase in our premium California sections. We also downsized our distilled spirits to give extra space to wine," he said.

Bob Jennings, buyer-merchandising manager of the beverage department at Raley's, West Sacramento, Calif., said that since the bulk of his stores are located in the heart of wine country, sales of California wines naturally outstrip all others.

"We have been increasing our selection of American wines for the past year, and now we are pretty much holding steady. With the imported wines, we just carry the basic items in each category. We don't carry the extensive European wines at all because they don't sell well," he said.

Liz Little, president of V. Richard's Market, a one-unit upscale specialty supermarket in Brookfield, Wis., said she finds American wines to be more customer-friendly, which could explain their increased popularity.

"On the domestic wines, the price is a little more competitive, and they are more approachable -- you can pronounce them nine out of 10 times. We have definitely increased our domestic, and especially with the surge of wines coming from places other than California, like Oregon," she said.

"Right now the trend is in merlot. Merlot is becoming the hip and trendy wine, along with pinot noirs. Also, at our wine tastings, and in the store, we're seeing that a lot of people are buying the blends. Blends are more drinkable and people don't feel that they have to be as educated about wines to enjoy them," Little said.

Wonder Market Cos., Worcester, Mass., is seeing strong demand for domestic jug wines.

"In our stores, people buy wine by price. Our business is mostly jug wines, which are mostly American," said Emily G. Holdstein, senior vice president.

European wines are not hurting in every market, however. They could actually be gaining ground in the Southeast. For example, they are showing positive growth at Harris Teeter, Charlotte, N.C.

"We're seeing an influx and a gain, although not a mammoth gain, in the European wines, and generally in the country wines from the South of France," said Walt Sumner, wine/beer manager at Harris Teeter. "Italy has made a big comeback with the Tuscan wines from Chianti. Chianti Pino Grecio is big.

"Imported wines in the $6 range are hot. We didn't offer them in the Southeast before, but at Harris Teeter, we're starting to introduce them to our customer. And our customers are snapping them up," he said.

As a result, Harris Teeter has been bucking trends elsewhere in the United States, and reducing the facings of some of the name-brand wines from California in order to increase the number of import stockkeeping units that it offers.

"We're making sure we have enough in stock and don't run out, but we're finding out that in the past we may have overstocked those [brand-name American] wines. We're trying to find that fine line, and when we cut down on some of those overfaced and overstocked items, it certainly makes room for an increased selection of foreign wines," Sumner said.

However, Harris Teeter's Sumner joined other merchandisers in noting that nontraditional imports are a factor in that trend in his stores.

"South African wines are a curiosity right now. There are a lot of them coming into the country. Generally the quality of the South African wines has been excellent. But the jury is still out on whether consumers will keep buying them as part of their regular buying patterns," said Harris Teeter's Sumner.

"We are seeing a minor increase in Hungarian, Romanian and Slovakian wines. They are just coming into the market and ballooning the figures -- we still have to see how they do," Sumner added.

As with American wines, a steady upgrade in quality is helping fuel their growth. "The wine that they produced 15 or 20 years ago was terrible, but with the introduction of stainless steel equipment and improved sanitation and vinticultural practices, the wines are coming out with good fruit character, and they are very drinkable," he said.

Novelty is one attraction for this product group. Another is price. Since production costs are often low in those markets, wines from these countries can retail for substantially less than domestic and traditional European sources, while keeping retailers' margins intact.

"We find that the traditional wines are not selling as fast as the foreign bargain wines, in the $3 to $5 category," said Michael Law, wine sales manager at Big Y Foods, Springfield, Mass.

"While we haven't seen the growth of American wines coming at the expense of European stock, we have been noticing a shift away from anything sweet, as well as the bulk sizes and name brands," he added.

"We've had some success with the Chilean wines. Santa Carolina makes good red wines such as cabernet and merlot," said Jennings of Raley's.

Most retailers said margins on American, traditional European and imported wines from other countries were pretty closely aligned, although in some instances imported wines had the edge.

Besides readjusting the mix and facings throughout the department, most merchandisers are also finding it best to separate the domestic wines from the imported wines.

"We do not commingle the California wines or American wines with the imported wines. They are across the aisle from each other, and are not even in the same shelf set," said Jennings of Raley's.

At A&P, where wine is sold in about 500 stores -- 100 of which also sell spirits -- imported wines are generally grouped by country.

"In American wine we really merchandise by brand, except in our 20 or so warehouse-type liquor stores, where we can arrange all of the boutique wines, like higher-end chardonnays, together. But from the 'fighting varietals' on down, it is set by brand," A&P's Quinn said.

Big Y operates a 20,000-square-foot liquor store in Northampton, Mass., under the Big Y Wines & Liquors banner, with the largest climate-controlled wine cellar on the East Coast. It segregates wines not only by country, but also by price, Law said.

"Our wines over $5 are merchandised in lay-down racks organized by country, while our wines under $5 are case-stacked and merchandised with informative signs," he said.