There has been much speculation in the Press and among North Idaho residents about the likelihood, or even the chance, of a Trader Joe’s opening in our area. Having some crossover with the company — given that we sell wine and so do they — we have the chance to have a bit of somewhat grounded speculation about why they have not yet come into this market. While we can’t speak for the company, nor can we know for certain why they have yet to show up, we have a sense of a few things that might be involved.
We have known for some time now from our shop-related real estate discussions that Kootenai County is one of the most “over grocered” markets in the country. On a per-capita basis, there are just more grocery stores here than frankly are needed. While this has nothing to do with liquor laws in Idaho and the ability of Trader Joe’s or any other company to execute on their business plan, it does likely present some statistical and strategic barriers for a company like theirs to open here.
What is behind their reticence likely is some legal barriers to their strategy for the wine business. Both Trader Joe’s and Total Wine have a similar business model when it comes to wine. In both cases, their wine sales model is based on selling private label wine. Private label wines are purchased in bulk by a large corporation like Trader Joe’s, Total Wine or even Costco. The corporation then bottles the wine and most of them are adorned with some clever marketing label like “Vineyard Hill Cabernet.” There is no Vineyard Hill winery; it is strictly a label that the corporate marketing folks have come up with, and they come up with literally thousands.
While many retail companies use private label wines, for these two behemoths, their entire business plan is based almost exclusively on private label. The reason they can’t do it in Idaho is private labels are illegal. In Idaho, we at The Dinner Party, along with every other retailer and every restaurant, have the right under the law to buy any bottle of wine that is distributed in the state. So, if we called the distributor that handles the wine for Costco and ask for a case of Kirkland Sauvignon Blanc, they would have to sell it to us at exactly the same price that Costco pays. It’s the law.
Our opinion has always been and remains that this is good for small business. It levels the playing field for all purveyors of wine, from the biggest to the smallest. And let’s be clear here, Trader Joe’s is big. I have read that they are the fourth largest grocery chain in the country! This part of Idaho Liquor law is brilliant in allowing all of us, big or small, restaurant or retailer, to have the same set of rules and the same prices at the wholesale level.
The reason these giant corporations like private label wine is that it allows them to eliminate competition. They can price whatever wine they want at whatever price they choose, because they prevent any competitor from getting the same wine. To be clear, wines that are private labeled have been discarded and sold off in bulk because they didn’t make the cut at the wineries that produced them. Even if the retail organization bottles under the same private label in subsequent years, the chances are slim the wine comes from the same vineyard or even the same winery, so the chance of you capturing a wine you have liked in later years are equally small.
Truth be told, this is one of the things I respect about Costco. By putting Kirkland on the label of their private label wine they are disclosing it is just that, and they are saying upfront that they will do all they can to choose wine that will live up to that label, year in and year out. I appreciate their honesty and transparency.
I encourage our legislators in Boise to maintain this vital part of our liquor law. It enables small business to flourish alongside larger companies, providing consumers with choices about which organizations they want to support. It also should give one pause in their enthusiasm for a mega-grocery store chain that attempts to pass themselves off as a small, friendly neighborhood store, while hiding their real strategy behind private labels.
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George Balling is co-owner with his wife, Mary Lancaster, of the dinner party, a wine and gift shop in Coeur d’Alene by Costco. The dinner party has won the award for best wine shop in North Idaho twice, including for 2018. George is also published in several other publications around the country. After working in wineries in California and judging many wine competitions, he moved to Coeur d’Alene with Mary more than 10 years ago to open the shop. You can also follow us on Facebook at facebook.com/#!/dinnerpartyshop.