Spec's and Total Wine Are Battling for Wine Supremacy, and You're Drinking the Benefits

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Want to buy a variety of brand-name wine, beer, and liquor practically at cost? Or shop an almost unprecedented number of Texas-made whiskeys, craft beers, and wines? Or choose from thousands and thousands of alcoholic beverages, a selection that dwarfs almost every other retailer in the area?

Then thank the battle between Spec's and Total Wine for control of the Dallas-Fort Worth liquor market. Over the past couple of years, the two chains -- Houston-based Spec's and Maryland's Total Wine -- have turned what used to be a gentlemanly and often price-controlled environment into the booze business' version of a pro wrestling cage match. This includes two lawsuits against Total (though none filed by Spec's).

"I'm not surprised that both chains are making little or nothing on these door buster kind of items, the national brands," says Dallas retail consultant Dwight Hill, who once ran the wine department at Neiman Marcus' NorthPark store. "We live in a highly promotional world, and we want a deal. These two companies are going to give it us."

As recently as the mid-1990s, the Dallas-Fort Worth market was still controlled by the family-owned chains that dated to the end of Prohibition and World War II: Majestic in Fort Worth and Sigel's, Red Coleman and Centennial in Dallas. (Goody Goody, the other Dallas family chain, didn't open until 1964.)

That started to change when large grocers like Kroger, specialty retailers like Whole Foods and Central Market, and the Costco and Sam's warehouse clubs came to town. Suddenly, a 6,000-foot store wasn't enough. The avalanche of wet-dry elections in Dallas and suburbs over the past decade made the old family chains, with their biggest locations on wet-dry lines, even less important. The entry of Spec's and Total (as well as Trader Joe's, the specialty grocer) finished changing the landscape, and the casualties included Centennial, which closed last year. Majestic went in 2011, bought by Centennial, and Red Coleman disappeared in 2005 when Majestic bought it. Sigel's, meanwhile, was almost acquired by Spec's in 2012.

Through all of this, consumers have seen what both Spec's president John Rydman and Total Wine spokesman Ed Cooper call a price war with little precedent anywhere in the country. Says Cooper: "There's no question this is a very competitive market, maybe the most competitive we're in. There are a lot of good retailers here. But the market has so much potential, the competition isn't going to scare us away."

Both say they're selling many items near cost, whether it's Kim Crawford sauvignon blanc from New Zealand; Segura Viudas sparkling wine from Spain; and national brand beer, vodka, and whiskeys (which are more difficult to identify, given how quickly those prices change). Partly, this is matching Costco's wine prices, a common practice for retailers across the country who see the Washington warehouse giant as the U.S. price leader. But Spec's and Total are also doing it in beer and spirits, and that doesn't happen in too many other places.

How does each manage to keep prices so low?

- Economies of scale. Spec's has 164 stores in Texas, 14 in DFW, and plans to open two more here. Total has 107 stores nationwide, with six in DFW. It says the state can support 25 or 30 more.

- Private labels. Profits can be one-third higher on brands that are exclusive to each chain. This isn't unique to Spec's and Total, and is becoming increasingly common, especially for wine. Costco's Kirkland and Trader Joe's Two-buck Chuck are very successful private labels, and Spec's and Total each does private label well. Total, with its Winery Direct program, has taken the concept where few other retailers have dared.

- Business acumen. This includes hard negotiating with suppliers and distributors for better prices (so hard, in fact, that eight people who work in the liquor business in Dallas declined to be interviewed on the record for this story). In addition, the recession has allowed each to open stores in prime locations without paying prime location prices. On Central Expressway, where Spec's and Total are practically next door to each other, just a short Range Rover ride from the Park Cities, the former occupies an old Toys R Us and the latter is in a closed Office Max.

The other question: How long will this last? Talk to those people who didn't want to be quoted and to a person they agree: As long as it takes for one side to win, given how much is at stake. That's one reason for the huge selections and all the Texas-centric beer, wines, and spirits. The old family chains never had to do things like that, but competition means that even national retailers like Cost Plus World Market sell Texas beer and wine with the wicker furniture and scented candles.

Both Spec's and Total see DFW, thanks to the maze of dry areas that have become wet or are expected to vote wet if and when an election is called, as one of the great growth markets in the country. Cooper, in fact, says Total expects per capita alcohol consumption in the area to increase, which is at odds with the long-time rule that wet-dry elections never increase consumption, but merely shift it around as consumers buy the same amount as always, but in newly wet areas.

Whatever happens, they'll be getting great deals.

Jeff Siegel writes The Wine Curmudgeon blog (winecurmudgeon.com), where he offers practical, consumer-oriented wine advice instead of the gobbledy-gook that passes for most wine writing. He is the author of The Wine Curmudgeon's Guide to Cheap Wine.

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