by Jack Robertiello
Beverage Dynamics, September 22, 2014
Buster’s is Watching the Ballot
When a company operates for nearly 60 years, dealing with change becomes part of its business DNA. But the owners of Buster’s Liquors and Wines, long known as Memphis, Tennessee’s premier wine and spirits shop, are in the midst of a serious shift. In what could be the most serious change in decades in the state’s wine and spirit retail business, Election Day looms as localities prepare to decide whether to alter the way beverage alcohol is sold.
Some significant changes have already occurred in Tennessee: as of July 1, wine and spirit retailers like Buster’s were granted the right to expand beer selection dramatically, and to start selling a wide range of non-beverage alcohol items like glassware, mixers, and food.
But the major concern for retailers in the state is the possibility that grocers will soon be able to sell wine. As of mid-August, pro-grocery sales teams had gathered enough signatures in 37 towns and municipalities across the state to get the referendum on the ballot. (To be placed on the ballot, pro-grocer groups will need to gather sufficient signatures in 156 communities on a locality-by-locality basis, as each designated area will be allowed to decide for themselves. Currently, Tennessee also disallows franchise stores in the liquor business, with owners limited to one outlet.)
Joshua Hammond, the president of Buster’s, has been at the forefront of the ongoing tussle. “Right now, the grocery lobby is trying to get folks to sign and get the referendum on the November ballot; in Memphis, it will be iffy — expanded alcohol sales may concern more of our citizens, and shopping local has a bigger impact than in Nashville, where it may be more likely to pass,” he says.
The rules, as Joshua reads them, could make wine sales almost ubiquitous in the state. “It’s called the Wine in Groceries bill, but to me it should be called wine in gas stations,” he says. “They defined a grocery store as a business of 1,200 square feet and selling at least 20 percent food product — that opens the door for much more than grocery stores selling wine. It will really change the landscape of where wine will be sold in Tennessee.”
Hammond explains that the law the legislature passed allowing wine in groceries was hashed out after years, with benefits granted to established retailers regardless of any referendum.
“The deal that was finally worked out allowed wine and spirit retailers to expand what we sell, and the grocers got the chance to have a referendum. We did a lot of things that make it more equitable, but I still don’t think we can make up for when grocery stores start taking our bread and butter by selling accessories and other things,” he says.
Founded in 1954, the 10,000 square-foot Buster’s is now being run by Josh, along with his brother, company CEO Morgan; they’re the third generation of family ownership following father Rommy and grandfather Buster (the founder). Josh is also president of Tennessee Wine & Spirits Retailers Association (TWSRA), the organization that represents the state’s 500 or so independent retailers who have been resisting the changes promoted by the large national grocery chains. Meanwhile Kroger, Walmart, Costco and others have been busy gathering signatures at their many locations.
He’s expecting that if wine in groceries passes in his market, up to half his wine business will be affected. While Buster’s has a well-earned reputation as a fine wine business, Joshua points out their customer base includes every type of wine consumer. “We sell a lot of bread and butter items — popular brands like Kendall-Jackson and Clos du Bois, as well as 1.5 liter bottles and box wine,” he says.
“When you have 10,000 items, you’re going to attract people with all types of palates, from the white zinfandel shopper to enthusiasts looking for an albarino from Spain to pure collectors we call ‘cherry pickers,’” he says. “Because of that Buster’s is unique because we’re able on the one hand to supply value, but on the other end service the high end customer looking for a special wine or spirit.” Buster’s was voted the premier wine shop and liquor store for the Memphis Flyer’s reader’s poll for nearly two consecutive decades.
Meanwhile, Buster’s deals with the changes that took place July 1, adding items including Reidel glassware, wine accessories and a wider selection of beer (before the new law, wine and spirits retailers were limited to selling beer at six percent alcohol and above — now, all beer can be stocked).
Buster’s may be the largest wine and spirits retailer in the state at 10,000 square feet, but the Hammond’s are eyeing further expansion of perhaps as much as 6,000 adjacent feet.Those plans are preliminary, though, and Josh doesn’t expect any announcement before the end of the year.
“Before the bill passed, we couldn’t even sell a corkscrew, but this has opened the door to things like gourmet food and breads, oils and vinegars and high end products, and that’s why we’re looking to expand,” he says. “We don’t want to give up our core business, but we think it’s an opportunity for us to become a full service beverage center with perhaps a growler station and tasting areas.”
That wouldn’t be the first time Buster’s has expanded.
In its current location in East Memphis, Buster’s got a fresh start when founder Buster Hammond and son Rommy sold the stores they owned separately in downtown Memphis and started fresh together in what was then East Memphis.
In the following years, the city sprawled eastward, so much so that Buster’s is now on the border between midtown and East Memphis, prime real estate only blocks away from the University of Memphis along a main thoroughfare.
And what started as 1,000 square feet in 1968 has expanded seven times to reach its current 10,000 square feet as spaces opened up in their shopping center location. Featuring a wide selection of wine, beer and spirits, the store is proud of its tagline, “If we don’t have it, you don’t need it.”
That sort of expansion is only possible when built on a significantly loyal customer base. “We’ve remained popular from a combination of things, but first and foremost it’s our hospitality and service, recognizing our customers when they walk in and trying to help them find what they want while being friendly. When you do those kind of things, you build a rapport, and that’s really important,” Josh says.
Going the extra mile, making special orders, seeking out hard to find items — these are the sorts of services Buster’s built their reputation on, he says, and it’s something that grocers won’t and can’t provide.
Josh attributes Buster’s growth from a liquor retailer to a nationally known wine merchant to his father’s interest and curiosity in exploring and expanding the store’s wine selection in the early 1970s. He pioneered the broadening of the wine retailing business in Memphis by taking on and promoting wines from unknown regions, at a time when California was best known for jug wines.
“Having that philosophy toward wine and appreciation of it has allowed us to continue that reputation to the present day,” he says. “But it goes hand-in-hand with service. We’ve got the wine people want, but what makes a difference is our people out there every day talking with our customers, working with them and communicating with them.”
He considers having several well qualified wine experts on staff, as well as numerous staff members eager to participate in pouring samples and speaking with customers at events, a very important aspect of the store’s marketing approach.
Even though Memphis is a sophisticated wine market, regional preferences influence the company’s purchasing decisions. “We’ve prided ourselves on our Italian, French and even Spanish wine selection, but make no mistake about it, when you think about Mephis and the South, our cuisine is geared toward a sweeter palate and that’s reflected in the wines we carry,” he says. “The majority of the people in the South want fruit-forward and easy to drink wines, rather than dusty or extremely dry; however, they are willing to explore.”
So in addition to fine wines, Buster’s has maintained a connection to national and regional trends, like the growth of Moscato and sweeter wines in the past few years. “These can make a good entry for many wine consumers — they have to start somewhere, and if you give them a dry or tannic wine the first time, it might not do it for them. There are not enough starting points out there until they can begin to educate and grow their palates.”
Another consideration in the possible future expansion is Buster’s’ welcoming of new products. “Because we continue to say ‘yes’ to our suppliers, our store continues to expand. When we take on new items, our staff gets excited about them, and then so do the customers. We dare to go where others weren’t willing to, maybe, and put up dollars to buy wine when others wouldn’t.”
But the folks in charge of Buster’s aren’t as swift to say ‘yes’ these days. The economy of the last six years or so changed how they approach product selection.
“The recession taught us some lessons on how to be good retailers. We were at a point where everything we stocked sold — it didn’t matter what the price point was and we didn’t have to make critical decisions about what to bring in. But the recession really made every retailer step up and make some changes — now we have some products on the shelf that are going to require more attention. Foot traffic solves a lot of problems, but when you have the foot traffic and the customers don’t have as much money, that’s a different problem.”
So close outs to reduce stock are more common now, and new items need to establish a market quickly. “We’re loaded to the max, and you can’t welcome new products when you’ve got no place to put them. So you’ve got to address that by moving out old stock and you’ve got to be up for the challenge. We do so because we understand that new items are a significant factor in keeping our store vibrant for our consumers,” Josh says.
The recession also slowed the annual compound growth of Buster’s wine sales for the first time in more than 50 years; the percentage has receded from a high of 63 to its current 53 percent of sales. Josh says the recession caused customers to trade down within the wine category, but also over to spirits, which were already poised to surge (beer currently only accounts for a couple of percentage points, with spirits accounting for the remainder of sales).
The Hammonds have been at the epicenter of the American whiskey boom, outpacing national trends and up more than 40 percent over the past few years. Finding and stocking new or rare bourbons and ryes has become far more important, and with local distillers also contributing to the boom, Buster’s has developed a significant whiskey business.
Currently, Buster’s has 14 private barrel whiskey selections in barrel, and Josh is concerned about the effect of the so-called whiskey shortage on his business. “Our biggest supplier has been Buffalo Trace though I just heard they would be limiting us to only five barrels this year,” he says. “Private barrels are obviously getting much more popular.”
Buster’s also does a good business in the Tennessee distillers including Pritchard’s, Old Smokey and Corsair. “These guys are doing a really good job marketing here in Tennessee and the ‘shop local’ thing is something that crosses over to all aspects to the industry. Most of the local bars carry some of their stuff partly because it’s a source of pride to carry Tennessee products.”
On the operational side, the new law that has allowed Buster’s to carry non-alcohol has created some other issues. Tennessee stores have long been prohibited from shipping or delivering, and while the new law would allow possible delivery, the rules and regulations haven’t been fully determined by the state Alcohol Beverage Commission — at least not in a manner that have encouraged the Hammonds to rush into the service.
So in the meantime, internet sales will remain for pick up only, as face-to-face transactions have long been the prevailing limitation. Buster’s launched an easy-to-shop website with more than 8,000 items about two years ago, a project they are very pleased with so far. “People seem to love it, and we average more than 250 visitors a day, with about half of them local, so it’s well worth its weight in advertising, if nothing else than to show who you are in the community.”
Keeping the Buster’s name out there is important as well, whether through advertising weekly in the local newspaper, promoting the shopping experience through in-store tastings several days a week of beer, spirits and wine, hosting wine dinners each month with local restaurants, and participating in a number of events throughout the city using the large “Buster’s” event tent.
And keeping operating systems current in such a large store is also important, as in employing hand held devices to keep inventory current and limit out-of-stock snafus, crucially important as on-line shopping grows. But right now, the focus is on the various referenda. The TWSRA doesn’t have the wherewithal to mount a campaign of any size comparable to the money being spent by the giant grocers to promote the “Wine in Groceries” law, but they are making sure local retailers are fully informed about the potential impact on their business, and getting ready to adjust to what may be a much different wine retailing landscape.
“This is uncharted territory – there hasn’t been a change comparable to this in some time, and no one can really predict the impact on us as retailers and on the rest of the state if and when so many others are allowed to sell wine.”