by Jeff Reeves | March 28, 2011 10:57 am
Whole Foods Market (NASDAQ: WFMI) is know for its local veggies and meats, and has become a grocery powerhouse by focusing on quality foods that are good for you – even if they are a bit pricey. Whole Foods stock has soared on that strategy, with shares of WFMI up about 80% in the last 12 months.
It’s no shock that Whole Foods is building on this image by constantly expanding it’s lineup of products. But what may surprise you is that the next area of growth for Whole Foods appears to be in the bartending business.
The retailer recently opened Bar Lamar in its flagship store in Austin, Texas, serving up locally produced wine and microbrews to thirsty shoppers. And it apparently was such a big hit that several other locations quickly followed suit, with more than a dozen more stores building out their bars as we speak for a broader test
So where are these Whole Foods beer and wine vendors? Currently here are bars in California, and two each in Arizona, Illinois and Texas, among others. And according to CEO Walter Rob, by 2012 there will be at least seven more bars gracing Whole Foods locations. That includes the prospects of a tiki bar in Hawaii.
Obviously, Whole Foods isn’t trying to compete with the traditional bar scene. The appeal of fine wine and craft beers – often with high price tags – fits in well with the overall store mission of quality premium foods. It could also have the added benefit of causing customers to linger, and thus maybe pick up a few more items from the grocery section.
The move also makes sense, since bar tabs are very high margin additions to any business. Prepared foods like the salad bar or hearty soups at Whole Foods already give the place the appeal of a restaurant for some shoppers, and ability to serve beer and wine will amplify the profits.
It’s also worth noting that Whole Foods isn’t the only major corporation finding fertile groun in the bar biz. Starbucks (NASDAQ: SBUX) is testing premium beer and wine sales in a small number of Seattle coffee shops. Starbucks beer and wine sales seem to mesh well with its premium coffee lineup.
The risk, of course, is that Whole Foods will see rowdy customers or poor behavior that are more often associated with barrooms than grocers. But chances are the kind of barfly who down a $5 pitcher of PBR and then picks a fight isn’t a Whole Foods customer. The higher prices of the grocery should naturally turn off folks who are just looking to get drunk as quick as possible.
Then again, wealth doesn’t always buy class. So only time – and the Austin police blotter — will tell the kind of patrons Whole Foods gets to belly up to the bar.
Jeff Reeves is editor of InvestorPlace.com. As of this writing, he did not own a position in any of the stocks or funds named here. Follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook.
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