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Industry revenue growth slows in first quarter

Revenue across all industries grew 6.9% in the first quarter, data from the Philippine Statistics Authority’s (PSA) Quarterly Economic Indices report showed. This was slower than than the 8.9% recorded in the fourth quarter of 2017 and the 9.5% logged in the same period last year.
Expansion was observed across all industries. Finance posted the fastest growth with 11.7%. This was followed by Real estate (8.9%) and private services (7.7%).
Employment also rose during the period, with the total employment index increasing by 1.5%. Sub-sectors posting growth were: trade (2.8%), electricity and water (2.7%), transportation and communication (2.1%), private services (1.8%), real estate (1.4%), manufacturing (1.1%), and finance (0.5%). Meanwhile, mining and quarrying declined by 5.1%.
Total compensation rose 6.1% from 6.2% in the same period in 2017. — Mark T. Amoguis

7-Eleven operator targets to reach 3,000 stores by end of 2019

Philippine Seven Corp. (PSC) aims to reach 3,000 stores by the end of 2019, as it accelerates its expansion to stay ahead of competition among other convenience store operators.
“Hopefully end of next year we’ll be close to 3,000, and hopefully even faster after that,” PSC President and Chief Executive Officer Jose Victor P. Paterno told reporters in a briefing ahead of the company’s annual shareholders’ meeting in Ortigas Center on Thursday, July 19. — Arra B. Francia

Globe to offer voice service to enterprise customers

Globe Telecom, Inc. said it is partnering with the Vonage’s Nexmo for its application programming interface (API) to open a new service that will allow its business clients to use programmable voice solutions.
Globe Labs, the company’s innovations unit, said in a statement on Thursday, July 19, the voice technology is meant to support businesses that wish to connect to its market on a more personal level.
“These readily-available and highly-reliable voice solutions will enable businesses and enterprises to boost operational efficiency and customer support functions; increase their customer engagement and loyalty with automated, contextual and personalized messaging; and, ultimately deliver much better business results,” it said. — Denise A. Valdez

DoTr to roll out more than 200 modern jeepneys tomorrow

The Department of Transportation (DoTr) is set to roll out more than 200 modernized public utility jeepneys (PUJ) in Ermita, Manila tomorrow, July 20.
“Over 200 modern public utility jeepney (PUJ) units will be readily available for dispatch to operators with franchises validated by the Land Transportation Franchising and Regulatory Board (LTFRB),” the department said in a statement on Thursday, July 19.
It added, Classes 1, 2 and 3 of the modern PUJs will be distributed. Class 1 has a maximum capacity of 22 passengers, Class 2 has the same number and will allow standing passengers, and Class 3 has a sitting capacity for more than 22 passengers. — Denise A. Valdez

Fitch affirms PHL’s investment grade

By Melissa Luz T. Lopez
Senior Reporter
FITCH RATINGS has kept its credit rating for the Philippines a notch above minimum investment grade amid strong growth prospects, even as it flagged rising inflation, rapid bank lending and a growing trade gap that could signal overheating risks.
Fitch on Wednesday affirmed the Philippines at “BBB” with a “stable” outlook, steady from the debt watcher’s December upgrade that placed the country one notch above minimum investment grade. This matches the rating given by major credit raters Moody’s Investors Service and S&P Global Ratings.
In a statement, Fitch said the ratings balance a “favorable” growth outlook and modest debt burden against a lower per-capita income and “weaker governance and business environment indicators,” compared to similarly rated economies.
Fitch sees Philippine gross domestic product (GDP) growing 6.8% this year, which if realized will pick up from 2017’s 6.7% but fall short of the government’s 7-8% target. The pace is expected to be sustained annually till 2020 on the back of robust domestic demand to maintain the country’s status as a growth leader in Asia.
Maintaining investment-grade rating helps cut borrowing costs for the economy, as it lowers the risk premiums on loans extended to the Philippines. The “stable” tag means current conditions support the country’s rating over the next year.
“Strong macroeconomic performance remains a rating strength, notwithstanding overheating risks,” Fitch said.
“[T]he agency believes the economy faces some overheating risks — evident from a recent rise in inflation, rapid credit growth and a widening trade deficit — although steps taken by the Bangko Sentral ng Pilipinas (BSP) to tighten monetary policy may contain these risks.”
Inflation hit a fresh five-year peak of 5.2% in June that brought last semester’s average to 4.3%, well above the central bank’s 2-4% target band. The pace is seen to rise further in July-September before easing later this year.
Economic officials welcomed the rating affirmation, although the central bank disputed overheating concerns.
A statement from the government’s Investor Relations Office said strong growth can take place without “runaway” inflation, as infrastructure investments should boost overall productive capacity.
The BSP introduced back-to-back rate hikes of 25 basis points (bp) each in its May and June meetings to rein in inflation pressures, which brought benchmark rates to 3-4%. A number of economists now say that another rate increase is on the table in August, with some even betting on a one-step 50-bp hike.
Fitch sees full-year inflation averaging 4.4%, well above target but slower than the BSP’s downgraded 4.5% forecast average.
“The one-off impact of the tax hikes is likely to dissipate in 2019, and therefore we expect average inflation to fall to around 3.8% in 2019,” the credit rater added, even as it said that the new tax law’s enactment signaled the government’s “commitment to reform.”
Starting Jan. 1, Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion (TRAIN) Act, reduced personal income tax rates for those earning below P2 million and simplified donor and estate taxes. Foregone revenues are offset by the removal of some exemptions from value-added tax; increased tax rates for fuel, automobiles, tobacco, coal, minerals, documentary stamps, foreign currency deposit units, capital gains for stocks not in the stock exchange, and stock transactions; and new taxes for sugar-sweetened drinks and cosmetic surgery.
As of May, state revenues were up 19% from last year and continue to beat targets.
With TRAIN, Fitch sees state revenues rising to an equivalent of 16.2% of GDP this year and 16.7% in 2019, from 15.6% last year. This should support fiscal stability even as the government ramps up spending on infrastructure, and will keep the budget deficit within the programmed three percent of GDP.
At the same time, the debt watcher flagged that the recent Supreme Court decision requiring the national government to allocate a bigger share of tax collections to local governments may “put upward pressure” on general government debt and pose as a challenge for managing public finances.
On trade, Fitch sees a wider but still manageable current account deficit this year amid a continued imports surge. Inflows from worker remittances and business outsourcing will offset these outbound flows and keep the gap at 1.1% of GDP.
Strong foreign investment inflows, a stable banking system and robust dollar reserves also lend further strength to the economy at a time of uncertainties, Fitch said, even as rising global interest rates and the persistent trade gap keep the peso weaker against the dollar.
Fitch also cited the country’s weaknesses in terms of business climate and human development. It flagged that a reversal of reforms and instability in the financial system could pull the country’s ratings down. Continued strong growth, stronger governance standards and a sustained pickup in tax collections, on the other hand, could help improve ratings.

DoF notes select taxes exceeded first-half targets

By Elijah Joseph C. Tubayan
Reporter
INCOME, percentage and excise tax collections of the Bureau of Internal Revenue (BIR) exceeded targets last semester, the Department of Finance (DoF) said in a statement on Wednesday.
The DoF cited the BIR’s preliminary revenue data showing total income tax collected in January-June totaled P500.59 billion, 2.27% more than the P489.46 billion recorded in the same period last year and about 11.15% higher than a P450.38-billion target.
Percentage tax collections reached P44.16 billion that period, 15.47% more than the P38.24 billion the past year, beating the P43.74-billion target by 15.48%.
Value-added tax (VAT) collections, however, failed to meet the target. The DoF said VAT collections last semester totaled P179.95 billion, up from the past year’s P178.44 billion but 19.09% short of a P222.42-billion target.
“… [I]ncreases in the percentage and income tax collections over the 2017 period indicate that SMEs and self-employed individuals that have not exceeded the VAT threshold are now opting to pay either the eight percent income tax on gross sales or receipts and other non-operating income or the percentage tax and the graduated income tax rates under TRAIN,” the DoF explained.
Repubic Act No. 10963, or the Tax Reform for Acceleration and Inclusion law that went into effect on Jan. 1 reduced personal income tax rates, removed some VAT exemptions and raised the VAT threshold to P3 million from about P1.9 million.
The same law also raised taxes on tobacco, minerals, fuel and cars, among others, and imposed new taxes on sugar-sweetened drinks and cosmetic procedures.
Finance Assistant Secretary Mark Dennis Y.C. Joven told reporters on Thursday last week that excise tax collections reached P152.72 billion last semester, 71.43% more than the year-ago P89.09 billion and beating a P136.82-billion target. “Total excise tax collection grew by 11.6% above target for the first half of the year,” he said.
“Sin” taxes — or those imposed on alcohol and tobacco products — accounted for about 74% of total excise tax collections. Mr. Joven said that taxes collected from such products reached P112.46 billion last semester, up 41.38% from the P79.5 billion collected a year ago and beating a P77.54-billion target by 45.03%.
Tobacco excise taxes alone generated P78.95 billion, 53.5% more than the year-ago P51.43 billion and 53.53% higher than the P51.42-billion target.
Alcohol taxes raised P33.51 billion, up 19.2% from the P28.11 billion the past year and 28.3% more than the P26.12-billion target.
“’Yun ’yung pinaka-aggressive — ’yung growth ng tobacco (tax collections showed the most aggressive growth),” Mr. Joven said, adding that “analysis shows there is some front-loading kaya medyo tumaas ’yung collection (increased by that rate) for the first half of the year.”
Since July, tobacco taxes are now set at P35 per pack from P32.50, as mandated by the TRAIN law. The taxes will gradually increase to P40 per pack until January 2022.
Finance Secretary Carlos G. Dominguez III said that revenues from tobacco products should steady after the hike in tax rate. “That will catch up, don’t worry about it. Because you cannot keep cigarettes long. First of all, you know there’s inventory carrying cost also…you have to warehouse it… you know, the quality deteriorates because of the humidity. You can front-load some but I know you can’t front-load more than six months,” he said.
Mr. Joven said that “… our statistics… show faster growth in excise tax collection; so we hope that this trend continues…”
“The problem with front-loading, you can only do so much. You cannot front-load your entire consumption or… from July to December,” he added.
DoF data also show excise tax collections generating P18.03 billion from oil products, 31.37% below target but 180.8% higher year on year; P2.92 billion from automobiles, 14.09% below target but 40.62% more than the past year; and P1.56 billion from minerals, missing the target by about 29.39% but still 67.16% more from last year’s first semester.
The BIR aims to collect P2.039 trillion this year. Latest data show it raked in P827.73 billion in the five months to May — up 17% from the P716.8 billion in 2017 — which is equivalent to 40.59% of the full-year target for 2018.

WTO credibility, survival at risk from trade war

GENEVA — The credibility and survival of the World Trade Organization (WTO) is under “serious threat” as major economies put up protectionist barriers, independent experts warned on Tuesday.
The report issued by the Bertelsmann Foundation comes amid a deepening trade dispute between China and the United States which has engulfed other major trading partners.
US President Donald Trump has warned he may ultimately impose tariffs on more than $500 billion worth of Chinese goods — nearly the total amount of US imports from China last year — to combat what Washington says are Beijing’s trade abuses.
China has sworn to retaliate at each step.
The 14 experts, led by Bernard Hoekman, urged WTO’s 164 member states to agree on a new work program that will address trade-distorting policies and preserve the multilateral rule-based trading system.
“Sticking to status quo modes of operating is a recipe for the institution’s gradual demise,” they said in the report, “Revitalizing Multilateral Governance at the World Trade Organization.”
It is urgent to avoid “further erosion of the WTO’s credibility,” they said, adding: “This includes preventing backsliding by WTO members towards unilateral use of protectionist trade policies and ensuring that disputes are resolved effectively and efficiently.”
In a statement, WTO director general Roberto Azevedo welcomed the “very timely” report.
The United States told the WTO last week that a “reckoning” over China’s unfair trade policies is urgent and is too big for the WTO to handle.
The experts said that problems go beyond the failure to conclude the WTO’s stalled Doha round, launched in 2001, with some national policies distorting trade and threatening to undermine the system.
The report cited the US invoking national security concerns to impose tariffs and quotas on imports of selected products as a prime example.
“Such measures create systemic risks given the prospect of tit-for-tat imposition of trade-distorting measures and greater use of national security justifications by WTO members for the imposition of protectionist measures,” it said.
China and India also feel that the WTO is unbalanced and treats them unfairly, the report said.
Failure to clinch new WTO agreements has led states to set up more than 400 preferential trade agreements since 2000, it said.
“Care must be taken that the baby is not thrown out with the bathwater,” it said.
“All countries, large and small, have a major stake in an effective, rules-based multilateral trading system.”
More than 500 disputes have been brought to the WTO since 1995, the report said.
Under Mr. Trump, the United States has demanded that the WTO’s dispute system is changed to stop Washington getting what he regards as an “unfair deal.”
Mr. Trump has also blocked appointments to the WTO’s appeals chamber to replace judges as their terms expire.
“If this matter is not resolved, the Appellate Body will be down to three members in September 2018, the minimum needed to consider an appeal, and will cease to be operational at the end of 2019 when two more vacancies arise,” the report said. — Reuters

PFA wants to double local brands going overseas in next two years

By Arra B. Francia, Reporter
THE PHILIPPINE Franchise Association (PFA) looks to double the number of Filipino brands overseas in the next two years, initially focusing on countries with large Filipino populations.
“Our goal in PFA, I think we have about 30 or 40 brands abroad, we want to double that in the next two years… We will be doubling the Filipino brands going abroad,” PFA Director and Chairman for the Asean Integration Committee Sam Christopher Lim told reporters on the sidelines of the Franchise Asia Philippines 2018 International Conference in Pasay City yesterday.
Mr. Lim noted that delegates from around 40 countries are participating in the Franchise Asia 2018 conference that will run until July 22 at the SMX Convention Center in the Mall of Asia Complex. Most of the international delegates come from Singapore, Malaysia, and other Asean countries, with a number coming from Europe, the United States, and the Middle East.
“We host them, we do business matching. Because we want to spur. For us to grow, we need more of our brands coming in,” he said, explaining that Filipino firms would have to expand outside the country since more international brands are competing with them here.
The overseas expansion of the local franchise industry is part of the PFA’s goal to grow by 15-20% in terms of revenues by this year, which would bring the sector’s 2018 revenues to P1.15 trillion or $21.72 billion. The Franchise Asia 2018 conference alone is expected to generate $3 billion in investments.
There are currently around 2,000 local and international franchise brands in the country, with 200,000 stores and around 1.2 million employees.
More brands are looking at countries with large Filipino populations such as the United States and the Middle East, as they are being used as “jump-off points” toward attracting locals.
“They use the Filipinos as a first jump-off point, but eventually you target the locals. Because even if you have a million Filipinos, that’s still small compared to the locals. Ang maganda (The good thing) with the Philippine brands right now is before, when you expand you only look at Filipinos, ngayon (now) more and more people looking at the mainstream,” Mr. Lim explained.
He cited Jollibee Foods Corp.’s expansion in Vietnam, where the company now operates around 100 stores even without a large Filipino population.
Food brands such as Jollibee and Potato Corner are leading the way in terms of expanding abroad, with Turks Shawarma also planning to put up sites in the United States, Hong Kong, and Indonesia.
Fashion brands Bench and Penshoppe are also aggressively expanding abroad, while services in the beauty care and aesthetics sector are seen to have the potential of expanding outside the country.

Civil Aeronautics Board crafting surcharge matrix to aid airlines

By Denise A. Valdez
THE CIVIL Aeronautics Board (CAB) is looking to implement a surcharge matrix which airlines may follow to allow them to adjust prices based on their spending.
Transportation Undersecretary for Aviation Manuel Antonio L. Tamayo told reporters in Clark on Tuesday that after receiving applications from airlines to impose a fuel surcharge, Transportation Secretary Arthur P. Tugade and economic managers advised the approval of a matrix that takes into account elements that affect airline spending — like fuel prices and inflation — instead.
“Ang gusto kasi ni Sec. [Tugade] at saka ng economic managers is to have a template. With this template, if there will be any fluctuations on fuel (price), hindi na kailangang bumalik sa amin for information. I-adjust mo na lang based on the template. Kung tumaas, e di itaas niyo. Kung bumaba, ibaba niyo rin. Kung hindi na kailangan, tatanggalin natin (Mr. Tugade and the economic managers proposed that we make a template. With a template, airlines no longer need to come to us for information. They may just adjust prices based on the template. If fuel prices rise, hike the surcharge. If it goes down, lower the surcharge. If it’s no longer needed, remove the surcharge),” he said.
Mr. Tamayo noted Philippine Airlines (PAL) already proposed its formula for the matrix last week while Cebu Air, Inc., the operator of low budget carrier Cebu Pacific Air, was set to submit its own on Wednesday. Once the CAB finalizes the template, he said Philippines AirAsia, Inc. no longer needs to present its version.
“Meron nang ginawang matrix ang CAB, kinukuha lang namin yung inputs ng iba. Dapat stakeholders kasi. Kapag na-finalize yan, ang AirAsia hindi na magpe-present sa amin. Kapag na-finalize, ipe-present namin kay Sec. at sa economic managers (The CAB already has a matrix. We’re just getting the inputs of the stakeholders. When it is finalized, AirAsia doesn’t need to present to us anymore. We will forward the matrix to Mr. Tugade and the economic managers),” he said.
PAL President Jaime J. Bautista told reporters in Pasay City on Tuesday the CAB is now studying their proposed formula, and they expect to have another meeting before the month ends or by early August.
Mr. Tamayo emphasized the importance of allowing airlines to impose surcharges, because he said if not, aviation companies may keep recording losses due to the continuing rise in fuel spending.
“Hindi naman puwedeng malugi sila. Anong mangyayari niyan, magka-cancel sila ng flights sa mga hindi kumikita? Ayaw naman natin yun (We can’t let them have no profit. What will happen then, let them cancel flights that don’t earn? We don’t want that),” he said.
Recently, PAL and Cebu Pacific had filed applications to the CAB to impose fuel surcharges, noting they are both incurring bigger expenses due to the additional spending. For PAL, Mr. Bautista said its fuel costs went up 36% in 2017 at $200.1 million. Meanwhile, for Cebu Pacific, its President Lance Y. Gokongwei said it is spending an additional P700 million on fuel every month.
Although it has not filed an application yet, AirAsia told BusinessWorld earlier it was also mulling to follow suit with its own surcharge proposal.

Fancy a cuppa?


WHAT BEGAN as the afternoon routine of a member of English nobility in the early 1800s is now a popular and healthy pastime in many parts of the world — drinking afternoon tea.
It was during late afternoons when Anna Russell, the seventh Duchess of Bedford, would feel hunger pangs so she, together with her friends, would schedule tea and snack time to tide them over until the regular late evening dinner. The idea of afternoon tea caught on and soon the people all over the British Empire were enjoying a cuppa with scones and cucumber sandwiches in the late afternoon.
A SPOT OF TEA
The tea industry in Sri Lanka (then called Ceylon) was introduced when James Taylor, a Scottish coffee planter, planted 19 acres of tea near Kandy, the country’s second largest city, in 1867.
Organic tea “grown without chemical fertilizers and pesticides” in farms in Sri Lanka is the focus of the English Tea Shop, which was established in England in 2010. “We are working with 2,082 small-scale organic farmers certified by US and European standards,” English Tea Shop Founder and CEO Suranga Herath told BusinessWorld at the launch of his products in Makati.
The brand works with local farmers who own an acre of land to grow tea, herbs, and spices.
“When we started in 2010, it was a depressing sight when we visited those farms. They do lovely work but there was no market for organic [products]. There was no export market because the scale wasn’t there. The organic players at that time looked for bigger volumes. When we went in, that inspired us to start in a dynamic way. We wanted to do more varieties, because if you do more variety, we can help more farmers and buy their small volumes,” he said.
Mr. Suranga said that the brand name pays tribute to the English tea tradition. “It really brought about that old tradition of the Sri Lankan industry that was born out of British traditions.”
The English Tea Shop is certified 100% organic by the Control Union Inspection, non-GMO Project verified by FoodChain ID, Inc., and approved Kosher by the Union Orthodox Jewish Congregation of America.
It has over 130 tea variants including herbal infusions; black, green, and white tea; and blended tea. Peppermint, super berries, lemongrass, ginger and citrus, and ginger honey are among its best-sellers.
HEALTH BENEFITS
Drinking tea has benefits for the mind and body. Tea come from the plant Camellia sinensis which contains flavonoids, an antioxidant that helps prevent “blood from clotting, causing an obstruction that could lead to stroke or heart attacks,” said dietitian-nutritionist Cheshire Que during a presentation at the launch.
She added that it helps boost the immune system (something that those with depressed immune systems should take note of). In addition, Ms. Que said that tea helps with one’s digestive health as a remedy for constipation and diarrhea, as well as promotes oral health by strengthening teeth.
Balance is key. “The benefits of the tea will not cancel out the bad things that will happen to your body if you eat the sweets excessively,” she told BusinessWorld — something to note when enjoying high tea with sweets or pastries. “But if it (sweets) is within the amount of calories your body needs, for example [you] ate one macaroon, that’s fine.”
As for those who burn the midnight oil, Ms. Que suggested taking variants of black tea “early during the night,” and wind down with variants of green or white tea which are less caffeinated than the former.
She also suggested herbal infusions such as peppermint, lemon ginger and citrus, as good for breastfeeding mothers.
Ms. Que noted that there is no science about excessive tea drinking. “There’s no regulatory board that tells us [how much] is the maximum,” she said, adding that according to studies, “Five cups is still safe.”
English Tea Shop is represented in the Philippines by Clever Cats International Company and exclusively available in most Robinsons Supermarkets nationwide. For more information, visit www.etsteas.co.uk. For inquiries, e-mail info@CleverCatsIntl.com.— Michelle Anne P. Soliman

Globe partners with Nokia to develop SD-WAN service

GLOBE TELECOM, Inc. is teaming up with Nokia for its SD-WAN service. — BW FILE PHOTO

GLOBE TELECOM, Inc. is teaming up with Nokia’s cloud business Nuage Networks to enhance its Software-Defined Wide Area Network (SD-WAN) service targeted to business customers by integrating Nokia’s Virtualized Network Services (VNS).
In a statement on Wednesday, Nokia said the Nuage Networks VNS solution is an improved version of the former Internet Protocol-Virtual Private Network (IP-VPN) connections that Globe uses for its SD-WAN service.
VNS “leverages any kind of network connectivity, including mobile,” it said, therefore making connectivity in an archipelagic country like the Philippines easier.
“With the Nuage Networks VNS, Globe will differentiate itself by adding automation, improved flexibility, application-aware routing and per-application security, while offering a managed, self-service VPN portal to its customers,” the statement said.
Globe launched its SD-WAN technology in February, aiming to connect businesses in multiple locations. The cloud-based technology lets companies manage operations from different offices, allowing it to run real-time applications and transactions connected from within the company or with customers.
Globe Chief Technology and Information Officer Gil B. Genio was quoted in the statement as saying, “We are excited to partner with Nuage Networks to bring the first fully operationalized SD-WAN service to the Philippines. The policy-driven automation will simplify our operations and enable us to cost-effectively expand our service footprint.”
Nuage Networks chief executive officer Sunil Khandekar said he is confident their technology would help Globe serve its clients with to let them “move to the cloud with the agility and visibility they need.”
The Ayala-led company saw a 27% increase in its net income attributable to equity holders during the first quarter, reaching P4.7 billion from P3.8 billion it recorded last year.
Shares in Globe gained P26 or 1.52% to close at P1,735 apiece on Wednesday. — Denise A. Valdez

Whose are better?


EVERYBODY LOVES a wine bargain. Retail chains reflect the zeitgeist, so they’re rushing to cash in by creating house brands to keep their costs down and customers buying. The latest is US giant Walmart Inc., which rolled out its new Winemakers Selection collection in 1,100 of its nearly 4,000 stores in May.
My first reaction was a yawn. Walmart wines? Seriously, could they be any good? I was intrigued when Nichole Simpson, the company’s senior wine buyer, claimed that the chain’s $11 to $16 bottles “drink like they cost $30 or $40.”
After sampling all 10 of them, I’d say they don’t outkick their category as much as that. But more than half of them, from a bright, spicy French rosé to a savory Italian Chianti Riserva, are quite a bit better than I expected. In fact, all display authentic character of the region they’re from, and they are — mostly — good deals. (Ratings below.)
In a telephone interview, Simpson explains that each of the wines is made by a family winery in California, Italy, or France specifically for Walmart, though she declines to identify her sources. (The company, like foodie-on-a-budget-favorite Trader Joe’s Co., is famously tight-lipped about details.) Unlike most supermarket brands, each Walmart wine has attractive, individually designed labels with helpful information for newbies on the back one. They don’t look like cheapies you have to hide in the fridge or pour into a decanter if your snob brother-in-law is coming for dinner.
The price range is higher than you might expect, too, as if Walmart is deliberately trying to go upscale and is using wine to reinforce an image of quality for its grocery section — and maybe, the entire store. (Target Corp., on the other hand, recently launched its California Roots line at $5 a bottle — and the wine tastes like it).
After studying the big data Walmart accrues on what its customers want and buy, Simpson says: “I saw a gap in the market.” Her 18-month process, from concept to bottle, included months of tasting hundreds of wines to find winemakers to work with in various areas. These are not repurposed bulk wines, she says, but — in today’s buzzword — highly curated regional selections.
So far, they’re available in 37 states. Surprisingly, the line up doesn’t include any whites, but Simpson assured me they’re coming. One safe bet will surely be a snappy New Zealand sauvignon blanc. She hopes to extend the range to as many as 30 labels; a few might cost as much as $25.
How do these wines stack up against those at Trader Joe’s? The 477-store, 41-state chain, which has a cult following for such discount luxuries as private-label Parisian macarons, has offered wines for more than four decades. In a current TJ podcast, Chris Condit, the head of vino, said the stores carry about 500 bottles, all chosen through a tasting panel.
The best-known exclusive brand at Trader Joe’s is Charles Shaw, introduced in 2002, which earned the moniker “Two-buck Chuck” for its $1.99 price tag. The wines now cost $2.99 and are still forgettable — suitable for undergrads who want a buzz and don’t like beer. Nevertheless, TJ has sold nearly one billion bottles of the stuff, and it just rolled out a new Charles Shaw organic line.
The more expensive Trader Joe’s reserve wine brand (several quality levels, with platinum the highest) sell in roughly the same price range as Walmart’s, so I rounded up 15 bottles to compare. Many are tastier than you might expect; others, especially the pinot noirs, not so much. Blends and sources keep changing — you must check the lot number to ensure you’re getting the same wine each time — as the reserve wines are made in limited batches and don’t all turn up in every TJ store. The best disappear quickly, as did the terrific cabernet from Red Mountain in Washington State that sold out just before I filed this column. The rare platinum reserve bottles that go for $14.99 don’t last, either. As of this writing, all the TJ wines I recommend below are available in Manhattan.
It’s true that many wines from individual producers offer more personality at equally low prices: Chateau Ste. Michelle dry riesling sells for $9; Louis Jadot Beaujolais-Villages can be had for $10, as can Gabbiano Chianti Classico. The new 2016 Mouton-Cadet Blanc at $12 tastes like it could cost nearly twice that. But even these well-known labels aren’t found everywhere.
The biggest virtues of Walmart and Trader Joe’s wines are value for money and one-stop shopping with your groceries, which is nothing to sneer at.
Here are my picks of the best, ranked by rating on a scale of zero to 10.
THE BEST WALMART WINEMAKER SELECTION WINES
• 2017 Grenache Rosé ($11) — Produced in the Languedoc region of France, it’s spicy and bright and doesn’t have the synthetic cotton candy taste of many cheap rosés. Slurp this one by a pool. 6.5/10
• 2016 Grenache Pays d’Oc ($11) — This soft-textured, mellow red has some zingy fruit and a balanced of smoky-earthy-fruity flavors. (The rich, peppery 2016 Syrah Pays d’Oc is almost as good.) 6.5/10
• 2014 Chianti Reserva ($16) — Dry and earthy, this everyday drink-me red has the savory, sour cherry character of an pleasant Italian Chianti and is superior to Walmart’s simple Chianti Classico. 7/10
• 2015 Sangiovese Sanguis Jovis ($11) — Full-bodied, with ripe red fruit flavors, it’s another lively wine from Tuscany made from sangiovese grapes. It’s richer and rounder than the Chianti, with more tannin. 7.5/10
• 2017 Cabernet Franc ($11) — This juicy red from the south of France was my best-tasting Walmart wine and the best value for money, too. The aromas are herbs and violets; there’s warm fruit and even a little elegance. Grab it. 8/10
THE BEST TRADER JOE’S BRAND WINES
• 2014 Reserve Meritage Monterey County, Lot 168 ($10) — With fruity aromas and soft earth and fruit flavors, this tastes as if it includes a lot of merlot. 6.5/10
• 2016 Reserve Petite Sirah Paso Robles, Lot 143 ($10) — This intense red is peppery and bold, with lots of dark fruit flavors, energy, and verve. It’s also very smooth-textured: ideal to accompany grilled meat. 7/10
• 2016 Grower’s Reserve Sauvignon Blanc California ($5) — A super-drinkable white from organically grown grapes, it has clean, clear flavors, with some spiciness and a mere 11.5 percent alcohol. Amazing for the price. 7/10
• 2016 Reserve GSM Dry Creek Valley ($10) — GSM stands for the blend’s grapes—grenache, mourvedre, and syrah. This lush red is all warm spice and dark-toned fruit, with hints of leather and tobacco. 7/10
• 2016 Grand Reserve Sonoma Coast Chardonnay, Lot 87 ($13) — Lush lemony flavors, appealing floral aromas, and a bit of zingy acidity make this white — one of several TJ chardonnays — a deal. 7.5/10
THE WORST WINES FROM WALMART AND TRADER JOE’S
• NV Red Blend ($11) — This Italian red blend is warm and rich, but way more generic tasting than the other wines. 5/10
• NV Winemakers Selection Sparkling Rosé ($13) — This was my least favorite Walmart wine. The gummy aftertaste doesn’t make you want to take another sip. 4/10
• 2016 Trader Joe’s Charles Shaw Chardonnay Organically Grown ($3.99) — Ugh! This white, part of TJ’s new organically grown Charles Shaw line, tastes simple and synthetic. 2/10
• 2016 Trader Joe’s Charles Shaw Shiraz ($2.99) — This has won awards, but I can’t figure out why. The rough taste of burnt matches lurks underneath the fruit, and there’s not much else. 1/10 — Elin McCoy, Bloomberg

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