Retailers Embracing Private Label Wines
Saturday, March 15 2003
Published on AllBusiness.com
f you're looking for private label wines, best bring a high-powered magnifying glass—it's only 2 percent of the off-premise retail wine market. And if you want to locate the supermarket share, you'll need a microscope as well—it's a miniscule four-tenths of one percent.
But wait.
Here's Steve R. Lawrence, vp of Lockwood Vineyards in Monterey County, CA:
"The greatest promise for private label wines lies in supermarkets. They have centralized distribution, the power to build brand loyalty and they need to make good margins—all good reasons for a private label investment. By 2005, PL wines will be the fastest-growing segment of the grocery wine business."
PL wine sales at supermarkets, drug chains and mass merchandisers grew 43.4 percent last year, bringing their combined PL revenues up to $17.3 million. But when supermarket sales are parsed out, we find that in 18 months, $826 million in new PL wine dollars were rung up at supermarket checkout counters, second only to the gain made by the hottest beverage of them all—bottled water—which raked in $973 million in added sales during the same period.
The PL wine dollars are even more impressive when compared to the bottled water figures when you consider that only 33 states allow wine to be sold in supermarkets. No such impediment exists for bottled water. Total supermarket wine sales were $3.6 billion last year, an impressive enough figure to keep majors like Albertson's, Kroger and Safeway interested in the PL segment since it's growing so vigorously.
Americans consume far less wine than Europeans—approximately 8 liters per year versus 60 liters in France and Italy—but a third of US households do purchase wine, and their increasing affinity for the grape (per-caps do keep going up), accompanied by their growing acceptance of private label wines, account for the stepped-up interest by retailers in the pursuit of PL consumers.
Austin, TX-based Whole Foods Market, with 130 stores in 26 states, bills itself as the world's largest natural and organic food chain in the world. So it was only, well, natural, that when it got into PL wines in 1999, that in addition to non-organic wines, organics would be on its roster. Today, says Marc Jonna, national wine buyer for the chain, it features a full range of non-organic varietals under its 365-store brand label, with chardonnay and merlot as its organic entries.
"Our non-organics sell for a modest price," says Jonna, "between $4.99 and $6.99, while our organics sell between $6.99 and $9.99. In both cases, this is a good time—if not the best time ever—to buy wine, since a worldwide surplus is forcing prices down. A $7 bottle today is as good, if
But wait.
Here's Steve R. Lawrence, vp of Lockwood Vineyards in Monterey County, CA:
"The greatest promise for private label wines lies in supermarkets. They have centralized distribution, the power to build brand loyalty and they need to make good margins—all good reasons for a private label investment. By 2005, PL wines will be the fastest-growing segment of the grocery wine business."
PL wine sales at supermarkets, drug chains and mass merchandisers grew 43.4 percent last year, bringing their combined PL revenues up to $17.3 million. But when supermarket sales are parsed out, we find that in 18 months, $826 million in new PL wine dollars were rung up at supermarket checkout counters, second only to the gain made by the hottest beverage of them all—bottled water—which raked in $973 million in added sales during the same period.
The PL wine dollars are even more impressive when compared to the bottled water figures when you consider that only 33 states allow wine to be sold in supermarkets. No such impediment exists for bottled water. Total supermarket wine sales were $3.6 billion last year, an impressive enough figure to keep majors like Albertson's, Kroger and Safeway interested in the PL segment since it's growing so vigorously.
Americans consume far less wine than Europeans—approximately 8 liters per year versus 60 liters in France and Italy—but a third of US households do purchase wine, and their increasing affinity for the grape (per-caps do keep going up), accompanied by their growing acceptance of private label wines, account for the stepped-up interest by retailers in the pursuit of PL consumers.
Austin, TX-based Whole Foods Market, with 130 stores in 26 states, bills itself as the world's largest natural and organic food chain in the world. So it was only, well, natural, that when it got into PL wines in 1999, that in addition to non-organic wines, organics would be on its roster. Today, says Marc Jonna, national wine buyer for the chain, it features a full range of non-organic varietals under its 365-store brand label, with chardonnay and merlot as its organic entries.
"Our non-organics sell for a modest price," says Jonna, "between $4.99 and $6.99, while our organics sell between $6.99 and $9.99. In both cases, this is a good time—if not the best time ever—to buy wine, since a worldwide surplus is forcing prices down. A $7 bottle today is as good, if
