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Constellation Brands Court Millenials with Newest Brands

Posted on  | April 5, 2012   Bookmark and Share
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by John Kell

–Company plans to launch more than 50 new wine brands and extensions this year, above last year’s 25

–Wine launches come as Constellation’s total domestic wine business has lagged the overall market

–Constellation hopes to court Millennial drinkers, who have driven wine category’s growth in recent years

An evolving palate and high interest in wines among the Millennial generation are two potential tailwinds that can aid Constellation Brands Inc. (STZ) as it launches a more plentiful slate of new wines this year.

The maker of Robert Mondavi and Ravenswood wines intends to launch more than 50 new wine brands and line extensions this year, a figure far greater than the 25 new products it launched last year. The alcoholic-beverage firm is hopeful it can win over customers, particularly those between 21 and 34 years old, as it focuses on the explosive demand for red blends, Moscato and unoaked, or stainless-steel fermented, wines.

The wine launches come as the company’s total domestic wine business lagged that of the overall market on a year-to-date basis through the fiscal third quarter, which ended Nov. 30, 2011. Constellation, which will report fourth-quarter results Thursday, has sought to court younger consumers that favor sweeter and more lush flavored wines.

Constellation Chief Marketing Officer Chris Fehrnstrom said industry data show that over the last five to six years Millennials have driven growth. And there is a general sense across the industry that this generation is embracing the culture of wine drinking and wine enthusiasm at a younger age than their parents and grandparents did.

He said the company has sought to better understand what tastes appeal to those drinkers and is developing brands to meet their interests.

One wine Constellation will launch nationally with Millennials in mind is Thorny Rose. Fehrnstrom said the company’s research for Thorny Rose, set to hit shelves in June, involved working with Millennial consumers to craft the brand’s packaging, name and flavor profile.

For Millennial women, Constellation is planning to launch ready-to-serve packages of Arbor Mist frozen wine cocktails. The summer launch for the $1.99-priced single-serve pouches comes as Beam Inc. (BEAM) is expanding its Skinnygirl brand and Brown-Forman Corp. (BFA, BFB) is rolling out a vodka collection under the Little Black Dress label to court female consumers.

Given fragmentation in the wine category, packaging is a key aspect of scoring a hit with consumers. Wineries began courting Millennials about five years ago with labeling that made wine more fun and whimsical, mainly highlighted in the so-called “critter craze” labels that were used to sell Yellowtail and Rex Goliath, among others.

Fehrnstrom said the whimsical craze became popular as most packaging at the time had classic labels. Now that the space has filled up, Fehrnstrom said Constellation has aimed to mix whimsical and elegant aspects of its newest wines. Simply Naked, for example, was launched a year ago and is packaged with one grape on a white background.

Three of the hottest wine categories, according to Fehrnstrom, are Moscato, red blends and Malbec. He said Constellation was launching line extensions, like Woodbridge Moscato, to jump on those trends, while also selling red blends under the Primal Roots label.

Wine Business Monthly editor Cyril Penn said the explosive U.S. demand for Moscato has been particularly important as the beverage is favored primarily by younger consumers, as well as urban African-Americans.

Penn said wineries were excited about that trend as it is helping bring new customers into the category, and the hope is they will drink other wines. According to Wine Market Council President John Gillespie, core wine drinkers, those who consume the alcoholic beverage at least once a week, make up just 21% of the U.S. adult population but consume 91% of all wine. Any diversification to that base would help bolster the industry’s volumes.

Gillespie said data show the 70 million Millennial-aged consumers–12 million of which haven’t yet reached the legal drinking age of 21–have come into the category as core wine drinkers at a faster rate than Generation Xers, favor red wines more than prior generations and are more open to imported wines.

Though the new wines offered by Constellation and other wine groups can greatly appeal to Millennials, Gillespie said other drinkers outside that age range can also be interested in the new categories.

Source: Dow Jones

April 4th


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