Posted on | March 22, 2016
Written by | Roger Morris
Beyond the ego appeal, private labels can add value to your business.
If you’re a wine shop or restaurant owner—whether a single establishment or a fledgling chain—does it make sense to have private label wines?
“Private labeling is becoming more prevalent and appearing with more variety,” says Steve Fredricks, President of Turrentine Brokerage, a California-based company which provides wineries with bulk and specially made wines from around the globe.
The allure is natural. Ego plays a role for some. So do margins, which can be 10 to 15% better than national brands. Private labels also can develop repeat business, since they are only available at the brand-owner’s store.
Practically speaking, private label wines are almost a stealth category. Not only have these exclusive products grown so quickly, the wines themselves blend in seamlessly, being of competitive caliber inside and out. Danny Brager, Senior VP of Nielsen’s Beverage Alcohol Practice, notes that in wine, “private labels look every bit like a regular brand, unlike private labels for other categories.” In addition, some brands can function like private labels-—direct imports, for example, as well as specific products are sold as exclusives to certain retailers in certain states for certain periods of time.
Quantity-wise, Fredricks advises: “If you can buy 500 cases, or a truckload a year, the world begins to open up for you.” At the same time, though, Turrentine and other private-label suppliers caution that many on- and off-premise businesses often don’t adequately plan before taking the plunge, either using the business’s name or a new brand name.
Among the questions that need to be asked and answered:
Who is drinking private labels?
Catered events and by-the-glass have proven fertile for private labels. When Xavier Teixedo added a special-events banquet room to his Harry’s Savoy Grill in Wilmington, DE, in the late 1990s, he decided he needed a private label, especially for wedding packages. Almost 20 years later, he still offers private-label Chardonnay and Cabernet for events, and by-the-glass at his three restaurants, and he sells about 700 cases yearly in total.
What kinds of wines do you want to private label?
You won’t have volume to compete at the low-price level, and it’s difficult to source a steady supply of wines from prestige regions such as Burgundy. “Pay attention to Nielsen,” Fredricks says. “What is selling commercially is what is being private-labeled.” For example, Malbecs and blends from Argentina continue to be very popular.
Be as tough-minded with your private label as you would be with a new wine being sampled by a distributor. What’s its primary appeal? Will consumers who buy it just abandon something else in your offerings? And remember, once you start private labeling, even if it’s an invented name, it’s your reputation on the label.
Where can you source wine?
Just ask. Many moderate to large-volume wineries in all areas of the country welcome extra business, especially if they custom crush. Teixedo sourced his wines for over a dozen years from French-based Georges Duboeuf. “They got out of the business,” he says, “so I asked my distributors for possible suppliers, and I easily found a new one in California.”
Bumper-crop vintages can make private-labeling more attractive. High-quality wine can also become available as “shiners” (wines bottled but not labeled) when wineries need to sell off extra stock—anonymously, of course…