62
Beverage Media
October 2012
INDUSTRY
WATCH
Wine Gets Proprietary
Private Labels
Attract Industry Attention
BY LAURA HOLMES HADDAD
According to a Media Reports/AC
Nielsen report, domestic private label
table wines and spirits sales skyrock-
eted in 2009, leaping by 29.4% and
7.8%
respectively. As a whole, private
label wine accounted for 3.3% of total
wine sales in food, drug, convenience
and liquor stores in 2010, according
to Nielsen.
Jim Ferguson, VP and general
manager of Coastal Wine Brands, a
division of DFV Wines in California,
witnessed the spike in 2009 as part
of an eight-year trend of remarkable
growth. “Our business has grown from
50,000
cases in 2004 to 1.3 million
cases in 2012,” says Ferguson. “The
primary reason is the economy,” he
says. “Consumers are not willing to pay
more for wine as they have in the past.
Meanwhile, costs have been increasing
for grape growers and wineries. But no
one has been able to raise their prices.
Large companies have pressured retailers
to maintain prices, so retailers look for
alternative ways to make their margins,
and private label is one way to increase
their margins.”
Jonathan Gelula, president of KDM
Wine Company in Philadelphia, has
been working with private wine label cli-
ents for over six years, producing wines
for restaurants, hotels and retail stores.
“
In general, private label products came
into the consumer goods market in the
last ten years, and wine was one of the
last to go private label because of the
cumbersome wine laws and lack of uni-
form pricing strategy,” says Gelula. “But
Costco came along with Kirkland brand
and everyone followed.”
Costco’s Kirkland brand first
launched launched in 1995, but its
growth spurt came after the turn of the
century. Today there are ten varietals
under the Kirkland brand, including
a Champagne (SRP $24.99) and a red
Bordeaux ($17.99). Other big retailers
with private label wine amonge their
broad product mixes include Walmart
(
Alcott Ridge); Trader Joe’s (Charles
Shaw, aka Two Buck Chuck, which
might technically be called an exclusive
brand rather than private label);
and Whole Foods, under their “365
Everyday Value” brand. Total Wine
&
More and BevMo! are two wine
retail chains doing significant private
label business.
Lowering Barriers to Entry
DFV’s Coastal Wine Brands is devoted
exclusively to private wine labels for re-
P
ressed by creeping wine costs on one side and tight-fisted
consumers on the other, more off- and on-premise outlets are
getting creative. Literally—by creating their own wine labels.
For some, branding is the main attraction, for others profit
margin is the key. By either rationale, from value to premium brands,
private labels are a new reality for retail shelves and wine lists.
