Private Label Wine

Adler Fels winery in Sonoma recently reported that over 70% of its production this year was expected to be private label wines. Of 560,000 cases made, 400,000 will be custom labels for restaurants, retailers and distributors, as well as labels designed for sale in “control” states such as Pennsylvania.

The trend is not unusual. In the U.K., private labels account for slightly over 40% of total wine sales. While the percentage in the U.S. is smaller, the category is booming and likely to become more popular.

One of the major factors is a glut of premium wine in California that can’t be sold at the usual market prices. Many growers with prime vineyard holdings have been unable to sell their grapes at all over the past two years, and are increasingly turning to the bulk market. The bulk market also provides an outlet for wineries that need some cash flow, but don’t want to damage their brand image by selling at a severe discount. The end result is a bonanza of quality wine at very reasonable prices.

The down side, of course, is that in many cases the consumer has no clue as to what he or she may be buying. Private labels have turned up in Wal-Mart (Alcott Ridge), Target (Perfect Circle), Kroger (Arrow Creek and others) and Harris Teeter (Oak Creek). 7-11 has even gotten into the act with Yosemite Road, which goes for $5. Without knowing exactly what’s in the bottle, the prospective purchaser has no reference point (I found the Yosemite Road Chardonnay to be dreadful).

It’s true that Trader Joe’s has become famous for selling the Charles Shaw wines for $1.99 (“Two-Buck Chuck”), but not all private labels are inexpensive. While Kroger’s Arrow Creek and Kalbarri brands sell in the $10 range, it’s Hawkstone and Parkers Estate wines retail for $15-25. Costco, the largest buyer and reseller of wine in the country, has also taken a tiered approach with their Kirkland Signature wines, which start at $9.99 and go as high as $37.99.

Private label wines are also becoming popular with restaurants, many of which see them as an opportunity to make a percentage of profit they couldn’t attain with a popular brand name. P.F. Chang’s is featuring their Vineyard 518 wines, made by Mendocino’s Wattle Creek, for $7.50 per glass. Maggiano’s Little Italy offers a Cabernet/Sangiovese blend called Salute Amico, made for them by Ruffino, for $8/32. At Legal Sea Foods, diners can choose among a Pinot Noir from DeLoach ($11.50/39), a Cabernet called Faux Pas ($9.50/35) and a “Legal Sea Foods Cuvée” Bourgogne Chardonnay crafted by Louis Latour ($8.50/28).

Look for the trend to intensify over the next few years. When Publix gets involved, things will become truly interesting.



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