Private Label Wines Make an Entrance

By Ron
Margulis

One of the unexpected pleasures for attendees at this week’s Private Label Trade Show in Chicago was the ability to enjoy a glass of chardonnay or merlot while surveying the exhibition hall. The wines being offered were, as one would expect, private label wines, which is emerging as one of the next growth categories for the segment, according to the Private Label Manufacturers Association.

With $3.6 billion in U.S. supermarket sales, wine was the second fastest growing category in that retail segment last year, behind only bottled water. And with the continued reports on the health benefits of moderate consumption, this trend is likely to grow.

“Just as retailers expanded their private label programs to include premium private label, gourmet lines and perishables, wines, as well as liquor and beer, are attracting serious attention,” PLMA President Brian Sharoff said.

There are currently more than 2,600 wine brands on supermarket shelves, and that is generating more consumer confusion than brand loyalty, said Sharoff. Consumers have to consider the type of wine, country of origin, the year and price range. Research shows only one in four consumers prefer a specific brand, and one in three buy wine “randomly.” The large branded wineries have not been able to lead the shopper out of the maze, creating an opportunity for retailers to do so as part of their overall private label reputation and image, he suggested.

Supermarkets and mass merchandisers currently account for about 35% of total wine sales at retail. America’s three largest supermarket operators, Wal-Mart, Kroger and Albertson’s, all offer exclusive brands for the most popular wine varieties, and Safeway currently offers a wide range of private label liquors under the Safeway Select brand. California-based specialty foods retailer Trader Joe’s, with more than 160 stores in 15 states, offers imported wines under the Trader Joe’s “French Market” brand.

Store brands are already a major factor in wine sales throughout Europe. In Great Britain, for example, retailers like Tesco and Sainsbury offer a wide variety of wines under their own labels. Private label market share, in fact, is 68% for Italian and German wines and 64% for French wines. Even private label champagne enjoys a market share of 60%. Private label market share in France runs to 43.6% for the most popular wines. And in Germany, private label market share ranges from 38.0% for red wines to 44.6% for white wines.

Moderator’s Comment: Can private label succeed in a
category like wine?

Take one trip to a Trader Joe’s that sells wine and you’ll
see for yourself that the answer to this question is a resounding yes.
[George
Anderson – Moderator]