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Grocery Buyer Emphasizes Wine Packaging

Advice to not neglect shipping boxes among messages shared during inaugural Wines & Vines Packaging Conference

by Paul Franson
Wine buyer Curtis Mann cited these innovative packages for their shape, composition and clever use of neck adornment.
Napa, Calif.—One of the most interesting sessions at the Wines & Vines Packaging Conference held Wednesday involved a retailer’s perspective regarding the importance of packaging. The conference drew 335 total attendees and 35 exhibits to the former Copia building here.

Curtis Mann is the senior business manager for wine, beer and spirits at Raley’s Family of Fine Stores, a family-owned chain with 118 stores under the Raley’s, Bel Air and Nob Hill brands in Northern California and northern Nevada. He offered a look at wine sales not only from his perspective through the supermarket chain, but also from former experience as the in-house representative for market research firm IRI from the offices of E. & J. Gallo, at Trinchero Family Estates and at a high-end wine store and bar.

Mann said that research conducted in partnership with customer science company Dunnhumby demonstrated that customers are most loyal to wine variety (or region), not brands. “More than 70% of customers who bought a major varietal brand bought another brand of that same varietal in a 12-week period,” Mann told the WVPack audience.

The research also found that more than half of customers bought Chardonnay compared to about 10% each for Sauvignon Blanc and Pinot Grigio.

Mann also tamed the industry’s enchantment with young customers. Citing Nielsen Panel data, he said, “The Millennials may be the future, but the volume buyers today are baby boomers, with the peak buyers in the 55- to 64-year-old range.” Even older consumers buy wine out of proportion to their numbers in the population.

Mann said he has observed a significant trade up among wine customers in recent years. Data from IRI, the market research firm, agrees, showing the highest growth rate is for wines selling for more than $20 per bottle.

He speculated that one reason for this is the demise of independent wine stores during the recession. “Even in Sacramento, Raley’s headquarters, there are few fine wine shops,” he said.

One response from Raley’s has been to open about 20 upscale wine stores that include brands selling for more than $30.

Package size and type
Relating sales to package type and size, Mann cited IRI data from US food stores that 1.5L bottles declined 2% in the 52 weeks ending July 13, while premium 3-liter boxes were up 12% (though they represent only 3% of sales). Likewise, 500ml boxes grew 19%, but still represent a tiny slice of sales. Regular 750ml bottles accounted for 74% of sales and were up 5%. Sales for 3- and 4-liter jugs were down 4%.

Though this was a packaging conference, Mann reminded attendees that the other P’s of marketing (product, place, price, promotion) still count, too. In particular, the price of wine has a high elasticity. Sales grow significantly with price reductions. Specifically, if the price rises 1%, sales drop 2% to 3%.

Likewise, promotion counts. Ads can increase sales 4%, while in-store displays have 24% impact. Placement is vital: Being out of stock can erode sales and momentum.

And you can’t ignore the product—in this case the taste of the wine. “Product quality can make or break a brand,” he said.

Mann tastes all alcoholic beverage products that come into the Raley’s stores, and he noted that he won’t accept wines with problems. “Sales declines are often due to problems like a bad vintage. People are very adventurous, and they won’t stick with a brand if they don’t like it.”

To Mann, the package doesn’t stop with the bottle, label and capsule/enclosure, it also includes the shipper (case box). The stores often use the colorful, fully designed ones for displays, and they can have a big impact.

The impact of labels
Mann spent some time discussing the impact of labels and trends. He noted a trend back toward dark labels. “That works since so many other labels are white, but if everyone does it, the bottles won’t stand out.” Mann said that silk-screened labeling achieves the dark label-look, but he believes they rarely look upscale.

He also noted that bottles with unique shapes and other unusual labels can stand out, but they often look cheap.

Straightforward labels such as one that proclaims the product in big letters help customers who are confused by the clutter of shelves and don’t have the time to study them. He showed an Italian label that said “Chianti” in big letters and said it sold 100 cases in a short period with a lot of repeat business, but a comparable quality wine that hid its Tuscan origins—and used the IGT classification—confused people. It only sold two cases in the same two-month time period.

Mann finds that unusual 750ml bottles can work if they are executed well. One such wine he highlighted is Coppola’s Sofia, which has an elegant look and style.

He added that unusual bottles don’t work if they are too tall, wide or easily tip. “Shelf placement could be a challenge,” he said.

Grab and go
Mann believes that customers are looking for a grab-and-go wine that can be consumed like beer, including 187ml bottles, cans, Zip cups and single-serving combined glasses and bottles, but they need to be in a cold box so they are ready to drink. These packages seem to have limited shelf life, too, he said.

Boxes and aseptic packaging are convenient and offer less waste, but many consumers don’t perceive them as being high-quality products.

Mann said he likes 500ml and 1-liter cartons, but beer still seems to be the grab-and-go choice. He also finds little movement up from the smaller to larger carton sizes.

On the other hand, he said 3-liter boxes have a lot more potential but need a better selection of wine, including high-end offerings.

Mann noted that “cement” (ceramic) bottles such as Mer Soleil Silver Unoaked Chardonnay are distinctive and keep wine cold, but they can be heavy and hard to stock. On the other hand, lighter glass bottles are greener and easier to carry, but consumers may perceive they’re used for inferior wine.

Mann also noted a trend toward screwcaps. “We’ve received no complaints about a $29 New Zealand Pinot Noir with a screwcap,” he said. Still, corks remain more popular in spite of the cork taint issue, which many acknowledge has declined but has not disappeared. Mann said he has reservations about screwcaps for long-term aging and due to instances of reduced wines.

He said that bottleneckers should be an extension of the package, and it’s still easy for stores to rip them off as a nuisance. “Scores are the most effective use of neckers,” he added. He also noted that the square-cornered neckers that fit over Gerard Bertrand wine bottlenecks are effective, elegant and stay in place.

Mann said stickers are an effective way to trumpet scores, but they can take away from the overall image on the bottle.

Finally, he repeated that shipping boxes could be effective in-store advertising—especially wooden boxes. “They can be expensive, but they immediately upscale the brand. Retailers never throw them out, so they remain as free advertising.”

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Wine Industry Metrics
Off-Premise Sales » Month   12 Months  
February 2015 $643 million
$7,954 million
February 2014 $601 million $7,560 million
Direct-to-Consumer Shipments » Month   12 Months  
February 2015 $132 million
$1,823 million
February 2014 $126 million $1,598 million
Winery Job Index » Month   12 Months  
February 2015 275
February 2014 219 206
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