November 2009 Issue of Wines & Vines
 
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Pushing the Packaging Envelope

Alternative formats and closures growing fast in volume sales

 
by Suzanne Gannon
 
 
Tetra Pak Fish Eye
    HIGHLIGHTS
     

     
  • Economic conditions and environmental concerns are driving the success of alternative wine packaging.
     
  • Sales rates for wines in Tetra Pak and bag-in-box packaging have grown many times faster than those of bottled wines.
     
  • Lighter bottles are gaining popularity with higher-end producers who maintain loyalty to glass.

Attuned to a healthy appetite among wine consumers and sellers alike for popularly priced wine that is more environmentally friendly, wineries and the packaging manufacturers who supply them are continuing to push the envelope on alternative formats. As a result, they are realizing significant gains in consumer acceptance, recyclability and reductions in greenhouse gas emissions.

Nielsen data for the 52 weeks ending Aug. 22 showed continued growth in dollar sales for both Tetra Pak and 3-liter bag-in-box formats. Tetra grew 25%, while bag-in-box jumped by 31% over the same period a year ago. The figures are particularly dramatic given weak consumer spending and sluggish growth in sales of glass bottles: Sales of 750ml glass bottles grew a mere 3%, while 1.5L bottles grew just under 6% in the same period.

Tetra Paks continue to penetrate
Although Tetra Pak has not introduced any new sizes for the wine sector in the past year, the company continues to see increases in market penetration for its 250ml four-pack, its 500ml, and its 1L sizes, according to Debbie Dawson, director of new business development for the Vernon Hills, Ill., manufacturer. And several new wine marketers have signed onto the format, among them Constellation’s Alice White, Yellow+Blue and the Wine Group’s Fish Eye.

Dawson estimates the cost of the Tetra Pak Prisma container with all of its components, such as printed paper with opening and cap, at between 10 and 25 cents, not including the co-pack fee. The package is entirely recyclable in municipalities where cartons are recyclable.

But despite the favorable economics, Dawson says that cost is not what’s driving Tetra’s success. “It fits the lifestyle needs of the consumer, and it strikes a positive note environmentally. If consumers can say yes to Tropicana, they can say yes to Tetra.”

Transition from glass to Tetra
To prepare for a transition from glass to Tetra, wineries must design their own package based on specifications provided by Tetra, and then determine how they will ship their wine from the winery to an authorized co-packer such as California Natural Products in Lathrop, Calif.

Marc Weinstein, chief operating officer of California Natural Products, says his business has doubled twice since he opened in 2004, and he expects that with the close of 2009, his volume will be six times what it was when he began.

Weinstein takes on jobs ranging in volume between 30,000 and 60,000 cases, though he says he will take orders for as few as 3,000 cases per SKU. A run of 30,000 cases of 500ml packs typically requires two days to fill, depending on how many lines are activated. Most of his wine clients run at least four different SKUs, which he accommodates among his 10 filling lines.

While the wineries themselves provide the wine and the container, California Natural Products provides the packing service, for which it charges a service fee of approximately $4 to $5 for a case of 12-500ml packages. Pricing varies based on case volume, the number of filling lines engaged, and any special services requested by the winery.

With sales of organic wines up nearly 30% in 2008, and sales of Tetra Pak up the aforementioned 53%, California Natural Products decided to develop its own product, which it released in October 2009. Some 18 months in development, CalNaturale is a 500ml container of 2008 Cabernet Sauvignon sourced from grapes grown organically in Paso Robles.

Sales manager Andy Hicks says the 500ml package will have a suggested retail price of $7.99, and the 1L will be priced at $14.99, well above the average suggested retail prices of $4.99 and $9.99 for 500ml and 1L, respectively, for Tetra-packaged wines.

“We think we’ve hit a sweet spot with consumers,” Hicks says. “It’s good for you and good for the environment, because it uses half the energy to ship, and we can ship more product than package.”

Yellow+Blue is another brand packaged exclusively in Tetra Pak. Made from certified organic grapes, the line includes Malbecs from Mendoza and San Juan, Argentina, a Torrontes from Galicia, Spain, and a rosé from Alicante, Spain. Introduced in May 2008, the line is priced between $10.99 and $11.99 for a 1L package, and is available in 45 states.

Yellow+Blue importer Matthew Cain, who spent much of his wine career importing and selling small-production, high-end wines from Italy and France for importer Kermit Lynch, asserts that the carbon footprint created by each Tetra Pak is only 54% of that made by a single glass bottle.

“Eighty percent of wine purchases are consumed within the first week—the majority within the first 24 hours,” he says. “Fifty percent of the weight of that package (when wine is bought in a bottle) is left over after the wine is drunk, and only 15% of glass bottles are actually recycled.” With Tetra, he adds, 93% of the package volume that is sold is wine.

Cain concedes that much more education of distributors, retailers, restaurateurs and consumers is required to overcome negative perceptions of wine packaged in materials other than glass, but he is willing to do the work.

“There’s been a stigma attached to alternatively packaged wines, because traditionally these wines just simply haven’t been that good,” he says.

Yellow+Blue soon will roll out a certified organic wine from Chile, and its wines have made some significant inroads into the on-premise market, appearing by the glass and on wine lists (the carton is brought to the table) at restaurants in New York, Los Angeles, Washington, D.C., and San Francisco.

More growth for bag-in-box
According to Dale Stratton, vice president of strategic insights for Constellation Wines U.S., which markets approximately 15 individual SKUs of premium wine in the bag-in-box format, dollar sales of Black Box experienced a 31% jump in the 12-week period ending Aug. 9, while total table wine sales grew a mere 4.2%. (His source was IRI scanner data.)

Introduced in 2002, the brand is line-priced at about $25 for a 3L bag- in-box, the equivalent of $6.25 for a 750ml bottle, and includes nine varietals, the newest being Columbia Valley Riesling and New Zealand Sauvignon Blanc, which rolled out within the last year. In 2008, sales of Black Box hit the equivalent of 1.1 million 9L cases, and sales to date in 2009 are trending up.

Stratton attributes the brand’s growth to a broadening acceptance among consumers of alternative packaging, particularly among Millennials, and a desire for better value for the dollar. He says the company forecasts continued growth through at least the next five years as a result of further market penetration.

To further engage consumers, the company has sponsored the “You Got Boxed” video contest, in which consumers film their wine-snob friends raving about Black Box without knowing they are drinking wine from a box.

Online resources
Katie Scarpelli, global market manager for Irvine, Calif.-based Scholle Packaging, a bag-in-box maker, said interest in the alternative package inspired the creation of aboutboxedwine.com, a website on which producers and consumers alike can learn about the product’s benefits, which include a six-week shelf life after opening, and complete recyclability.

Though Scholle has not introduced any new formats within the past year, it has continued to see growth in sales and market penetration, and has collaborated with brands such as Red Truck Mini-Barrel—a miniature synthetic barrel holding a plastic bag and flex tap.

For bag-in-box packaging, wineries purchase the corrugated carton from their carton supplier. The bag inside is a plastic item that is recyclable wherever No. 7 plastic is recyclable. The flex tap, which pokes through the outer cardboard carton, is recyclable as well.

Scholle’s minimum order for bags is 1,200. Wineries that cannot afford to invest in a bag-in-box filler machine
of their own can lease fillers directly from Scholle.

Boisset breaks molds
 

 
Leading the pack among wine marketers willing to experiment is Boisset America, which made headlines back in early 2006 with its French Rabbit brand, packed in 500ml and 1L Prisma containers from Tetra Pak. The brand now sells 240,000 cases annually and claims a 90% reduction in carbon footprint.

Boisset currently is rolling out two major new initiatives with potential for both on- and off-premise placements, about which Wines & Vines has reported previously. The Barrel-to-Barrel program, which is the company’s first innovation geared to the on-premise market, offers to restaurateurs refillable 10L wooden barrels of DeLoach Vineyards California Pinot Noir, which can be used for by-the-glass pours.

The barrels hold plastic liners called eco-bags that keep the wine fresh for as long as two weeks. Barrels can be displayed in eye-catching fashion on a back bar or more prominently on the service bar itself. Each eco-bag weighs approximately 68 grams (in contrast to the equivalent 13 bottles, which weigh about 550 grams). One bag of replacement wine costs the same as a 9L/12-bottle case of the same wine, giving the restaurateur an extra liter, or the equivalent of seven glasses, worth of profit.

“The wine world is quite lethargic,” Jean-Charles Boisset said. “Everyone wants to move forward, but nobody does. We’ve taken the cellar experience of tasting unfiltered wine directly to the restaurant consumer.”

Todd Nagle, Fairmont San Francisco’s director of food and beverage, now offers hotel guests three different DeLoach wines, priced from $13 to $21 by the glass, from the barrels. Servers present the wine tableside and pour it from an etched Riedel decanter. Fairmont also offers a flight of the three wines (1.5 ounces of each) priced at $26. “For the bartender, it’s a no-brainer,” Nagle said.

Boisset said some 500 restaurants have signed onto the Barrel-to-Barrel program.

In May, Boisset began his other initiative, the release of Fog Mountain Merlot in PET plastic. The first California wine to be marketed for sale in the U.S. in this format, it is currently rolling out in Marriott hotels and resorts. One-hundred percent recyclable, the bottles consume only 38% of the energy required by the manufacture of glass bottles, and they feature an oxygen barrier to protect against premature aging. Because they weigh less than glass, the bottles are available in the 1L size, meaning they offer 33% more wine to the end-user.

S.G.
Innovations in closures
Wine closures, too, are continuing to see the benefits of innovation. Previously embraced by vintners in Australia and elsewhere, the Zork closure is beginning to make inroads among U.S. wineries. Produced by a division of Portola Packaging Inc., which designs, manufactures and markets recyclable closures, bottles and equipment, the Zork is a three-part closure for glass bottles consisting of a tamper-evident cap, a foil oxygen barrier and a reinsertable plunger.

Zork is currently being used by approximately two dozen U.S. wineries, including some of the Don Sebastiani brands, according to spokeswoman Charlotte Mills Seligman. It recently inked a deal with Napa-based AT Mobile Bottling to add a Zork bottling unit to its service lineup.

Seligman says that while Zork was originally favored among producers of $15 and $20 bottles, now a few winemakers are using it on $30 and $40 bottles.

Zork USA has consulted several glass bottle manufacturers regarding the dimensions of their cork mouths and the lips on their bottles. These include Owens Illinois, Saver Glass, Saint-Gobain and Amcor, among others.

At Sapolil Cellars in Walla Walla, Wash., co-winemaker Abigail Schwerin is now finishing nearly half of her 2,000-case production under the Zork, which she says has led to a zero rate of cork failure.

“Whether we were corking professionally or hand-corking bottles ourselves with traditional corks, we weren’t happy with the rate of failure,” she says, estimating that it was about 5%. “And with the screwcap, we didn’t believe in complete elimination of the oxygen transfer—we wanted the aging process to be similar to that under natural cork.”

In addition to performance, Schwerin says the winery has saved on equipment, materials and labor costs. She has calculated the cost of the Zork at one-third the cost of corks and capsules combined, and says the hand-corker tools for the Zork cost $35, compared to the $150 she has spent for traditional cork. And with 10 laborers putting in five hours of work, the winery finished 490 cases, while they were typically able to finish only 250 cases in a full day using traditional cork.

Sapolil Cellars currently sells three different wines that feature the Zork closure: its 2008 Syrah ($35); 2008 Chardonnay ($18), and 2008 Gandy Dancer ($25), a blend of Syrah, Sangiovese and Malbec. Schwerin may soon take advantage of the customization offered by Zork—she is considering using the winery’s signature mustard color and perhaps imprinting the closure with the winery name.

Based in New York, Suzanne Gannon writes on travel, culture, food and wine. For the past four years, she has reported on a variety of topics for Wines & Vines. Reach her through edit@winesandvines.com.

 
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