Canned Wine has “Similar Opportunity” to Craft Beer
The canned wine category has really taken off in recent years. In 2018 canned wine sales were up a whopping 69% and volumes were up 47% in all Nielsen-measured channels. Though it is still growing off of a relatively small base.
A panel at the annual Wine & Spirits Daily Summit in San Diego last week explored the canned wine craze and the challenges and opportunities the category presents.
THE OPPORTUNITY. Cans give wine the opportunity to enter new markets, according to Jordan Kivelstadt, founder and president Free Flow Wines. “I see cans as an opportunity to expand wine consumption to a whole host of places where it just didn’t really exist effectively before,” he said.
In turn, that brings in new wine consumers. Jordan shared that Stephanie Gallo, vp of marketing for E&J Gallo, said a few years ago that one third of the consumers that purchased Barefoot Refresh (a wine spritzer) had never purchased a wine product before. “Is there a whole consumer audience that we as a wine industry aren’t tapping into because the format, the bottle, doesn’t transport well certain places?” he said, such as, music festivals, the beach, hiking etc., basically anywhere that a corkscrew and glass bottle would be cumbersome.
Ball Corp., a provider of metal packaging since the late 1800s, started getting into canned wine in the early 2000s. It was a hard sell to put in the capability to make the sizes for canned wine (187ml, 250ml and 375ml), according to Melanie Edwards Virreira, director strategy & marketing Ball Corp., but “once we started to see wine had an opportunity similar to craft beer and certain large wineries were getting into 250ml cans, it really started to take root,” she said. “We think it’s got a lot of runway.”
THE CHALLENGES. “I think one challenge is grabbing more real estate on the shelf,” said Geoff Whitman, evp sales John Anthony Family of Wines. Jordan echoed the sentiment, adding that because retailers have limited shelf space, they’re telling suppliers ‘I don’t need your brands in bottles and cans, so pick one.’
Another big issue in the category is educating the market, because one of the biggest questions is: Does the wine taste different in a can? Blind tastings is one way to do it, agreed Geoff and Jordan.
A THANK YOU TO CRAFT BEER. One thing that came up several times during the panel is that craft beer moving into cans helps canned wine. “We’re the beneficiaries of the craft beer movement. The consumer is willing to pay a lot of money for product in a can now,” said Jordan. In fact, the sweet spot is about $5-$6 a can or the bottle equivalent of $10-$15, according to Jordan.
Similarly, Melanie said: “I think we saw there was an opportunity for a new market. Craft beer was gaining traction and we thought wine would be that next market and we knew it would be a long-term bet,” adding that “perception of cans has been elevated thanks to craft beer.”
Speaking of beer…
BEER DISTRIBUTORS’ WAY INTO WINE? Handling can distribution is different from handling bottles, which is not something wine and spirits wholesalers are used to.
“Another interesting thing we need to watch is do cans finally provide the opportunity for beer distributors to get into the wine game?” asked Jordan, because “they’re not selling a wine, they’re selling a packaging they understand.”
Ball gives their customers tools to help distributors with this issue. “What we try to do when we have new customers is try to give them the training and the tools so they can arm their distribution network with best practices on how to handle cans,” said Melanie.
FINDING THE RIGHT CHANNELS. “There is no recipe for every retailer. It really is brand retailer specific. Because they have different demographics,” said Jordan, adding, “It’s all about matching the type of cans and who the consumers are.” But there is one channel where cans have a clear space to play. “Cans will blow up the convenience channel for wine,” said Jordan.
But the distribution issue comes back up. “If you’re not one of the top five [wine and spirits distributors] you don’t even touch c-stores,” he said. “If you’re a brand with a fine wine house, that’s a channel that may not be open for you.”
SPIRITS MAKE SUPER BOWL DEBUT
The Super Bowl is always a big night for ads. And many companies shelled out a pretty penny to get their product in front of the millions of viewers last night (about $175,000 per second of ad time).
A few spirits companies dipped their toes in, and by our count only one wine brand (Yellow Tail) had skin in the game. But it was a huge night for beer (just check out today’s Beer Business Daily). Part of the reason is that beer has been able to run ads during NFL games for years, while the league only opened it up to spirits in 2017.
Here’s who made it to the Super Bowl:
— Deutsch Family Wine & Spirits Yellow Tail wine brand ran an ad for the third consecutive year during the game with a new ad campaign called “Tastes Like Happy.”
— Beam Suntory bought local ads to promote Jim Beam’s new campaign called “Raised Right.”
— Jim Beam also briefly appeared in A-B InBev’s ad for Budweiser Reserve Copper Lager. You may recall, the two announced a cross-merchandising partnership last year [see WSD 04-03-2018].
— Brown-Forman’s Jack Daniel’s also debuted its first Super Bowl ad with its existing “Our Town” campaign.
— Hennessy also ran an existing ad during the game called “Major.”
It’s likely the list of wine and spirits ads shown during the big game will get a lot longer come Super Bowl LIV.
TRADER JOE’S NIXES DELIVERY PROGRAM
Just when it seemed like every grocer was betting big on some kind of grocery delivery program, Trader Joe’s decided to nix the idea altogether.
Trader Joe’s has offered delivery in New York City for the last decade and will now end the program on March 1 and has no plans to roll it out in any other markets. Why? It costs too much.
“Instead of passing along unsustainable cost increases to our customers, removing delivery will allow us to continue offering outstanding values – quality products for great everyday prices, and to make better use of valuable space in our stores,” says Trader Joe’s representative Kenya Friend-Daniel, per Business Insider. “This was not a decision we made lightly. We value our customers and all that they do to come shop with us.”
ANGEL’S ENVY TO RELEASE LIMITED EDITION SHERRY CASK FINISH. Angel’s Envy Kentucky Straight Bourbon Whiskey Finished in Oloroso Sherry Casks is the brand’s first new release since 2013. Just 3,600 bottles will be available at the distillery in downtown Louisville, KY and select retailers across KY starting February 12.
STOLLER WINE GROUP LAUNCHES NEW BRAND. Stoller Wine Group has launched Chemistry Wine, a collaboration between Stoller Family Estate and Chehalem winemaking teams. The grapes will come from Oregon’s Willamette Valley AVA and be priced between $14 and $18 a 750 ml. In addition, the company is also expanding its sales team with three new regional sales managers. Shannon Berndt will oversee the southwest region; Pat Hiley will oversee the southeast region; and Bryan Schoen will oversee the midwest region. The new wine and expanded sales team are moves to “further strategic diversification across various price points and distribution models,” per a release.
IRON SMOKE DISTILLERY RELEASES CASKET STRENGTH. New York-based Iron Smoke Distillery announced the release of CASKet Strength Bourbon. The bourbon is picked from the distillery’s triple char virgin white oak barrels, bottled at 120 proof and has no liquid fillers. It will be available in very limited quantities.
HOPE FAMILY WINES NAMES NEW DIRECTOR OF VINEYARDS. Stasi Seay has been appointed the new director of vineyards for Hope Family Wines. In her new role, she will lead the company’s grower relations, control grape acquisitions and maintain quality for the portfolio. Stasi has 25 years of industry experience under her belt, most recently running a vineyard consulting business.
HEAVEN HILL DISTILLERY APPOINTS NEW MASTER DISTILLER. Heaven Hill Distillery has named Conor O’Driscoll as its fifth master distiller, effective immediately. He brings with him 15 years of industry experience, previously working at Angel’s Envy distillery, Woodford Reserve distillery and the Brown-Forman distillery in Shively.
“You may delay, but time will not.” – Benjamin Franklin
It’s a bittersweet day here at WSD. I have had a fabulous 7-year run, but it’s time to pass the baton. As of today, I will leave the publication in Sarah Barrett’s very capable hands. She’s been contributing more than most of you likely realize for the past three years, and I have all the confidence in the world she will be able to continue and improve on the newsletter.
Thank you, dear readers, for the boundless insight, educational responses, and damning critiques. They made this publication the wealth of knowledge that it is. Keep it up.
I will see you around the conference circuit.
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