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Posted: Sunday, 31 December 2017 11:36

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WBWE 2017: Achieving Success with Private Label Wines in India

Dec 31: One way to beat the high taxes and increase sales of quaffable imported wines can be managed by creating private labels, sourcing bulk wines at World Bulk Wine Exhibition and getting them bottled in your label and import as BIO wines, resulting in low costs and long term profitability and stability of business, says Barcelona-based Cruz Liljegren, Head of wine broking for Premium Wine Broker Co., who was a Speaker at one of the many interesting conferences at the WBWE 2017 in Amsterdam last month. Subhash Arora reports

Why is private label relevant to us, asked Cruz Liljegren, Head of wine broking for Premium Wine Broker Co. while starting his Talk at the WBWE 2017, an international exhibition for bulk wines which are very important source for private labels. He gave some of the reasons as:  Wine shoppers generally have a low brand loyalty, it’s increasing in many parts of the world- like in US, growth potential at higher price points and that consumers want to compare prices-comparison shop and private labels can score in this area.

Private Label industry huge

Surprisingly, the percentage of private labels is highest in Europe, according to Cruz- with the max being in Switzerland (45%), Spain and UK (41% each). USA at 18% is barely above the global average of 16.5%. India at 5% may look small in front of the global average but almost gigantic as compared to the almost non-existent 1% in China.

Private Labels around the world

Cruz gave a successful example of the US-located WINC Wine Club which has created hundreds of private labels in small batches to create wines with a distinctive character (of course, this might not be hardly feasible in India where label registration charges on each label can be high, to be paid in every state-and every year-editor).

Wines are sent to subscribers in boxes of 4 bottles once a month (on similar lines to that of the erstwhile Wine Society of India which went bankrupt last year). The strategy is to showcase as many countries, regions and grape varietals and styles to the consumer as possible.

Similarly Marks and Spencer in UK has a private Champagne label Champagne Louis Chaurey produced in collaboration with Philippe Launois, a wine broker. (Incidentally, they already have very successful ‘Jewels of Nashik’ label from Sula Selections). Here, the strategy is ‘delinked’ in that it makes the wine look like a producer brand, although Cruz stressed that many wine writers and journalists consider this to be a less hones approach.

Vinomfo.com is another example of an Australian private label started in 2011. It is an Australian online retailer that plans to expand to UK and The USA during the next couple of years.

Game of Thrones is another example of a private label launched in 2016 by HBO in conjunction with Vintage Wine Estates, a company that specialises in creating private labels for their clients. (p 34). The buyer used Consultancy services from the well known Californian winemaker Bob Carol. Not a cheap wine, it’s priced between $20-50 and is sold through Amazon which could be a strong launching pad for sale of private labels in India if and when they are allowed to be sold on the internet- a vehicle that is years away for us-if not decades. Obviously, the strategy for the private label is to exploit the high popularity of the TV Serial.

Zumbali and Umbala by Oenoforos in Sweden is a glaring example of the popularity of private labels when handled right. Produced at Nordic Sea Winery of Sweden with base wines from South Africa, it is a boxed wine, both the red and white wine for years. Almost 3 million liters are sold every year. In Sweden most wines sold are private labels made by wine importers, since there is hardly any local production.There strategy has been to make cheapest wine available in Sweden and they have been successful.

The Two buck chuck has been a global testimonial of private label popularity. Launched in 2002, it was riding high in popularity with the $2 price but in 2016 47% sales declining in 2015-16 and was discontinued, due in part to the negative publicity. For a report in delWine , click here.

Restaurants can have their own private labels too. Peli-Peli is ranked #10out of 7245 restaurants in Houston (Trip Advisor). They make their own branded blend of Sangiovese, Cabernet Sauvignon, Bordeaux blend and Chardonnay-the most famous varieties in that market, ostensibly. The Competitor is another Private Label promoted by wine consultant Gary Vaynerchuk of Wine Library in the US who I had met in Delhi about 10 years ago when he was trying to promote his wines in India but did not, because of difficulty in entry. This Lodi produced Cabernet has the strategy of a bottle selling for only $20, competing with the high quality of Napa. We are all too familiar with the Kirkland Label from Costco- the second largest retailer in the world but the largest wine retailer, where you can find wines like Kirkland Gran Reserva Ribera del Duero at $12- truly a brand name quality at discounted prices.

Opportunities for brand owners

Retailers, supermarkets, wine shops, restaurants and importers have several opportunities in selling private labels, depending upon the present or future expected volume of business. There is lower cost to entry, it’s faster to market them and enables full exclusivity. You can target your consumer segment, driving loyalty and increasing shopping frequency, resulting in increased chances of sales and profits.

Opportunities for producers

Although it could be a profitable model for bulk wine producers and those who make bigger volumes to sell to the private label owners, they can sell out extra inventories through this route or even at time when the wine does not meet their own standards or that of the appellation. At time the production is more than expected demands due to marketing factors and this way they can get rid of the extra stock or leftovers. This also improves their cash flow.

Of course, it is possible that the label might start competition with winery’s own label in some  market segment. It is important for the producer to keep the innovation level high and create enough product differentiations iand he information disseminated. Usually the producer will have enough marketing support, else they might need to reinforce it as some importers, restaurants or retailers are more aggressive in marketing.

Agreements are necessary

Agreements between the two parties-producer and the private label owners are necessary like any other producer-distributor relationship.. These must outline key business terms, identify timing of certain actions, define the role and responsibility of each party, manage parties’ expectations of the product quality and also outline the procedures in case there is a dispute.

Trends that will affect in 2018

Illustrating the 3 trends that will affect your private business in 2018 will be growing consumer acceptance of private channels , with the brand loyalty continuing to decrease, and the private label industry growing in the US, giving a further momentum to the private label industry globally- including perhaps India, feels Cruz.

Private Label Strategy

The owner of a private label must have a strong USP- he must have a reason to co-exist. He must create a brand identity and decide if it is a pseudo brand. The owner of private label then tailor the wine for the market-be it a retail, importer or a restaurateur.

One must know the correct pricing and know his competition well. Type of labels, packaging and type of closure he chooses are important. Of course, he must be aware of the rules and regulations applicable to him.

While preparing for success, the private label owner should offer wines at different price points. PR and Publicity wll be equally important for his target audience. He will need to make the fact sheet for press and consumers.

Private label business can be a good business. Write to Cruz directly for more information of if he can help you with the sources. You may want to also attend the WBWE 2018 in November , 2018 as a VIP buyer in which case you could request us at delWine@delwine.com and we could put you directly in touch with the event organisers. We are not connected with the organisers in any commercial way but to help the consumers and importers only.

Here are some helpful websites for further studies:

Spain: https://shop.winetastic.eu (for consumers)

US: www.wxbrands.com

UK: www.rackandriddle.com

Spain: www.premiumwinebroker.com

UK: www.Kingsland-drinks.com

Ger: www.copestickmurray.com

Private label business can be a good business. Write to Cruz directly for more information of if he can help you with the sources. You may want to also attend the WBWE 2018 in November , 2018 as a VIP buyer in which case you could request us at delWine@delwine.com and we could put you directly in touch with the event organisers. We are not connected with the organisers in any commercial way but to help the consumers and importers only.

Subhash Arora

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