KDM
KDM Global Partners / Newsletter First Quarter, 2010
In This Issue
Retailing Trend: Private Label Growth is Outpacing National Brands
Wine & Spirits Advertising Through the Years: A "Vintage" Look
Post-Recession: Shoppers Sticking with Private Label Brands
Ripley & Romie's Sidebar
Ripley and Romie
 
" Wake us up when this
 nasty winter is over..."

About KDM
 
KDM Global Partners, LLC is a wine producer and importer whose core business is creating and building new wine brands for its clientele of retail chains, restaurants, hotel/resorts, corporations, meetings/events - and individual brand owners.  

With corporate offices in Philadelphia, PA and wine-making capabilities throughout the world's great viticulture regions, KDM's turnkey brand-building capabilities are unparalleled: packaging design, regulatory approvals, warehousing and distribution (to all 50 states and overseas)...all varietals, price points, low case minimums. 

The world of wine production, distribution and sale is evolving quickly, creating compelling opportunities for businesses of all types.
 
We'll take you there. 
 
Learn more here:
KDMGlobalPartners.com

 
Let us hear from you!
 

 
"In wine there is wisdom; In beer there is freedom; In water there is bacteria."


 -Ben Franklin
Archives
Easy Access to
Prior Articles:

(click on Newsletter below)

Join Our Mailing List
Retailing Trend
Private Label Growth is
Outpacing National Brands


Wine BasketNielsen Company sales data confirms that the growth rate for private label (proprietary label, exclusive house brands) is considerably outpacing sales of the ubiquitous national brands.
 
However, sales volume for private-label table wines and spirits grew 29.4% and 7.8%, respectively, during the 52 weeks ending Jan. 9 versus the same year-ago period.
 
Wine is a highly fragmented category, and in many cases, consumers are not even aware that they're buying private-label wines -- the wines come in attractive bottles and don't actually bear a retailer's name. Some retailers' private-label spirits brands also tend to fly under the consumer's radar; in other cases, consumers simply view store brands as a good value, he adds.
 
Some key off-premise alcohol trends:
 
  • Alcohol purchases by retail channel are, by and large, reflecting consumers' overall, economy-driven pattern of doing less shopping in specialty or "discretionary" stores (including wine stores) as they consolidate trips and focus on grocery and "value" formats such as warehouse clubs, supercenters and dollar stores. 
  • Many retailers are taking advantage of the economy-driven weakness in on-premise (restaurant/bar etc.) alcohol consumption by developing private labels and discounting. Pricing wars are common, leaving little or no room for price increases.
  • Consumers continue to aggressively seek value via trading down, coupon use and promotion/deal shopping.
  • With food and other types of retailers increasingly pushing to optimize space by honing national brand assortments and increasing space for private label-brands in most categories, including wine and spirits, national wine and spirits brands -- particularly those that are not #1 -- will feel increased pressure by store-owned brands.
  • For wines, those in the $9 to $15 range are on the rise, while other (particularly higher) price segments and imports are on the downswing. 
  • Despite consumer resistance to price increases, alcoholic beverages continue to be very attractive to retailers because they significantly boost overall shopping basket expenditures. Furthermore, among the top 122 product categories by unit growth in food, drug and mass for the 52 weeks ending Dec. 26, 2009, wine ranked ninth (with 4.7% growth), spirits ranked 20th (2.4% growth) and beer ranked 46th (0.6% growth).
 
Some key on-premise alcohol trends:

  • The on-premise scenario for alcoholic beverages will remain challenging this year, but declines will be "shallower," according to Nielsen. Ongoing challenges include continuing consumer financial insecurity, inability to rely on new location openings for growth, increasingly aggressive competition from retail stores, and consumers' now-ingrained expectation of discounting.
  • Alcoholic beverages can help restaurants grow traffic, guest check size and profits. Hence the trend to fast casual and even quick-serve restaurant chains adding beer or wine to their menus. 
Wine & Spirits Advertising Through the Years:
A "Vintage" Look
 
The wine industry has inherited a monster. For many years wine has been viewed as unapproachable, distant and aloof...for special occasions, for formal dinners or when the boss invites you out with clients.
 
Wine used to be for people who can describe a Shiraz as "an ample, plump cerise, with hints of black cherry on the nose and slight teasing of tobacco character." Or for people who know how to spell Gew├╝rztraminer. These are the kinds of stereotypes that have impeded more regular consumption.
 
Today, it's an entirely different - and much more democratic - marketplace. Now, the message is that wine is a fun, healthy, everyday beverage that can be enjoyed at any time of the year. And, despite what Robert Parker might say and how he "rates" the vintages, varietals and winemakers, all decisions about what is "good" and how to pair with foods is a uniquely personal decision.
 
Have you ever wondered why those ubiquitous "national brands" are so expensive? The answer is...mostly because of the cost of advertising! The large wine and spirits producers must budget huge sums in order to promote their wines...and these costs are passed down to all of us in the cost of each bottle we buy!
 
So, since we've all been paying the freight for these ads, let's enjoy a retrospective, dating back to the mid 19th century....
 
Anheiser-Busch, 1860:
1860 Anheiser
 
Absinthe, 1890:
1890 Absinthe 
 
Budweiser, 1910:
Budweiser 1910
 
Calvert, 1930
Calvert 1930
 
Seagrams, 1940:
Seagrams 1940 

Old Fitzgerald, 1950:
Old Fitzgerald 1950
 
Schlitz, 1950:
Schlitz 1950 
 
Heublein, 1960:
Heublein 1960 
 
Imperial, 1970:
Imperial Whiskey 1970 
 
Almaden, 1970:
Almaden 1970 
 
Cutty Sark, 1980:
Cutty Sark 1980 
 
Rolling Rock, 2000: 
Rolling Rock 2000
 
Luckily, we've all grown up and matured as consumers.
 
What is now clear to everyone (thank goodness!) is ... these national brands, no matter how much we may like them, are priced way too high for what we're getting in return.

Consumers are trying new lower-priced alternatives
and they are  liking them ... switching from the brand we see everywhere to that brand our favorite store or restaurant serves exclusively as a 'house brand' or "private label brand." We are finding that these brands offer a much better alternative - and for a lower price.
Post-Recession: Shoppers Sticking with Private Label Brands
 
Whether the US economy has actually turned the corner or not, the recession has left us with some interesting consumer trends worth noting.
 
According to a study conducted between mid-October and early December among shoppers nationally, over one-third of those who turned to private label brands during the economic downturn will continue to purchase them once the economy recovers. The study also found that a majority of shoppers "agree" that private label brands are normally an extremely good value for the money.
 
These results are interesting on several levels: (1) Consumers are more willing than ever before to try new brands and can easily be converted from their loyalty to national brands; (2) Unlike the early days of "generic" private label brands, consumers are now willing to attribute the same type of brand traits to new PL brands as they did in the past to the heavily-promoted (and thus more expensive) national brands; and (3) For retail chains, supermarkets, big box retailers, restaurants and all other sellers of PL products, there is now an unparalleled opportunity to attract new customers, earn their loyalty and - perhaps most important - earn higher margins.
 
For wine sellers, these consumer trends are the same: (1) Especially at lower price points (under $25 per bottle), consumers are easily converted to a new wine varietal, new brand or a house feature offering; (2) Private Label wine brands are becoming critical tools at all quality levels, imported and domestic, and retail price points - as sensible alternatives to the "usual suspect" national brands. Customers are coming back for repeat purchases, too; and (3) With increasing consolidation among larger retail chains and shrinking margin opportunities with that increased competition, retailers and on-premise wine sellers are finding that offering their own PL wines to customers offers much more margin for the house - as well as a way to differentiate from the competition. http://bit.ly/8XY8e2.