Gregg Popovich, president and owner of California’s popularly-priced Castle Rock Wines, saw sales steadily increase through the beginning of this year, something he credited to the erosion of premiumisation.
But the pandemic should have put an end to that, right? Castle Rock lost key cruise ship and airline accounts when Covid-19 upended those two markets, Meanwhile, the launch of a by-the-glass Chardonnay and Pinot Noir program for national and large regional restaurant chains couldn’t have come at a worse time. So why were Castle Rock’s sales up 11% over the first six months of the year, led by mid-double-digit growth for two of its $15 Pinot Noirs?
“Our national distributors tell me we’re doing so well in retail accounts because Castle Rock is a recognizable brand known for consistency and high quality,” says Popopovich, whose winery makes almost 400,000 cases a year. “And being priced from $8 to $12 retail certainly helps. I’m hearing consumers are not in the mood or mindset to experiment with new, unknown brands.”
Popovich is not alone. Talk to producers, analysts, retailers, and marketers, and the answer is the same. Consumers, forced to stay home during the pandemic, were looking for price, quality, and value. And, more often than not, consumers associated those qualities with the brands they know and have bought before. That means national account brands, be it Deutsch’s Josh Cellars, Chianti from Banfi, or (and probably not surprisingly) Precept Wine’s 3-liter box House Wines, have been thriving.
The biggest wholesalers, meanwhile, have been reaping huge dividends from previous investments and technology upgrades to their supply chains. This has allowed them to streamline sales and marketing just in time for the pandemic, making on-site visits less necessary than ever.
“People are looking for the predictable, for the enjoyable, for the well-worn,” says Alfonso Cevola, a Dallas sales and marketing consultant and former major wholesaler executive. “And with shortages of consumer goods in the stores, whether they be paper products or hot sauce, a tried-and-true brand that represents a solid and sturdy value is right up there with one’s pet or one’s favorite pillow. Call it well-being or pleasure or convenience, it all boils down to comfort.”
At the beginning
Reliable statistics about US wine sales during the pandemic are in short supply. But there does seem to be a consensus that, regardless of how much wine has or has not been sold, consumers are trading down. A recent Sonoma State study, part of the university’s Wine Industry Financial Symposium, found that 57% of US wineries who participated in the symposium survey said their sales had declined.
The beneficiaries of that? The biggest producers in the top-heavy US business, where the five largest companies account for more than three-quarters of all the wine made in the country and the top 50 account for 90%. The Sonoma State study found that, among the top 10,000 wineries, the largest wineries were taking market share from the other 9,950 or so. Hence, the success during the pandemic of national brands.
“What I’m seeing for the most part is well established brands people are familiar with – the ones that have broad grocery distribution are winning,” says Dan Peabody, regional director for Banfi Wines, who oversees 20 states in the middle of the country. “Multiple shopping stops are not happening, so instead of going to the grocery store, then to the fine wine shop, butcher, cheese monger, and so forth, people are getting everything in grocery stores.”
Peabody says Banfi’s success – it had five SKUs in the top 50 for Italian wines costing more than $12.99 through the beginning of August – can be credited to its long-established chain supermarket distribution. That was especially true for its Bell’Agio Chianti, one of the few Chiantis still sold in a wicker basket in the US Its sales had been moderately declining prior to the pandemic; post-Covid 19, sales were up 8.1%.
That was also the case for Deutsch Family’s Josh Cellars, one of the fastest-growing brands in the US over the past couple of years. It barely missed a beat despite the coronavirus – sales pre-Covid-19 were up 30% according to IRI, and up 61% after the pandemic started. All of the Josh wines sold 51,000 cases via online delivery platforms like Drizly in the first five months or so of the lockdown, becoming the most purchased brand on that app.
“We knew from history that we had to act quickly, because if you’re contrarian and capitalise on disruptions, you can improve market share,” says Tom Steffanci, the president of Deutsch Family Wine & Spirits. “But we also knew that we had to be focused on keeping our people safe, so we weren’t going to have anyone in the field, anyone in the office, or anyone traveling.”
That meant focusing on marketing that could be done safely; so, no supermarket end caps to boost sales. Instead, “we knew consumers were going to be at home, so we had to find something to reach them, and that meant more digital content,” says Steffanci. Deutch emphasized marketing that consumers would see at home, including featuring Josh on delivery app platforms and social media tastings with Josh founder Joe Carr. The idea, says Steffanci, was to reinforce the Josh image: “To share a sense of normalcy, that Josh was about relief and recharging.”
Help from the supply chain
Given that search for normalcy, should it be any surprise that almost all the House Wine boxes sold what the company termed “very” well – a 10% increase? A promotion featuring wine and cheese – combination packaging with both Cheez-It White Cheddar crackers and House Wine Rosé – sold out in an hour in July.
“This is the kind of wine that hits on multiple cylinders,” says Alex Evans, the chief marketing officer for Precept Wines, which owns the brand. “It’s an iconic brand. It fits the perception of the times, that everyone is welcome in our house. And it gets a lift from our distribution, which enabled customers to buy more.”
Hence, it’s not surprising that supply chain efficiencies played such a key role in helping established brands sell so well during the first six months of the pandemic.
“I think that’s certainly one of the two main reasons,” says Michael De Loach, a wine broker and marketing consultant in northern California. “The biggest wholesalers, and not just on the West Coast, have put a lot of technology and investment in their supply chain, so that it’s more robust than ever. So when Covid-19 hit, they knew what to do and how to do it. They knew how to get stacks into the stores where they were needed.
De Loach says this meant the need for fewer sales calls at a time when no one wanted to or could make calls, as well more real-time inventory information so that wholesalers knew when retailers needed to restock. He says he especially saw these improvements with Young’s Market Company on the West Coast, as well as with its joint venture partner, RNDC, and its footprint across the rest of the country.
This kind of cooperation also paid off for Vineyard Brands, the Birminghan, Alabama-based importer. La Vieille Ferme, the French $10, 1.5-litre red, white, and rose, is one of its leading brands, but Greg Doody, Vineyard’s CEO, wasn’t sure how it would do during the pandemic. The company was already trying to figure out how to handle the Trump Administration’s 25% tariff on French wine when the pandemic hit.
“So we went to our suppliers and distributors, and we said, ‘We need you to help maintain our prices,’” says Doody. “We told them we didn’t want to lose our placements after 50 years with the brand. And they worked with us on pricing, so we had flexibility with pricing.”
The result, which speaks to the success of familiar brands and value pricing? The La Vielle Ferme line saw sales increase by 16% in the first three or four months of the pandemic – about 300,00 cases nationwide. In addition, says Doody, the brand is picking up national accounts that are looking for value-oriented and well-known brands.
Familiarity is all
Familiarly also mattered for Indiana’s Oliver Winery, one of a handful of little-known but successful US regional producers. Oliver, one of the 50 biggest in the US, makes more than 400,000 cases annually – even though most of its wines are sweet. That dependability turned into an advantage during the pandemic, says Sarah Anderson, Oliver’s marketing director. The start of the pandemic coincided with the re-launch of the winery’s flagship product, Oliver Soft Red ($8.50). It got a new label and new name, Oliver Sweet Red. But the changes didn’t hurt sales – the entire Soft Wine Collection, which includes the red, a white, a rose, and a red lime, were up 34% in dollar terms in the 12 weeks at the end of July.
“That’s well above category performance during that time frame,” says Anderson. “A look at data trends during COVID-19 will tell you that people are gravitating to quality and dependability, and we’ve seen loyalty in our tried-and-true markets like the Midwest, and the taste of our products is fueling growth in repeat purchases in our emerging markets.”
And, finally, canned wines also played a role in brand success. Importer Wineseller Ltd.’s Sea Pearl cans, a New Zealand Sauvignon Blanc, had debuted in 2019, but faced resistance when the pandemic hit.
“When a challenge comes about like we are in, it’s everyone’s duty to take extra care of existing products and be sure there is focus and attention on recouping losses forced by this pandemic,” says Jordan Sager, co-president of Winesellers with his brother Adam.
Still, the product made inroads thanks to the continued popularity of cans and Wineseller’s innovative pricing. The 250-ml cans are sold in two-packs with a suggested retail price of $10.99. That’s a big difference, since 250-ml cans are usually sold in four packs. “But we wanted to give the retailer something different to offer,” says Sager, “as well as give the shopper the opportunity to try something new at a fraction of cost compared to the rest of the category.”
In other words, one more example of the success of value pricing and a popular format. Throw in the success of familiar brands, and it’s as if the pandemic re-introduced the US wine business to its formula for success before premiumisation.
