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Category Review: Alcoholic Beverages

Alcoholic Beverages Get Crafty

Craft beer and sweet varietals carve a new path in private label wine and beer.

January 15, 2013
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In this article, you'll learn about:

  • Private label beer and wine sales

  • Various sellers of private label beer

  • Adult beverage industry trends

  • The top wine selections sold
     


Private label beer
was on pace to achieve a second consecutive record sales year, according to data from Chicago-based SymphonyIRI Group in a report titled “2012 Mid-Year Beer Category & Craft Segment Review.”
 

  • In U.S. grocery and drug channels, private label beer sales grew by 106 percent in 2011, for an additional 1 million cases, according to The Nielsen Company’s Premium WineScan.
  • Craft and sub-premium private label beers continue to drive total private label beer sales, according to IRI, with private label craft case sales at $220,177 through early July, and private label domestic case sales at $599,933.
  • Craft Beers in general were on pace to achieve their seventh consecutive year of double-digit dollar sales growth in supermarkets.

However, according to IRI, there are visible signs regionally of private label beer sales softening. Private label beer volume sales were down in half of the regions midway through 2012 compared with a year ago.

“[Craft beer] is a rapidly growing category,” said Stephanie Grubbs, vice president of marketing for the Winery Exchange in Novato, Calif.
Grubbs sees craft beer as a good outlet for private label.

“That consumer is pretty adventurous and open to try new things,” she said.

And better yet, it’s an enjoyable trend to work with – “The creative department has a lot of fun with those,” she added.

Trader Joe’s is one retailer known for its private label craft beer. It offers lines such as Joseph Brau, which comes in Oktoberfest and Stockyard Oatmeal Stout styles, and its Mission St. line, which offered a 2012 Mission St. Anniversary Ale last year.

Trader Joe’s shoppers also can buy cider in its aisles. Under its Newton’s Folly label, TJ’s offers an Authentic Draft Cider and Granny Smith Draft Cider. Cider continues an astounding ascent, up 43 percent in the past year, double its growth of the previous year, according to The Nielsen Company. Sales are poised to surpass 2 million cases shortly.

In Trader Joe’s November Fearless Flyer last year, the retailer highlighted Trader Joe’s 2012 Vintage Ale.

“It’s here just in time to reflect on the year in your beer,” the flyer read. “The defining characteristics of this limited-edition ale exhibit crafting, brewing and bottling that are unique to 2012. Drawing upon centuries-old Trappist Monk brewing traditions, the Belgian-style dark ale is bottle conditioned on lees (aged in the bottle on fresh yeast). This year, it results in finely structured brew that presents rich, malty (mildly sweet) flavor, with notes of cocoa and mulling spices. Complex, interesting, thoroughly enjoyable – it was quite a year.”

Taking a nod from other craft brewers, the limited-edition beer is packaged in a 750 ml bottle sealed with a cork ($4.99). Another packaging option for private label craft beer is cans. “Customers are asking us to put craft beer in cans,” Grubbs said.

Trader Joe’s, for example, offers it Simpler Times Lager and Pilsner in cans.

The two hottest craft styles remain India Pale Ales and Belgian Whites, according to The Nielsen Company. In the past few months, IPAs have edged out Belgian Whites to be the No. 1 style in the U.S. Although seasonal offerings sell more in terms of total cases, the seasonal segment combines multiple styles of beer offered for limited periods of time.

Hy-Vee Food Stores launched its first seasonal private label brew, Bonfire Marzan Ale, this year to join three other beers under the Baraboo Brewing Co. banner. Produced by Stevens Point Brewery in Stevens Point, Wis, the Baraboo Brewing Co. beers also include Red Granite Lager, Lumberjack IPA, and Woodpecker Wheat, all of which were released in July.

“The craft beer movement is very strong right now, so the time was right for Baraboo,” Jay Wilson, Hy-Vee assistant vice president for wine and spirits, says on the

“The craft beer movement is very strong right now, so the time was right for Baraboo."

Hy-Vee website.

Harris Teeter offers Barrel Trolley Beer, which includes Belgian-Style Wheat Ale, Pale Ale, Amber Ale, IPA, and Nut Brown. The retailer also has a new way to showcase its beer and wine. It opened its first 201central stores in October, located in North Carolina, which feature an extensive variety of wine, beer, and specialty foods, positioning Harris Teeter to offer increasingly specialized services to its customers.

That service includes in-store wine consultants; educational classes focused on wine, beer, and food pairings; a beer room; and a walk-in humidor.

Although the beer room is certainly a sign of Harris Teeter’s entry into the premium market, it is nothing new. Drugstore retailer Duane Reade offers its Brew York City growler bar at the 72nd Street, Manhattan location, and its Williamsburg, Brooklyn location. There, thirsty shoppers can fill their “Brew York City” labeled growlers with their sudsy choices and – regardless of the content’s brand – every purchase becomes an ad for Duane Reade, as they tote their growlers home.

WINE

In the grocery channel, private label wine sales grew by 8.2 percent in 2011 to total 2.7 million cases, according to The Nielsen Company.

Total U.S. retail sales of wine are estimated to reach $40 billion in 2012, an increase of 5.8 percent compared with 2011 totals and 19 percent since 2007, according to a Mintel Group, Ltd. report, “Wine - US - October 2012 Executive Summary.”

Millennials are driving adult beverage industry trends, a report from Technomic in July said. Across the board, respondents aged 21-24 are more likely than average to consume wine and are more likely to do so with high frequency. Looking forward, when 2015 ends, the entire Millennial generation, 77.7 million, will be of legal drinking age, according to Mintel.

Millennials like “far more lifestyle brands more than the traditional,” Grubbs said.

They also are driving wine flavor profiles, which are skewing into the sweet, she said.

“Moscato and red blends are big now,” she said, “just a sweeter profile really.”

Chardonnay, Cabernet Sauvignon, and Merlot remain the top three varietals in terms of overall volume, according to The Nielsen Company. However, Red Blends, up 29 percent and 587,000 cases, eclipsed both Sparkling wines and Pinot Noirs in the last year. Red Blends likely will surpass Merlots in 2013 to be the third-most popular domestic wine style.

Moscato is another domestic varietal climbing the ranks, according to The Nielsen Company. Up 34.5 percent in the past year, it surpassed even Red Blends in growth percentage, and had the fourth-greatest incremental case gain, after Red Blends, Chardonnay, and Cabernet Sauvignon.

Additionally, Mintel says leading claims among new product launches from 2007-12 are environmentally friendly packaging and premium positioning. Brands that can position themselves as environmentally conscious have a better chance with wine drinkers age 21-34.

To this end, Harris Teeter’s Earth Wise wines, made exclusively for the retailer, are “Earth Friendly” featuring sustainably farmed grapes coupled with all recyclable packaging. Varietals include Cabernet Sauvignon, Chardonnay, Merlot, Moscato, Pinot Grigio, and Pinot Noir.

Although Earth-friendly and organic wines resonate with shoppers and are growing, they don’t seem to be growing as quickly, Grubbs said.

“It is interesting to us so we’re keeping an eye on it, but it’s not something our customers are asking for in any big way,” she said.

As for product innovation, Grubbs said they are mainly trying to figure out the next big varietal and watching to see if flavor trends in spirits creep into wine.

SymphonyIRI Group doesn’t break out beer and wine sales for private label, but it is worthy to note that private label spirits saw 91 percent growth in year-over-year sales as of Nov. 4, reaching more than $19 million in sales overall. However, with share of less than 1 percent, private label spirits have a long way to go before they make a dent in the more than $4 billion category.

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