Juice Box globalization was one of three wine market scenarios that I proposed in a talk I gave in January 2013 at the Unified Wine and Grape Symposium in Sacramento (you can read a brief summary of my remarks here). I was inspired by the Minute Maid apple juice box pictured in the slide above.
You think of Minute Maid as an American brand and goodness knows that we grow lots of apples here, but in fact it has become a globally sourced product. The generic apple juice in that box could come from the U.S. or Argentina, Austria, Chile, China, Germany or Turkey (or any combination of them, I suppose). The brand is the thing here — country of origin is almost literally a footnote and apple variety is a complete non-issue.
Is juice box wine possible — wine pretty much stripped of variety and place of origin? Many heads nodded yes in the audience as I asked the question. Just a matter of time as global sourcing of wine becomes a key supply side factor and strong brand identity continues to grow in importance on the demand side. Juice box wine isn’t the only direction wine is headed, I suggested, but it is one possibility.
Barefoot Makes an Impression
And now it is here (although perhaps not for the first time). Gallo’s Barefoot brand has introduced a new red blend wine, Barefoot Impression, made from grapes grown on four continents, according to a recent report in the Modesto Bee.
Impression Red Blend is the 22nd product from Barefoot, which Gallo has built into the nation’s top-selling brand. The blend includes grenache from Spain, shiraz from Australia, malbec from Argentina and tempranillo from California.
Impression joins 14 still wines and seven sparkling wines, all made from California grapes, in the Barefoot portfolio. Barefoot winemaker Jennifer Wall describes the new wine as “a smooth red blend with dark fruit flavors, framed by notes of sweet vanilla and spice.” It has a suggested retail price of $6.99.
Lost in Space?
A quick trip to my local Safeway store revealed Barefoot Impression on the shelf along with other inexpensive red blends. The purple footprint was part of the typically attractive Barefoot package. But I was more interested in what the package didn’t say than what it did. No vintage year. No listing of the grape varieties used. And no listing at all of place of origin.
Whereas the Barefoot Zinfandel I found proudly boasted Lodi as its birthplace, and “California” appeared on several varieties (the Pinot Grigio in my store was an American appellation), I could not find any geographical designation at all for the Impression. I guess it makes sense — a multi-vintage blend has no year and a multi-continental blend has no specific point of origin (although there would be nothing to stop Barefoot from providing this information if they wanted to).
Message in the Bottle
Will consumers care that there is no vintage year or appellation? Some might question the wine if they look for traditional year-variety-origin references. But Barefoot has created their own narrative (see video below), which is very much in the Barefoot spirit and very appealing, too, and I am sure the marketing team has discovered that at least some Barefoot drinkers respond to the progressive social message more effectively than they would to a more traditional alternative.
Is Barefoot Impression the beginning of an important trend? Impression probably isn’t the first and certainly won’t be the last wine in this category. Watch this space for future reports.
Blue Nun wine reinvented itself a few years ago — I wrote about it in a chapter in Wine Wars called “The Curse of the Blue Nun.” It stopped being that rather mediocre sweetish German white wine that some of us remember from the 1970s (along with Matteus Rosé) and became something a bit different.
The classic Blue Nun
The classic Blue Nun white wine got better. It became Riesling, not a Liebfraumilch blend, for example. And the brand became more global, with Blue Nun wines in many different varieties (Cabernet, Pinot Grigio, Rosé) sourced from several countries. There was an alcohol-free “lite” Blue Nun and a bubbly wine with tiny sparkly, floaty golden bits to brighten your day.
Blue Nun became a brand with the same sort of broad portfolio of wines that, say, Barefoot Cellars offers. This approach is very successful in today’s market and, as the promotional video above indicates, Blue Nun is back (if it ever really went away).
One key to the transformation was the Blue Nun herself. She was perhaps the one constant. Marketers saw the gentle, friendly nun on the label as a key marketing tool — memorable and and maybe especially appealing to women, who are a target market.
More Than Skin Deep
I was prowling the Wine Wall recently and I noticed that Blue Nun has had a makeover — and it’s more than just skin deep! The surface change is significant, however. The bottle is still blue, of course (but not for all the varieties — see images here). But the blue nun is now only a shadow of her former self — a small golden cameo medallion.
Blue Nun Makeover
The gold highlights a smaller gold seal that I thought must be a wine competition award of some sort (all the Barefoot bottles feature them), but turns out to be a seal of “Sichel Superior Vinification.” Good to know!
I guess the sleek modern look and gold accents must now be seen as a more powerful image than the kindly nun. But the change goes deeper than the label.
I was puzzled to see “Rivaner” on the label. “Now made from the classic Rivaner grape, it has more balance, softness and depth of fruit flavor.” That’s what it says on the back. More than Riesling? Really?
I wasn’t sure that I’d ever had a Rivaner wine before, so I rushed home to check out my copy of Jancis Robinson’s Oxford Companion to Wine:
Rivaner: another name for müller-thurgau, used in Luxembourg, where it is the most planted grape variety, and, increasingly, elsewhere. Rivaner sounds more appetizing.
And I suppose it does sound more appealing — or maybe just easier for a novice to pronounce. Am I the only wine veteran who didn’t know that Müller-Thurgau is now Rivaner?
Blue Nun Delicate is another interesting innovation. With just 5.5% alcohol by volume, it rides the Moscato-powered low alcohol wave (just fyi the Rivaner is only 10% abv).
I’m looking forward to twisting the cap on this bottle with a couple of my research assistants when they get back from a trip to the Northeast. Müller-Thurgau can make fine wine, but its general reputation is for quantity more than quality, especially in Germany. It is the most-planted variety is Rheinhessen, where this wine is from. In Vino Veritas, as they say. How deep is the Blue Nun’s makeover?
I encourage readers to use the Comments section below to report their experiences with Blue Nun, both today and in the past, and to comment generally on the transformation. You might also be interested in these cooking videos from Blue Nun.
Is Moscato The Next Big Thing (TNBT) in wine? That’s the question Liza B. Zimmerman asks in an article in the March 2011 issue of Wine Business Monthly titled “A New White Zin is in the House.”
Moscato wines sales soared by 91.4 percent by dollar value according to Zimmerman’s article, compared with 4.9 percent overall market growth (Nielsen off-premises survey data for the 52 weeks ending October 16, 2010). That’s a big surge in sales, albeit from a relatively small base.
Move Over White Zin
Some of the increase probably comes as consumers switch over from White Zin, as the article’s headline suggests. The decline in White Zinfandel sales is accelerating as measured by Nielsen, with a 7.4 percent decrease in the most recent month reported in the same issue of WBM. Since White Zin sales are huge (almost double the sales of Red Zinfandel, for example, and slightly larger than Sauvignon Blanc in the Nielsen rankings), it wouldn’t take many consumers switching from White Zin to Moscato to generate big growth numbers.
Wineries have been quick to respond to the trend. Sutter Home, the White Zin king, has a popular Moscato Alexandria. Robert Mondavi Woodbridge and Gallo’s Barefoot Cellars are in the market, too, and yesterday I saw an advertisement for a Moscato from Columbia Crest. Now that I have started to pay attention, I am seeing Moscato everywhere.
I associate Moscato with low-alcohol fizzy Moscato D’Asti wines from Italy, but Zimmerman points out that Moscato can be made in a variety of sparkling and still styles, which she sees as a plus. The fact that the wines do not typically cost an arm and a leg is an advantage, too. I will be interested to see to what extent Italian producers will benefit from the Moscato boom or if American wineries will capture much of the market growth.
Now to be honest, I don’t really care if Moscato becomes The Next Big Thing — I’m more interested in TNBT wine phenomenon itself. Many of the winemakers and winery executives I talk with around the world display an understandable fascination with TNBT. White Zin, which once defined TNBT here in the United States, shows that fads and trends can at least sometimes develop staying power, as the huge sales figures make clear. But TNBT of today cannot afford to get too comfortable — there’s always another NBT on the horizon.
Some of my contacts in Italy worry about Pinot Grigio (PG), for example, which was TNBT for a while and continues to grow in the U.S. market. Nielsen reports sales of Pinot Grigio/Pinot Gris totalled $751 million in the sales vectors they monitor in the 52 weeds ending January 8, 2011 — much higher than White Zin’s $425 million for the same period. The Italians are glad that PG sales are growing, but they worry that their share of this market may be crowded off the shelves by U.S. PG wines (from Sutter Home, Barefoot Cellars, Columbia Crest and Woodbridge, for example).
And, of course, they are concerned that the market will swerve and TNBT will shift in some other direction entirely, leaving behind a smaller market niche.
Is Torrontés TNBT?
So when I was getting ready to visit the wine country in Argentina I found two groups interested in the question, is Torrontés TNGT? — the hopeful Argentinean producers and fearful makers of Pinot Grigio back in Italy!
Torrontés is an interesting candidate for TNBT. Some people see it as Argentina’s signature white grape variety, ready to take its place along side Malbec in the market place. While Malbec has its roots in France (it is one of the classic Bordeaux blend varieties), Argentinean Torrontés is thought to be theirs alone — a cross between Muscat (think Moscato) and the Criolla or Mission grapes planted by the early settlers. It is or can be intensely aromatic and some of the wines I’ve tasted (the Doña Paula, for example) seem to be all about flowers more than fruit or minerals. Distinctive, but everyone’s cup of tea.
Having read so much here in the U.S. about the amazing TNBT potential of Torrontés, I was a bit surprised at the reactions I found in Argentina. Some of the wine people we talked with were clearly enthusiastic and ready to ride the wave if and when it came, but others had doubts.
The optimists view Torrontés as the next wave of distinctive “Blue Ocean” Argentinean wines. Malbec paved the way, then Torrontés broadens the market, then Bonarda and so on each filling a unique market niche.
More than one person talked about the potential for Torrontés in Asia, pointing out how well it pairs with Asia food. Of course everyone in the world who makes white wine with good acidity dreams about selling their wines in Asia, so this is hardly an uncontested market. And it is also useful to remember that while you and I might like the taste of Torrontés (or Alsatian Pinot Gris) with Pad Thai or Kung Pao Chicken, most Asian consumers believe that wine should be red and that it is not necessarily meant to be consumed at meals. So caution is warranted.
Parallel (and Ambiguous) Universes
I was surprised at the number of wine people who were Torrontés sceptics. Some were concerned that Torrontés lacks the quality to be an important grape varietal. They would rather focus on quality international varietals like Chardonnay and Cabernet Sauvignon, to complete directly based on quality and price rather than trying to develop a new but possibly marginal market segment.
Torrontés is like Pinot Grigio, only it’s good, one expert told us with a grin — and with obvious disdain for both wines. Although Italian Pinot Grigio can be excellent, its reputation is influenced by simple basic products that flood the market and I think there is concern that this could happen with Torrontés in Argentina.
The parallels with Italian Pinot Grigio are interesting. The best of the Torrontés and Pinot Grigiot wines come from particular geographic areas (Salta in Argentina, for example, and Alto Adige in Italy), but expanded production would probably come from other zones where the quality is not as high. As TNBT effect strikes, if it does, the initial quality could be undermined as output expands. The concern is that Argentina is not as established as Italy in world wine markets and its reputation might not be able to withstand a wave of mediocre wines.
But perhaps it is the nature of TNBT phenomenon that hot products simultaneously exist on many levels, simple and complex, highest quality and no-so-good. Perhaps that is the key to their success. Maybe it is the diversity (or is it ambiguity?) that allows fads or trends to evolve into TNBT.
Although wine snobs almost universally reject White Zinfandel, for example, some good wines of this type have been made, including an early vintage by Ridge Vineyards that I talk about in Wine Wars.
If this is true, then maybe Moscato and Torrontés have a chance!
Some people think that the long hard winter of the economic crisis is coming to an end and “green shoots” are emerging. It is too soon to tell if this view is correct, but not too early to begin to assess which parts of the wine economy have been hardest hit by the recession and which have actually benefited. Herewith a brief analysis of winners and losers.
Wine Market Breakdown
There are several ways to break down the winners and losers in the wine market. The first and most obvious is by price segment. Distributors are finding wines in the $25 and up category difficult to move through normal retail or “off premises” sales channels. This doesn’t mean that everyone is buying Two Buck Chuck, however. The “super-premium” $10-$15 segment continues to grow, for example, although the trading down effect is still significant. The woman who was willing to pay $20 two years ago now aims to spend $15 or less, with similar changes further down the line.
Some wine brands have been particularly well positioned to attract value-seeking buyers. Gallo’s Barefoot wines, for example, have gained market share among the “fighting varietals” and the CMS by Hedges red and white blends have done well in the $10-$12 category, as have many others.
Since most Wine Walls are arranged with the most expensive wines on the top shelf and the cheapest at the bottom, it is almost as if the top shelf has been eliminated and all the other wines moved up one rank. Whether this is a temporary or a permanent shift remains an open question. I explicitly do not assume that everything will reset back to “normal” once the recession’s game of musical chairs has come to an end.
On-premise sales have declined, too, as restaurants have felt the recession’s sting. It has been especially interesting to watch as restaurants adjust by switching to lower cost wines from beyond the “usual suspect” regions. Reds from Spain and whites from Oregon, for example, can be sold profitably at lower price points than the better known French and Californian alternatives. Because buyers may not be as familiar with these wines they can enjoy the adventurous experience of “switching over” rather than simply “trading down.” Restaurants can maintain their margins at lower prices.
Inevitable the recession has had uneven effects on different regions and countries. The news from Northern California is not good, for example, with many reports of surplus grapes, some that will not find a buyer this year. Cost is a big factor. Napa and Sonoma are high cost growing regions. The rule of thumb is that $2000/ton grapes produce $20/bottle wine — that’s how it pencils out when all the costs and mark-ups are accounted for. It is difficult to know who will buy wine made with $3000/ton grapes in the present market if, as we are told, the $25+ segment is a “dead zone.”
There is better news here in Washington state, on the other hand. Sales of Washington wine are rising at a 9% rate according to recent data. This makes sense because so much of Washington’s wine is positioned in the $15 and under category. About three quarters of all Washington wine is produced by Ste Michelle Wine Estates’s brands such as Chateau Ste Michelle and Columbia Crest that provide good quality and good value.
Argentina is another winner. Much like Washington State, Argentina produces good value wines at every price point and has increased sales across the board, although I suspect that Malbec at $10-$12 leads the way. While the overall US wine market has grown by 4.8% over the last year according to the most recent Nielsen Scantrack numbers, sales of Argentinian wines have risen by 46.8% — a tremendous if unsustainable rate of growth. By comparison Chilean wines sales have risen by 12.7%.
New Zealand’s wine industry is heading toward a crisis, as I have written before, but this seems less about the recession than a simply matter of demand and supply. You cannot double and redouble vineyard acreage forever and expect the export market to absorb every drop.
Australia is suffering, too, but like New Zealand I think the recession is a secondary “tipping point” factor. Wine imports from Australia are down 2.5 % for the last 52 weeks and Syrah/Shiraz sales are off 5.2% for the same period. Australia is facing all sorts of problems — drought, fire, recession and so forth — but the biggest problem maybe that “brand Australia” has gone out of sytle, taking the whole Syrah/Shiraz category with it. Even unfashionable Merlot has done better, with 0.8% growth.
The French Connection
I think France is the big loser from the recession, especially the segments that previously earned a “prestige premium,” particularly Bordeaux and Champagne. There is enough Champagne squirreled away in producer cellars to supply the market for several years. I think the big houses would pass on making any new wine this year if they could.
Even the famous chateaux are cutting price in Bordeaux this year, so I can only imagine what things are like for the producers of ordinary bottlings and bulk wine. French wine is a drag on the market even in Britain, where South African wines are surging ahead. Brand France, like Brand Australia, is in steep decline, although for different reasons.
There is a lot to be learned from a close study of the wine recession. The most important, at this point, is that it is more than a decline in demand. There are hints of more profound structural changes taking place. The more things change, the French say, the more they stay the same. I wonder if that will be true this time as the recession’s grip slowly weakens?
8/31/2009 update: An article in today’sTimes of London suggests how severe the crisis is in Champagne. (Click on the link to read the rest of the story.)
Hopes of a glut of cheap champagne are set to be dashed when vineyards meet next week to agree on a big cut in production to prop up prices.
With sales falling, producers may be ordered to leave up to half their grapes to wither on the vine in an attempt to squeeze the market.
Merchants are pushing for an historic reduction in yield as they seek to ensure that champagne remains an expensive luxury. “Everyone agrees that production has to be cut because no one here wants to see prices fall,” an industry insider said. “The only disagreement is on the scale of the cut.”
The backdrop to the debate is a slump in sales for champagne makers, from 338 million bottles in 2007 to 322 million last year and a predicted 270 million this year. The fall stems in part from a slide in demand, estimated at about 10 per cent, and in part from destocking by distributors, notably in Britain and the United States.
9/3/2009 update: A great article in today’s Wall Street Journal on the crisis in Champagne. Check it out!
When the economic crisis began to unfold last year many people said that it wouldn’t affect the world of wine — people will still want to drink, they said, even more so when they are worried or depressed. Recession is good for wine, they assured us.
Well, we all know now that that line of reasoning was misguided. The crisis is hitting almost every shelf on the Wine Wall as consumers cut back and trade down (only a few value brands like Barefoot Cellars seem to be benefiting). The most recent issues of Wine Spectator and Decanter feature cover stories that are designed to appeal to recession-shocked bargain-hunting wine enthusiasts. (See note below.) Wine industry publications are packed full of stories about how producers, retailers and restaurants are coping with declining demand.
Cycle or Shift?
Now that we know that economic crisis is having a real impact on wine, it is time to think more seriously about what form that impact is taking. Most people that I have talked to are thinking in terms of boom-bust cycles. The current downturn will be very difficult — and a shake out will take place across the industry — but, they say, the wine economy will bounce back again once the economy itself starts to recover. This is probably the correct way to think about the future of wine markets, but it isn’t the only way.
A second possibility is that the crisis will produce a long term structural change in the wine market. The market won’t bounce back from its low, but rather will reset itself and proceed along a new and possibly unpredictable future path. Economists who study other sectors (finance, automobiles, agriculture) and taking the possibility of structural shifts seriously. Could it be happening in the world of wine?
One point of the book is that some crises are more significant than others. Sometimes a crisis is a tremor that shakes things up for a while but leaves the landscape pretty much unchanged. Other crises are major earthquakes, with more lasting long term implications. Maybe this is a “Big One,” at least in terms of wine. I’m going to use the next few blog posts to think through this important question.
The Market Center Shifts
One early indicator of structural change comes from London, the center of the wine world. Great Britain, as I’ve said before, is the most important wine market in the world. The British don’t drink the most wine in the world or produce the most, either, but they buy a lot of wine from other countries, making them the largest import market and therefore the focus of international competition (Germany and the United States along with Britain form the Big Three import markets).
But this may be changing. Britain’s economy is being badly battered by the economic crisis, as an article in yesterday’s Financial Timesmakes clear.
As the UK economy contracts at its fastest rate since the second world war, the … Industry Watch report predicts that more company casualties will follow in 2010. It says 39,000 businesses, or one in 50, are likely to fail next year.
Britain’s banking sector is in bad shape, perhaps even worse than the US industry, and its government budget deficit is also spiraling into the red. This has general wine market effects similar to those in the US (cutting back, trading down, switching over), but some different ones, as well, the most important of which is due to the exchange rate.
As Britain’s economy has imploded the pound has collapsed as well. The pound has fallen by about 25% against both the dollar and the Euro. It took about $2 (or €1.30) to buy a pound a year ago, now it is selling for $1.45 (or €1.06) today. This means that imported wine (which in Britain is, well, wine) costs much more because of the exchange rate at the same time that the slumping economy (and lowered expectations) are undermining demand. The US dollar, on the other hand, has appreciated relative to most currencies apart from the yen, promising wine buyers lower prices to match their reduced economic circumstances. So the recession is affecting wine in Britain more than the US wine market. A shift is taking place — is it temporary or will it be permanent?
Although it is too soon to know for sure, I think it is possible that these factors could cause London to lose its preeminent position in the world wine market. I see indicators in the decline of the Australian industry (complicated by other factors, I know — but the collapse of the British market is part of it) and the recent global focus on Argentina and its excellent wine values (both Wine Spectator and Decanter make this point).
Although Argentinean producers are looking to export wherever they can get a foot in the door, my strong sense is that they see their future in the U.S. market more than Great Britain. Perhaps they are at the head of the pack as the world wine market resets and proceeds on a different path.
[Note: Wine Spectator includes 18 tips on stretching your wine dollar. My favorite is tip #7: buy by the case and get a discount (page 55 of the April 30, 2009 issue). Sound advice, although the particular example cited may miss the point: “A 10 percent discount on a $300 case translates into a saving of $2.50 per bottle. That adds up fast.” The problem, of course, is that the people who used to buy those $300 cases are cutting back the hardest and I’m not sure that $2.50 a bottle is going to turn them around.]
The second in a series of reports on how the economic crisis is affected the wine market. (Click here to read the first post.)
A Wine Recession?
Evidence continues to pour in that the economic crisis is having a significant impact on the world of wine, but some industry people seem to be in denial. They tend to fall into three groups. The first say that yes, customers might trade down and away from your part of the wine market, but my wine is still selling fine, thank you! The second group believes that people drink more, not less, in bad times, so the overall wine market is recession proof. The third likes to think of wine as an investment and argues that with traditional financial investments doing so poorly affluent people will switch over to fine wine and power a continuing boom in these “liquid assets.”
There is of course some truth in each of these views. Cult wines like Screaming Eagle will still sell out no matter what happens on Wall Street — no one wants to be dropped from the distribution list in bad times because it’ll be impossible to get back on when the economy picks up. And there are wines that are positioned to benefit from a down market (see below) while others suffer. But this only tells us what we already knew, which is that wine isn’t one big market, it is a lot of big, small and medium sized market segments and it is no surprise that they all aren’t affected equally by any trend.
People may in fact drink more alcohol in a a down economy — call it wine relief or corkscrew therapy. But even if they do, it doesn’t necessarily mean that they’ll drink more wine, does it? Wine isn’t always the cheapest way to drown your sorrows. And it sure doesn’t mean that they’ll pay more for wine, even if they do drink more of it, because they are likely to trade down to cheaper products. Econ 101 teaches us that total expenditure falls with price when demand is inelastic, as it may be in some wine market segments.
And the evidence shows that some but obviously not all wines are good financial investments, but it is important not to over-generalize this effect. When the influential Canadian wine writer Beppi Crosariol recently quoted the importer of wines such as Domaine de la Romanée-Conti on the benefits of wine investment in his column in the Global and Mail he was flooded with comments ridiculing the idea of wine as a general investment strategy.
The Permanent Lifestyle Hypothesis
There is lots of evidence that the economic crisis is affected the demand for wine. Restaurant sales have been especially hard hit and grocery store customers are trading down in the quest for good value. But is trading down really the right term to describe this phenomenon? We know from Constellation Brand’s market surveys that some wine buyers are influenced mainly by price, so that trading down to a cheaper product comes naturally to them.
But other market segments (the ones responsible for much of the growth in wine sales in recently years) are what I think of as lifestyle wine consumers. They watch the Food Network, buy lifestyle magazines like Gourmet and Bon Appétit that are heavy with wine advertising and think of themselves as people with sophisticated lifestyles that include wine, fine dining and probably even wine-related travel. (Note: even Cooking Light magazine has a wine column now — I was quoted on page 184 of the October 2008 issue.)
Lifestyle wine consumers are unlikely to give up wine during a recession because it would mean more than changing consumption patterns, it would mean sacrificing an important element of their carefully constructed identity. But I don’t think they will necessarily simply trade down to lower priced wine — Carlo Rossi or Two Buck Chuck — either, because that would also undermine self image (to the extent that this is based upon consumption patterns). I believe that people will try to maintain their lifestyle identity through the economic cycle to the extent they can. This is a lifestyle variation on Milton Friedman’s economic theory of the permanent income hypothesis.
So while some people will trade down to lower price, others will trade over — to a different idea of wine that allows them to spend less without feeling like they are giving up their lifestyle. I’m still serious about wine, their choices say, but I don’t take my self so seriously all the time. I like to have fun with wine and so I’m buying wine that reflects this fact now.
Barefoot Cellars: Trading Down or Trading Over?
This, I argue, is what’s behind the recent success of Barefoot Cellars wine, which has experienced rising sales in the decling market. It is pretty clear that consumers are trading down or trading over to Barefoot. Why?
Barefoot Cellars is a wine with a casual image — kick off your shoes and relax! — but the wines have a serious side, too. Barefoot wines are entered in various wine competitions and the labels proudly display the gold medals they’ve earned, something that gives these products credibility on the Wine Wall despite their competitive price point. (Barefoot California Zinfandel retails for $6.99 or less in most markets.) Wine critics have given some of the wines favorable ratings and they often appear on published “Best Buy” lists.
The Barefoot brand was founded in 1965 by Davis Bynum and passed through various hands before being purchased by Gallo in 2005. (Here is a history of the brand.) Jeremy Soine, a former student of mine at the University of Puget Sound, is the brand’s manager; I asked him why it has been so successful. Here is our Q&A.
Who is buying Barefoot and why?
Barefoot Wine is marketed to the “young at heart.” The idea of “getting barefoot” is universally appealing, whether you are 25 years old or 75 years old. At the end of the day, most of us look forward to that moment where we can “kick our shoes off” and disconnect for a few minutes from our hectic lives.
What can you tell me in terms of sales trends?
Barefoot Wine is one of the top selling wines in the United States, and sales growth continues to significantly outpace the wine category.The sales growth of Barefoot has actually increased during the past six months, and I believe this is because people are seeking out better values as they have fewer extra dollars to spend.Much of Barefoot’s popularity has occurred during the past few years, but many people don’t realize that Barefoot Wine was actually started in 1965 by Davis Bynum, who is not now famous for his Pinot Noirs.
Have you changed your marketing strategies in any way to compensate or take advantage of the changing market conditions?
Barefoot is the most awarded Winery in U.S. wine competitions for under $15 per bottle, and we actively communicate these awards to people by placing medallion stickers right on the bottle. We believe that the medallions give people the confidence that they are buying a wine that has been recognized by wine critics.
Do you think that Barefoot’s succcess is due mainly to the trade-down effect — that is, is it driven by the poor economic times, with consumers trading down to cheaper products? Or is there more to it than that?
Barefoot does not spend money on traditional advertising like other large wine brands. Rather, we donate wine to local non-profit organizations. This allows people to try Barefoot wines, and also frees up funds for non-profit organizations. In 2008 Barefoot Wine will be poured at more than 3000 non-profit events in most communities in the United States. We believe that this grass roots approach will win in the end because people appreciate these donations, will love the wine and will recommend the wine to their friends. Fewer than half of all wine drinkers have even heard of Barefoot Wine, and we are fine with that because people want to “discover” wine, not be mass-marketed to through television ads or billboards.
So Barefoot seems to have benefited from the trading down effect, but I think you can also see a trading over effect. Paying less? Yes. But buying a different idea of wine: relaxed but not unsophisticated and with a social agenda that fits the times. I don’t want to push the Barefoot case study too far — to over-generalize it — but I think there’s something to be learned from this brand’s success.