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Store-Brand Wine and Beer Sales on the Rise

According to market research firm IBISWorld senior analyst Steven Connell, Australian consumers are lapping up private label wines from big retailers Coles and Woolworths (the leading retailer in Australia). IBISWorld projects that 10% of Australia's domestic wine sales will be own-brand by 2013.

While I don't doubt his numbers, and this trend mirrors that of other products globally — from groceries to video game accessories — I don't completely buy his verbal analysis: "Drinkers have more choice and a more cultured taste. They will try more products and are more sensitive to price."

More choice; yes. Try more products; perhaps. More sensitive to price; undoubtedly. More cultured taste? That's debatable. Certainly, even here in the United States, at stores such as Trader Joe's, we see consumers buying private label bottles that hold excellent wines which have been sold to the store due to excess production. The private label deals allow wineries to get some cash for wine they can't sell at traditional retail prices due to the econony — and they can do so without hurting the wineries' own brands through drastic disounting. But, by and large, these bottles are selling because of price and the trust that consumers have in Trader Joe's selections, not because the consumers' "cultured taste" somehow divined that the mystery wine was going to be excellent.

Trader_Joes_Coastal_Cabernet_Sauvignon

I'm not dissing consumers, but the purchasing habits of various consumer segments are fairly consistent. Price shoppers shop price. While quality is of some concern to them, these consumers are sensitive to very small increments in price. They are also much less loyal to brands, in part because their previous buying decisions have also been based on price rather than brand. Clearly, if they try a new wine based on price and decide that it's complete swill, they won't buy more. But, they will very likely accept a somewhat lower level of quality in exchange for a dollar or two of savings. And, frankly, these consumers have become very accustomed to sweet, uncomplicated wines and would likely prefer those to higher-quality wines with unusual flavors or perceptible tannins. Woolworth's say that their own-brand wines are undercutting those of comparable quality by up to $5. That is a huge and motivating price delta in a product segment that tops out at roughly $15. Fortunately for these consumers, and for the stores, it's easier than ever before to create boring, yet friendly, fruit-centric wines at very low cost. [via Herald Sun]

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This article is original to NorCalWine.com. Photos by Fred Swan. Copyright 2010 NorCal Wine. All rights reserved. Photo by Joe.