U.S. Wine Sales Ripen On Improved Marketing

by , Jan 26, 2007, 5:00 AM
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Sales of wine in the U.S. last year passed 300 million cases for the first time, driven by improved marketing by wineries, publicity about wine's potential health benefits and an increasing acceptance of the beverage as a part of everyday American life.

Elaine Smith, owner of an eponymous wine consultancy in Sacramento, Calif., said that large, multinational corporations have made big leaps in the ways they market their premium categories.

"They're producing millions of cases of wine at the $10 mark," she said, "and they've been successful with packaging and with names that contain a concept the consumer can understand."

Smith cited HMR Rex Goliath ("the 47 pound rooster") as an example of better packaging. Its colorful label replicates the vintage artwork from a circus banner. Among the names that give bottle buyers a clear idea of the winery's culture are the Don Sebastiani & Sons spin-off Three Loose Screws Wine's "Screw Cappa Napa" and "Mia's Playground."

"You know you're not putting that bottle on a shelf for 20 years," said Smith.

The wines' styles also have contributed to making them more palatable to American tastes. "They're more approachable. Their tannins are soft and they're ready to drink right now," said Smith. "The quality is high, the value is high. Consumers respond to that."

The larger concerns also have improved their channels of distribution, going into such popular chains as Trader Joe's.

The consolidation of distribution channels has improved sales results for the larger players but, as Smith noted, smaller wineries like the ones she works with, are increasingly hampered by distribution challenges and opt instead for the approach she recommends: establishing relationships with consumers by building a culture around the winery.

The U.S. wine market is set to pass France and Italy as the world's largest sometime this decade. Sales of U.S. and foreign wines rose 3% in the United States last year. California wineries increased sales 2%, to 189 million cases. Sales of wine produced in the other 49 states dropped 1.3%, to 23 million cases. But foreign wineries boosted sales 10%, to 88 million cases.

It's those foreign wineries that are worrying U.S. winemakers. California growers have raised $300,000 to create a better marketing campaign.

The U.S. wine industry spent just $108 million on advertising in 2006, compared to $1.1 billion by the beer industry.

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