Tiering Up Wine Brand Portfolios

When the wine industry talks about “tiers,” the word most often refers to the established three-tier system that dominates distribution and sales. But another type of tier is inherent within winery marketing strategies. Even many small-production wineries differentiate among price points, and packaging is the most direct way to do this, whether for hand sales in the tasting room or on retail shelves.

The use of tiering in a wine producer’s portfolio is another version of the “good, better, best” consumer market segmentation strategy. This good, better, best principle acknowledges that customers are not all equal. They have distinctive needs, seek out different product attributes and respond to different price points, according to veteran marketer/brand designer Ed Rice, director of brand strategy at Affinity Creative Group in Mare Island, Calif.

Rice pointed out that this type of differentiation is well known in other categories, especially among automobile brands, which seek to lure different consumer segments with economy through luxury models. (Think Chevrolet-Buick-Cadillac or Scion-Toyota-Lexus.)

The good, better, best segmentation principle gets tricky in the wine category, he said. “We know that brand-building is hard in this business. It makes more sense to support one brand rather than many brands. But how can you do this while developing tiers that will appeal to different consumer segments in the marketplace?” he asked.

Often, Rice believes, verbal and visual cues in the packaging serve as a way for the producer to communicate with the consumer. “Brands take great pains to modulate the size, placement and execution of each and every design element on wine labels as the tiering or laddering process is conceived and executed,” he explained.

Retail reaction Raley’s Family of Fine Stores, a retail chain based in Sacramento, Calif., recently was named Retailer of the Year by Wine Enthusiast magazine. Curtis Mann, director of wine and spirits for Raley’s, shared his perspective about wine brand tiers.

Mann said that Raley’s data shows most customers who buy in the $12 to $25 per bottle segment will also buy $50-plus wines, while many who buy from the lower end (less than $12 per bottle) do not trade up. “I think the higher end wines have a completely different customer than more moderately priced wines,” Mann said.

Large-scale retailers also maintain tiers among different outlets in different locations, he pointed out, so every store may not carry all the tiers of a given brand, based on consumer demographics.

Mann outlined packaging elements that are often changed within brands to differentiate among their tiers. Bottle weight: Higher tier wines from Duckhorn, for example, are much heavier than wines from the company’s lower priced brand Decoy. Labeling: Duckhorn’s labels employ softer coloring than those of Decoy. Additional packaging elements: Higher end Penfolds wines are often wrapped in gift paper, and retailers say such premium wines generally arrive in six-packs or three-packs rather than the 12-pack cases seen in lower tiers. Closures may change: In some cases, screwcaps on the lower end cede to corks and capsules at the higher end, especially for white wines. Unmarked for transit: Wine shippers for the higher tiers tend to be more subtle, with limited exterior marketing messages than those common at the lower end.

To Mann’s seasoned eye, only a certain type of customer will be willing to spend $15 on a bottle most of the time before they will spend $40 per bottle. It happens more often, as customers are still trading up, but Mann feels the trade-up is more specific to tasting rooms than in retail.

“In retail, the mid-tier brand is often not placed next to the high tier, and since customers are not brand loyal, we see less crossover than you would expect. We require that high-end or mid-tier wines stand on their own in regard to packaging and wine quality,” Mann said.

Family winery values Steven Kent Winery in California’s Livermore Valley is an example of a small producer that provides several tiers of wine. Winemaker/president Steven Kent Mirassou and vice president of operations Jennifer Fazio make the packaging decisions for the 5,000-case winery. Some 2,000 cases are sold through the wholesale channel, the remainder predominantly through the wine clubs. Prices range from $24 to $175 per bottle, and many individual SKUS are exclusive to wine club members. Pricing remains consistent between DtC and wholesale sales.

Mirassou described some of his wine club exclusives for Wines & Vines. The Collector’s Circle offers six labels per year, each named for the original artwork on its label rather than a varietal. Bottle shapes vary only as far as Burgundy or Bordeaux (driven by the varietal), and closures are all Stelvin screwcaps from G3 throughout the $36-per-bottle range.

For the BDX Collection (five 100% Bordeaux varietal wines grown at Ghielmetti Estate Vineyard), the same bottle styles bear black labels with copper foil. At $42 per bottle, these are all finished with Ganau natural corks. The highest tier, Lineage/Livermore Valley, is bottled in heavier glass with longer, higher quality cork. Landmark prints all of the labels, and according to Mirassou packaging costs vary due to the size of each tier’s production.

Producing about 80,000 cases annually, Clos LaChance Winery in San Martin, Calif., is a mid-size, family-owned winery offering three tiers of wines.

Marketing director, vice president and proprietor Cheryl Durzy and winemaker Jason Robideaux are responsible for packaging decisions and difference among the tiers. According to Durzy, the Estate Tier, which retails for $12-$18 per bottle, is sold through distribution, on- and off-premise channels. At $18 to $40 per bottle, the Reserve tier is sold entirely through the tasting room and wine club, with some local on-premise sales included via self-distribution. Designate, the top tier, is sold exclusively through the wine club and tasting room at $40-$75 per bottle.

Durzy said that the sales channel definitely makes a difference in packaging choices. The 250 or fewer cases of Designate available every year are sold to the best (wine club) customers, and they always sell out prior to the next vintage release. “Distribution wouldn’t make sense” for these wines, she said.

With some 500-750 cases annually, the mid-range Reserve Tier is a little more available, usually 90% is sold to wine club members and tasting room visitors. The wines in this tier change year to year, based on what showed well in the barrel.

“We sell some in local restaurants and high-end clubs….I would be happy to sell more of these unique wines in the wholesale channel, but I get too much push-back on price and quantity by wholesalers,” Durzy commented. “The Estate tier are the wines we sell in distribution. We have about 20 distributors throughout the country, selling seven SKUs.”

Clos LaChance decided some years ago to use more sustainable, lightweight “eco” bottles for all of its tiers. Labels are different for each product, but all retain the winery name and its signature hummingbird.

Designate is screen printed, front and back. For the Estate level, all the wines are in screwcap. The corks in the Reserve and Designate level are custom, with the phone number, URL and branding included. The hummingbird is on the top of all capsules and screwcaps.

Shipping cartons are customized only for the Estate tier, since it is sold through distribution, and “only retailers really care about it,” Durzy said. Labels are printed by Trysk in Washington state. “We use a thick paper for both, but the Reserve tier costs more due to smaller quantities,” she noted.

Corks, capsules and screwcaps are sourced from Cork Supply; Diablo Valley Packaging provides bottles and boxes. Peltier Glass Works now handles the winery’s screen printing.

One big, happy family With annual production of about 850,000 cases, Wente Vineyards is a heavyweight among family-owned wineries. Amy Hoopes, president of the Livermore, Calif.-based winery, noted that the company has been growing and making wines since 1883, and has explored different options of brand hierarchy during the course of its five generations.

“While there are many ways to look at how a winery can divvy up its portfolio—by channel focus, by sourcing, by production size—it is most often done with the end consumer in mind and simply tiered by price points,” Hoopes explained. “For Wente Vineyards, it is imperative for us to continue to share our story of authentic, estate-grown, certified-sustainable wines to our consumers, regardless of channel or price. With this in mind, our portfolio of wines strives to keep the iconic family name at the forefront.”

Within the portfolio, a wide range of wines is priced from $15 to $120 per bottle. Most readily available, the Estate Grown collection is distributed in all 50 states and more than 75 countries worldwide, both at retail and on-premise establishments for $15-$18 per bottle. The packaging reflects the multi-generational history of the Wente brand, including a watermark of the home estate to convey a sense of place.

Each of the wines also bears a proprietary name: Among Wente’s four different Chardonnays, for instance, consumers can easily distinguish between the Morning Fog and Riva Ranch selections from the Single Vineyards collection of three different wines from across company plantings that sprawl across the Livermore Valley as well as Arroyo Seco in Monterey County, Calif. This tier is sold across all trade channels in the United States and abroad at prices from $22 to $30 per bottle. Labels are somewhat simplified to focus on specific vineyards where the grapes are grown while maintaining the Wente Vineyards icon.

Three more Wente tiers include Small Lots, retailing at $24-$40 per bottle, mostly onsite at the winery and in limited allocations to on-premise U.S. locations. Solely for club members, bottles in the Artist Series have a unique, artist-designed label for each vintage. At $45-$65 per bottle, Hoopes said these are seen not only as great wines but also as collectibles. Wines in the Nth Degree line are limited production reserved for Nth Degree Club members with a handful of cases for on-premise accounts.

“From a packaging standpoint, we use the same quality and weight of glass, high-quality paper labels with embossing and foil for all of the collections (except Nth Degree, which is packed in a screen printed, slightly heavier bottle). Nearly every wine in the Wente Vineyards collections is finished with natural cork. The few exceptions are wines for which a screwcap is deemed to convey a fresh, ready-to-drink style, primarily Riesling and Sauvignon Blanc,” Hoopes said.

The Wente procurement team declined to name its suppliers for glass, labels and corks, saying that having multiple options ensures competitive pricing and availability of the products when they are needed.

View from the corporate ladder Treasury Wine Estates, a multi-national company that owns Napa wine brands including the historic Beaulieu Vineyard (BV) and Beringer Vineyards contends with tiers within each brand. Marketing leaders Megghen Driscol and Seth Hynes discussed how they handle the complex multi-tasking.

Designs must be so clear that consumers instantly recognize the quality level while shopping, they stressed. “We expect that when consumers drink BV Cabernet for $30 as their Friday night-at-home wine that they will step up to (the flagship red wine) Georges de Latour at the steakhouse on Saturday night or when buying a gift to bring to dinner at a friend’s house. Obviously, when you see the Georges de Latour, it will look more premium, more special,” they commented.

Brands must evolve to keep current; the parchment paper labels, gold embossing and flanged tops of the 1990s are long gone. Some packaging changes are radical; others are more evolutions of a classic. Georges de Latour packaging changed to stay ahead of the times while retaining authenticity cues to honor the integrity and 75-year history of the brand. The BV Coastal brand, meanwhile “made a revolutionary change,” the marketers said.

The BV brands range from Coastal at $7 per bottle, to Napa at $30, Rutherford ($45), Tapestry ($65) to Georges de Latour at $140 per bottle and Rarity culling the top price of $1,000 for a 1.5-liter bottle.

The company expects that packaging cues will help to educate consumers. “We don’t have the luxury to educate all consumers, but we do spend tremendous time on packaging development and consumer research to ensure we are getting it right,” Driscol and Hynes said.

Treasury’s Beringer brand uses photos by Murad Osman that depict the Beringer brothers’ pioneering spirit with a motto of optimism: “Tomorrow will be even better than today.” Each image features a woman leading someone by the hand toward iconic vistas from both Northern California and New York City. These are incorporated in a series of six advertisements.

Beringer’s lineup includes the newly repackaged Main & Vines ($6 per bottle), Founders Estate ($9), Regional Estates ($35), Distinctions ($35-$70), Beringer Napa Valley Cabernet ($23), Quantum Red Blend ($65), and the Reserves: Private Reserve Chardonnay ($40) and Private Reserve Cabernet ($170).

Treasury sources packaging materials and services from many suppliers. Glass comes from O-I and Ardagh; labels are generated by Multi Color Corp. and Euro Stampa; capsules are provided by Maverick and Rivercap; Amcor provides screwcaps; cork comes from Amorim, and shippers are purchased from Kapstone and PSC.

Reasons, choices, solutions for all “One size fits all” doesn’t work well for apparel, autos, fast food or wineries. Establishing distinct tiers allows even small producers to serve different types of audiences, whether in direct-to-consumer situations like wine clubs or tasting rooms, on-premise markets or retail sales.

Just as different closures for different varietals can simplify buyer decisions, varied packaging for different price points may allow retailers to target specific audiences.

Tiering wines can complicate winery production and marketing decisions, but in the end it may expand the market for eventual sales.