Really? Surely a private label wine is the last thing you would want to give as a gift?
OK you might not want to turn up at a dinner party with a bottle of Tesco Finest, but if you did you can be pretty much guaranteed no one would complain about what it tastes like. Private label, own label, or exclusive wines are the benchmark setters for the industry. Wines that have probably had more scrutiny and attention paid to how they are made than the average branded wine on shelf. These are the wines that a retailer, a restaurant group, a pub, or hotel chain is putting their prized name to. These are the wines they are most proud of and take very seriously indeed...
Yes, but why are we talking about them now?
Because private label wines are one of the few areas of the wine aisle that are in growth and in high demand by consumers who are looking for even more value out of the wines category. This does not mean they are looking tor the cheapest wine on the shelf . These days private label wines can sit quite comfortably at some of the highest price points to be found in a major supermarket. Good value means a lot more than price. It represents a safety net, reliability and reassurance a safety net that what you are buying delivers the best value you can find.
So what else is happening with private label?
The rise in and acceptance of the hard German discounters, Aldi and Lidl, has had a huge impact on the entire grocery retail sector in the last 10 years. Consumers have fully taken on board the different retail offer the discounters provide. These are true global players with the buying power to source products at a better price and margin than even the likes of Tesco and Carrefour can afford. They then match that with a dedication to make the highest possible quality products that are at least as good as the number one grocery brand in that category, be it Heinz Baked Beans, or Kellogg’s Corn Flakes. An increasing number of their customers have come to recognise and appreciate the quality and value of the private label brands that the likes of Aldi offer. It’s why both Aldi and Lidl now set the benchmarks and standards by which the rest of the grocery retail sector now follows. It’s also why private label products now account for over 50% of all UK grocery sales. Tesco may still be the biggest supermarket by size, but it is no longer the most influential.
How is private label doing in the on-trade and other more premium retail channels?
Good question. Private label is no longer the preserve of the major supermarkets. Even the most respected and premium retail and on-trade operators are keen to have their own exclusive brand to showcase their credentials. The Wine Society’s 'Exhibition Range' has long been not only one of its best sellers, but also fastest growing areas. Premium restaurant chains like Gaucho are actively looking to source and secure wines they can proudly put their name to. If a customer is willing to pay a hefty price for 10oz of prime Gaucho-sourced Argentine beef, then why would they not do the same for a Gaucho-sourced wine?
What does this this mean for branded players and producers looking to sell their own wines?
They need to be taking private label far more seriously. In fact, they need to make sure a growing proportion of their revenues are coming from private label contracts. It might not be what they set out to do as a business, or tie in with their core brand strategy, but they can’t ignore the fact that whilst sales of branded wines are in long term decline, private label is enjoying year-on-year growth. The producers who get the serious listings in the future will be the ones that can provide customers win both a strong branded offering, and a competitive and innovative private label capability too. Gone are the days when they can rely on off-loading their lower quality, commercial wine to the private label sector. To succeed in private label, now means being as committed to producing wines that are any bit as good as your own branded offer. Having strong private label relationships with customers in key markets around the world also spreads your risk, and secures distribution for all the wine you are producing.
What’s next for private label?
Well, for a start we can expect more private label sales, market share and growth. But we can also look forward to ever more innovative ways that retailers use private label to forge closer ties with their customers. For example, in the US a Texas-based grocer, H-E-B, has recently released its own credit card to encourage shoppers to buy its own private label products - if they do they get 5% cash back on private label items vs 1.5% on other goods. Now that’s taking private label to a whole new level.