CHICAGO -- It's no secret that the wine industry is a booming business. In fact, many die-hard beer and spirits drinkers are becoming connoisseurs of the latest cabernets and chardonnays. This popularity has led to an overwhelming number of new items being introduced in the wine market over the past years, creating challenges for manufacturers and retailers to get a firm handle on which new items are successful and what characteristics are actually driving sales.
Newly introduced wines, which include new brands as well as line extensions, captured a 10% [image-nocss] share of the $500 million in growth from wine sales in U.S. grocery and drug stores for the year ending in mid-summer 2007, according to a new analysis from Information Resources Inc. (IRI).
The IRI analysis shows the following trends:
E. & J. Gallo dominates the new items category, particularly with the low-priced Mattie's Perch from Australia, Sebeka from South Africa and Red Bicyclette from France. The success of Mattie's Perch comes from finding an untapped segment. The brand is value priced at $4.99, significantly below most of the popular Australian brands whose average prices are about $6.50 for a 750ml bottle.
California and Australia lead the pack of new lines and brands, accounting for 70% of revenues of new items. Imports and domestics have taken turns in dominating new introductions during the last three years, with imports during the last summer-to-summer period posting a greater share of the total revenues from new products at 58% versus 42% for domestic companies. In the previous year, domestics accounted for 63% versus 37% for imports.
Volume of new brands and extensions is spreading through the price tiers. In 2005, 48% of new items were priced in the popular range and 25% were in premium. This year, there are five price categories, each with at least a 10% market share.
Five flavor types captured 63% of total dollars spent, with pinot noir leading the bunch followed by chardonnay, red blends, syrah and then riesling. Cabernet sauvignon was listed sixth and merlot seventh. It's no secret that pinot noir has been a great success for California wineries, with an average of 40% sales increases during the past three years. The success with the flavor this year, however, originates outside the United States. Australian pinot noir increased by 76%, well above the 12% average in the previous two years, helped in no small way by Yellow Tail, whose new pinot noir item is the overall top-selling new item. French pinot noir grew 352% driven by a new item from the Red Bicyclette brand, which quickly became the best seller in the segment and the second best-selling new item overall.
Retailers should make sure they are carrying this year's top performers, adds Williams. Each price segment contains an overflow of new items, so picking the right items is essential given that 85% of all new item sales are generated by only 20% of the new items.
IRI is a major provider of consumer, shopper and retail market intelligence and insights supporting consumer packaged goods (CPG), retail and healthcare companies.
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