Dear Client:
Earlier this month Treasury Wine Estates (TWE) revealed some promising H1 (6 months ended December 31) results in the Americas. Although volumes were down -1.5%, it was much improved from fiscal 2011 when volumes were down -11%. So we caught up with Stephen Brauer, managing director of Beringer, to get more insight on what TWE did differently to improve its numbers.
Also top of mind is its new wine brand “Be.,” which is currently shipping to distributors and will hit shelves in April. It will be available on-premise – predominately in casual, contemporary accounts, clubs and holiday resorts (like the Cape, Jersey Shore, South Beach) – for about $10 a glass. TWE plans to back Be. at the off-premise with in-store materials and an “extensive” sampling campaign. It retails for $12.99 a 750 ml bottle.
Here’s what Stephen had to say as you, dear reader, are a fly on the wall:
WINE & SPIRITS DAILY: With your latest innovation, Be., why did you choose to only roll out white varietals?
STEPHEN BRAUER: Be. is very much a wine for millennials, specifically women, created by a team of millennials here within Treasury. It is an attitudinal wine, so don’t take it too seriously. Enjoy it in very casual situations by the glass and by the bottle. The whole point of Be. is it is wine and mood, not wine and food. You’ve got four flavors. You’ve got a Be. Flirty Pink Moscato, Be. Radiant Riesling, Be. Fresh Chardonnay and Be. Bright Pinot Grigio. It’s very much targeted at the up and coming varietal, as well as the ones that are important and relevant to consumers today. Pinot Grigio and Chardonnay are the two largest white varietals in the category, and we still think there is a great opportunity for Riesling but it has got to be made in a style that is contemporary, easy drinking, nice and fresh. The freshness factor is really, really important. And of course you’ve got Pink Moscato, which we have gotten a great reception to. We’re very excited about Be. It’s yet to hit the shelf, but based on everything we’ve learned from both customer and consumer actions and interviews, we think it’s got great potential.
WSD: Is it part of the Beringer family?
STEPHEN: No it is its own brand. Right now we’ve got four mindsets, but we’ve got others waiting in the wings. We just want to make sure that those four take hold first in the market.
WSD: Volumes were greatly improved in the first half of fiscal 2012 in the Americas from fiscal 2011. What did Treasury do to boost those numbers?
STEPHEN: I would say there are three main reasons. Luxury continues to be strong. Innovation has really started to hit its stride. And we’ve just gotten smarter with our promotional activity. The part of the business that has always been pretty healthy over the last couple of years is the luxury business. It continues to show strong growth. But the game changer in terms of our H1 trend this year versus prior year has to do with a couple of things. One is innovation. We saw tremendous growth with Beringer Red Moscato and White Moscato, and now we have Pink Moscato. Beringer’s Red Moscato and Pink Moscato are selling out as soon as they hit the warehouse. We’ve seen very strong growth with Colores del Sol, which is a Malbec from Argentina. In general our line extensions have done very well because they are now geared towards what consumers are looking for. Lindeman’s has a Sweet Red and a Moscato. That’s quite new for the Australian category. We’re the first in Australia to actually use a consumer-centric approach to the varietal designation. So relevant innovation that clearly resonates with consumers helped.
We’ve also sharpened our promotional activity. Chateau St. Jean posted just under +30% growth for the half. We’ve gotten it back right front and center on the promotional calendar, as well as expanding our activity beyond what was a Chardonnay-focused brand. We now have equal activity against Cabernet and Merlot. Chateau St. Jean is a great brand. It was out of that magic price point for promotional activity in prior years. We’ve found that it’s done quite well now that it is back in that sweet spot
Lindeman’s is another example. It’s a big brand for us – it’s just under 2 million cases. We also sharpened some price points there. In combination with our innovation activity like Moscato and Sweet Red, Lindeman’s has really responded well. It’s up healthy single digits, and had a big turnaround from last year where it was down double digits.
We call it “winning the weeks to win.” Making sure we’re doing well during the key promotional periods like Thanksgiving and during the holidays when consumers are just more geared towards wine consumption. But we’ve still got work to do. We were down -1.5% for the half, and we still got a long way to go before we’re satisfied with our performance.
WSD: What is the Chateau St. Jean “sweet spot” price point you’re referring to?
STEPHEN: The promotional sweet spot is around that $10 price point. When the Chardonnay is promoted between $9.99 to $10.99 it really sells well. If you look at the Nielsen numbers, Chateau St. Jean for the past 26 weeks has significantly outperformed the category. That’s the promotional price point that seems to be working at the moment.
WSD: What is your strategy with the other innovations coming out?
STEPHEN: We’ve designated a number of key areas of innovation. Millennial males is one, so Sledgehammer is an example. It is a brand focused on big, muscular red wines, no frills, and that doesn’t have some of the back label complexity that a lot of red wines have.
Emma Pearl is part of what we look at as sweet indulgence. It tends to be more focused on women, and it’s been in test up until now in two markets. It was in North Carolina with Harris Teeter and in the Midwest with Jewel-Osco. Based on results, we’re now rolling that out to more markets. It seems to be doing quite well. It has two flavors [Chardonnay and Merlot], so we kept the brand simple. A softer, sweeter, easy to drink wine, but from the Central Coast so it’s actually got some wine credentials backing up the proposition.
So those are the innovations we had in test last year and are rolling out into more markets this year. The big innovation in terms of new to market is Be. That is launching as we speak. We’re going national with it. We’ve gotten extremely good trade response. We’re looking forward to seeing an equally positive response from consumers. Again, when you see the brand, it’s a completely different approach to both positioning wine and marketing wine. It looks like cosmetics marketing. It’s very, very geared towards the millennial women who are getting into wine. They know what varietals they want, but they just don’t take wine too seriously.
So that is the big initiative for us in the second half, along with continuing to build distribution with the three Moscatos from the Beringer range.
WSD: You’ve mentioned that there is still work to be done, so where are you putting your focus in the second half?
STEPHEN: There are three big priorities. The overriding one is to generate topline growth, which means both volume growth and net sales revenue. That is our overriding objective for the business in the Americas. The brand that is going to drive that is Beringer. It is such a critical brand for this business. Turning Beringer around and driving volume and revenue growth on Beringer is the number one priority for the business. We are on track to do that. It’s going to be a combination of innovation, and growth with our Light and Refreshing portfolio in general, which includes Pinot Grigio, and stabilizing Blush, which is our single largest challenge. White Zinfandel is still a very big and important category, but it is a category that has softened.
We’re also focused on growing our Beringer Founder’s tier. If you look at Nielsen in the past 13-weeks, it is back in growth. Our entry-level tier for Beringer is our commercial tier and right now that is on track to show growth. Founder’s has started to show some very nice growth aided by some innovation. You’ve pointed out in a number of your articles how popular red blends are. Beringer now has a Smooth Red that is launching and on the shelf.
Also, we want to continue the fairly explosive growth on Chateau St. Jean. And then Lindeman’s is a very, very critical part of our growth strategy. And finally, while we’re on the subject of Australia, we will be re-launching Rosemount at the end of our fiscal. That really won’t take effect until most likely May or June, but that is part of our longer-term approach to both brand building and generating top line growth. So that’s the game plan.
WSD: What does the Rosemount re-launch entail?
STEPHEN: The theme on Rosemount is about reconnecting Rosemount with the consumers who absolutely fell in love with Rosemount when it was launched. It’s time to reconnect with those consumers again. We’ve got new packaging. We’re introducing a new tier of blends. And the wines are specifically meant to be drunk fresh and young. They are very fruit forward and easy to drink. They’re delicious. The key thing is to make sure the wines are drunk fresh and young. We will have current vintage on the shelf in May and June. The wine quality is as big a story as the packaging is for the brand.
WSD: What about the wine business at large?
It’s a very exciting time in the wine business. The thing that is encouraging is that we’re both seeing and hearing that the on-premise is starting to pick up again. That to me is like a canary in the mines for the wine business because it may only be 15-20% of the volume, but it is a big part of the wine story for consumers. And it’s a much bigger part of the value for the business.
WSD: What are your big on-premise wines?
STEPHEN: Our single largest brand on-premise is Beringer White Zinfandel, which tends to be particularly strong by-the-glass in casual restaurants. Lindeman’s also does very well in casual dining.
The brands on a more premium level that are especially strong on-premise are Etude, Stag’s Leap, Beringer Knights Valley and Penfolds, especially our Bin Range and Grange. Those are the biggest brands.
WSD: Thank you for your time.
WSD BRIEFS:
TTB WORKING TO MODERNIZE COLAS. Speeding up label approval (COLA) times has been a big focus by the TTB since budget cuts forced the agency to reduce its staff and as a result slow down processes. Yesterday it announced new plans to streamline the system for the coming months and years. Their long-term goals include: (1) Modify COLAs Online to expand the system’s current functionality and allow them to review labels more quickly; (2) Begin processing both electronic and paper COLA applications electronically in June; (3) Update the COLA form to remove impediments; and (4) Continue collecting comments and suggestions. (You can email suggestions at streamlineefforts@ttb.gov). The TTB also pointed out that it experienced much higher activity in 2011. They received over 146,000 alcohol beverage label applications in 2011, which was up from over 134,000 applications in 2010.
WIRTZ BEVERAGE GROUP has awarded its Arthur M. Wirtz Leadership Award to vp of operations for Wirtz Beverage Illinois and grandson of the award’s namesake, Arthur Wirtz III. The award is given annually to one employee in recognition of their outstanding work ethic, leadership and performance achievements.
Until tomorrow, Megan
“We are always the same age inside.”
Gertrude Stein
SUBSCRIBE to Wine & Spirits Daily today: http://www.winespiritsdaily.com/subscribe.php
Email us for CORPORATE PACKAGE rates
MAKE YOURSELF HEARD, your opinions count. Anonymous feedback and tipster form: http://www.winespiritsdaily.com/hotline.php
WINE & SPIRITS DAILY
Subscribe or check back issues at: www.winespiritsdaily.com
Send news and comments in confidence to: megan@winespiritsdaily.com
© 2012 Wine & Spirits Daily, all rights reserved. Please, no forwarding or copying. May quote with attribution.
Follow me on Twitter http://twitter.com/WineSpiritDaily
Editor: Megan Metcalf – megan@winespiritsdaily.com
Customer Service: Kim Griffin – admin@beernet.com
Check winespiritsdaily.com for back issues or to subscribe or renew. Phone: 210-805-8006. Email: admin@beernet.com
SchuPub, LLC, 613, Suite 1 E. Ashby Place, San Antonio, TX 78212, USA
