Retailers love private label and store label wines for two reasons. First, the profit margins are better than those on national brands. And second? You can’t buy them anywhere else.
In this, private label and store label wines are becoming increasingly popular as the recession takes its toll on the wine business. A retailer can sell a store or private label wine for less than the similar national brand and make more money. That way, the consumer is happy and so is the retailer.
After the jump, what these brands are – exactly -- and how they affect you:
Private labels are not new. They are products made exclusively for one retailer that no one else sells. A store label is a specific kind of private label, one that carries the retailer’s name – Kroger peanut butter, for example.
Sears has been selling private labels for decades (Craftsman tools and Kenmore appliances), and one of the reasons for Costco’s success has been its Kirkland label. I did a Costco story several years ago for the American Airlines in-flight magazine, and Costco boss Jim Sinegal told me that its customers love the Kirkland products so much that the chain doesn’t even bother to carry some national brands. No one was buying them.
What is new – or at least what’s becoming more common – is private label wine. At the beginning of this decade, few retailers bothered with them, save for Trader Joe’s and its Two Buck Chuck. If business is good, it’s easier to carry a national brand like Kendall Jackson and not worry.
But when business isn’t good, and it isn’t now, private labels look much more attractive. Generally, they’re twice as profitable as a national brand and usually retail for as much as 10 percent less. So you’re seeing more retailers make a push to private label wine, whether it’s national retailers like Whole Foods and its 365 brand, or smaller, regional retailers (though the latter usually don’t put their name on the wines). Costco has even made efforts to sell Kirkland wine. One of my favorites is a private label from Spec’s, a leading Texas retailer, which sells an Australian private label called Yellow Bird. Yellow Bird, Yellow Tail – get it?
How can you tell a private label if it doesn’t have the retailer’s name on it? The wine will sometimes have a line on the label that says “Made exclusively for. …” Also, it will usually be displayed prominently in the store, often at the end of an aisle (the display is called an endcap).
The other question, of course, is whether private label wine is any good. That depends on the retailer, as well as the kind of wine they’re competing against. Cheaper does not always mean better, although if the price is low enough, most of us don’t much worry about quality. The only way to be sure is to taste the wine – which is always good advice.