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Private label wines, value, and quality

We’re in the middle of a tremendous price war in Dallas, where retailers are selling some wines more or less at cost. Segura Viudas, one of my favorite cavas, is $6 – about half of what it cost here a year ago (and about what it costs in Spain).

Yet the retailers don’t seem especially concerned that they’re giving away wine. Items like Segura Viudas are loss leaders to get customers into the store; once they’re in, they can switch them to brands with better margins – and, increasingly, these brands are private labels. In fact, private and store label wines, which are sold exclusively at one retailer, are perhaps the most important development on the retail side of the business over the past couple of years.

Some retailers, like Trader Joe’s and Total Wine and More, focus almost exclusively on private label, but national grocery stores and regional chains are doing them as well, tucked onto the shelf next to the Kendall-Jackson, Yellow Tail, and Barefoot.

The question, then, is whether these private labels offer value and quality, or if they’re just dodges to sell wine that consumers wouldn’t normally buy. The answer, sadly, after the Wine Curmudgeon’s recent private label experiment (unscientific, but worthwhile nonetheless) is that more and more, private labels are becoming the latter. More, after the jump:

Consumers have long known that private label is not quite as good as the national brand – the ketchup doesn’t taste quite like Heinz and the peanut butter doesn’t taste quite like Skippy. But they buy it anyway, because they’re willing to trade quality for price, and the store brands are cheaper than the national brands.

In wine, the equation is more complicated. A traditional wine retailer’s business is based on the premise that better wines are always more expensive, so any foray into private label sticks to that line. Kroger’s private labels, for example, don’t try to undercut the national brands, and you can't even tell which are which on the shelf. However, more retailers are junking that approach in favor of “this wine is cheaper and just as good – or even better.”

The most obvious example is Trader Joe’s and Two-buck Chuck, which Two-buck Chuck’s maker, Fred Franzia, insists is just as good as any bottle of pricey Napa wine. I’m not quite sure anyone believes him (or that Franzia even believes it himself), but, as a marketing approach, it has been incredibly successful.

Total Wine, with 82 stores in 13 states, has taken this one step further. It identifies its private label wines as such, which almost no one else does, and displays them next to the comparable national brands – complete with little cards under the wine, or shelf talkers, that say that its private labels are cheaper and better (or as much as it can without running afoul of federal regulations).

Are Total’s private labels cheaper and better? Or is this just a cynical ploy to prey on consumers who can tell the difference between ketchups but who can’t tell the difference between wines? I’ve argued for years that the wine business is not as interested in educating consumers as it is in selling them wine, and it’s easy to see how this could be part of that. Given how confusing wine is to most of us, our first instinct is to trust whatever the store says. They’re not going to lie about their product, are they?

One distributor I asked, who doesn’t have Total in his state, is convinced that the  chain is counting on the consumer’s ignorance. My experience, in the short time Total has been in Dallas, has been much the same. Their private labels are less expensive, but you can also taste the difference – and not in a good way.

Case in point: Victoire Champagne Brut Prestige ($20, purchased), which the shelf talker claimed was half the price of branded Champagne and just as Champagne-y. I’ve done this long enough to know that this is all but impossible, but I also pride myself on my open mind. Besides, what if it was just like Champagne at half the price?

The Victoire wasn’t, and it wasn’t even as well made as $20 cava or French cremant (or many $10 cavas, for that matter). The Big Guy tasted it with me; he took a couple of sips and asked if I had anything else to drink. The wine had little structure, and tasted more like apple juice mixed with club soda than sparkling wine.

No wonder it’s easier to buy ketchup. Or that it’s more popular than wine.

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