The Emperor's New Clothes

Used to be, the guy who showed up at the party with the box o’ wine was quickly ordered to drop it next to the cases of Natural Light and all the other drinks reserved for consumption when all the good booze had been emptied.

Times have changed, though. A new group of slimmer, classier boxes have appeared on the market, directed toward the wine consumer who is confident enough to recognize that what’s in the package is much more important than the perception of the package itself. Joining this new generation of high-end boxed wines is a complementary group of innovative containers that, taken together, are fast changing the way retailers and consumers think of acceptable wine packaging.

Many of these new packages, including Tetra- Pak boxes in traditional 750 mL and single-serve sizes called “187s,” half bottles and jugs, pouches and upscaled champagne cans, even aluminum bottles, are fast gaining traction among consumers and are showing profits that are making retailers very happy indeed. Products like Black Box, French Rabbit, Three Thieves, Sofia Blanc de Blancs and dtour are showing that wine in alternative packages sell, and sell productively. Sales of premium bag-in-box wines, the fastest-growing nontraditional packaging segment, were up more than 50 percent in sales last year, according to ACNielsen; overall, they made up just over 2 percent of the wine market, but that’s changing.

With wines growing quickly as a category – they’ve gone back and forth with beer as the most popular alcoholic beverage option for Americans in recent years – the pressure is on for retailers across all channels to come up with interesting presentations and value pricing, and these new packages seem to have shaken off their low-end stigma.

“Consumers are starting to realize that the three liter box isn’t necessarily the sugar water you used to get in the five liter,” says Scott Kamp, the wine buyer for Meijer, a 176-store grocery chain in the Upper Midwest. “We’re making good money on a good margin, and the consumers have responded to it very positively.”

They’re responding well because they know more, according to Ryan Sproule, the original inventor of Black Box wines, which grew from oddity to national phenomenon when they were purchased by Constellation in 2003.

“It’s appealing to people who are daily drinkers of wine, and who have outgrown the pomp and ceremony,” Sproule says. “For them, having a practical, price-effective package is a good thing.”

Wines have taken off in the past decade in America as a result of a increased mass culture attention and the introduction of accessible “New World” tastes like Yellowtail Australian Shiraz and Sauvignon Blanc, as well as many California products that share the Aussies’ style of fun labeling and unintimidating twist-off caps, such as Twin Fin and Big House Red.

“There’s more willingness to go to fun packaging as a result of Yellowtail,” says Charles Bieler, one of the founders of Three Thieves, a fast-growing brand of wines that has broken ground in Tetra-Pak and other alternative packaging methods, including jugs. “But I’m also talking about real differentiation, not just a different kind of label or twist- off cap.”

According to Bieler, while the “Critter Wines” might have introduced the much sought-after millennial group of 21-to-35 year-olds to a whole new way to consume alcohol, they’ve also helped them learn enough about wine to not have to stand on ceremony when it comes to the packaging of the productlf. In fact, if they’re aware of the past stigma associated with the packaging, it adds to the attraction. It hits a sweet spot in the hipster sensibility, combining environmental sensitivity, a feel for modern design and an ironic love for low-end imagery.

“Everyone wants to be considered ‘in the know,’ on the verge of the latest thing,” says Alberto Pecora, the regional manager of A.V. Imports in Columbia, MD. “The appeal of these packages is to get into the ‘in crowd.’”

A.V. has gone into the far reaches of alternative packaging, marketing a wine that’s as deeply anchored in fashion trends as it is in the worship of Bacchus. With a double-capped, cylindrical bottle, one marketed in upscale magazines and retailers, A.V.’s Voga was a success in its first year, shipping more than 150,000 cases. A new offering, Quattro, will offer retailers a triangular 15-pack with a case card built right into the case.

“Packaging is changing in all other categories,” Bieler says. “Tradition in winemaking might be one of its strengths, but with more accessible wines, the increase in approachability is bringing in way more new sales. The new people buying wine are buying the fun wines.”

Nevertheless, for Bieler, the scion of a multigenerational wine making family, Three Thieves didn’t begin as an offering to everyday wine drinkers, but as a challenge to smaller wine dealers to have fun and not take the product too seriously.

“We were bored by the idea that screwtops were the revolutionary idea,” Bieler says of himself and his two partners. “We got sick of the idea that the only way to present a different face is on the label. We wanted to change all notions of packaging in the business.”

Manufacturers are jumping into the alternative packaging trend en masse, albeit not as quickly as they embraced the development of critter wines. But the shipping, storage and display advantages of boxed wines and single-serves can create major supply chain efficiencies – and savings all around. And that could mean they’ll be even more popular in the long term.

“I think it’s where the future of wine is going in this country,” says Vincent Monaco, the corporate wine director for Kappy’s, a chain of package stores in the Boston area. “It won’t all be packaged that way, but you’ll see more and more available.”

According to Bieler, a case of his Tetra-Pak “Bandits” consisting of 15 4-packs of 250 mL single-serve boxes weighs 28 lbs.

“That’s nine pounds less shipping weight for three more liters than your regular case of 12,” he says. But the real advantage for retailers still lies in the novel aspects of the packaging, he adds. “There’s a lot of trepidation, but it’s a fantastic way to differentiate yourself among mass customers,” he says of retailers. “Just being like your neighbor is a pathway to mediocrity. This adds a lot of life to the store.”

And with consumer wine education on the rise, they’ll see the advantage of the packages, manufacturers say. Singles consumers, who have buoyed the market for “187s” (so named because they are 1/4 the size of the traditional 750 mL bottle, or 187 mL) know they can open one of the small “juice boxes” when they don’t want to uncork an entire bottle and see it go to waste. Meanwhile, steady consumers recognize the value of a four-bottle capacity box that can keep wine fresh for weeks, due to the fact that the bladder inside the box decreases the wine’s exposure to oxygen.

“It makes for nice portion control,” says Monaco. “Someone wants to have a glass a night, it’s easy, and it’s quick.”

Additionally, because the products cost retailers less, they appeal to cost conscious consumers, as well. A Black Box, for example, contains the equivalent of four bottles of an award-winning wine – at the low price of about $6 per liter.

“Consumers are more aware of what they’re drinking, and the energy market has really come into play from a supplier standpoint,” says Josh Schulze, director of packaging technology for Constellation Wines. “The price of oil is affecting glass manufacturing, and recyclability is much more of an issue. PET is also petroleumbased, so that takes energy, as well. And as consumers get more knowledgeable about our products, they become more aware of its costs, and so we are more aware of those costs as well.”

It’s not as if America is in the lead when it comes to marketing these packages to consumers. In Australia, the same place that launched the critter labels, bag-in-box wines account for more than 50 percent of wine sales overall; in Italy and other European countries, Tetra Pak bricks are common to many drinks and other liquids, including milk and broth. Recently, Tetra Pak products also became the darling of Ontario, Canada wine sellers, because a shortage of dump space meant that there was nowhere to put traditional bottles.

Dump space aside, it’s in-store spacing that’s the real key to selling boxed wines, according to Kamp, the wine director at Meijer.

“What I’ve actually done is separate the threeliter boxes from the fives, because those products, the Franzias of the world, are more in line with the traditional box,” he says. “In most stores, we’ve now got a four foot, five-shelf section. It’s really big, and we carry all the Black Box SKUs, a Blue Nun Riesling, some South African boxes, a Sangria from Spain, even Toad Hollow Pinot Noir.”

He’s devoting the extra space because, he says, “when the ‘cork dorks’ got ahold of Black Box, they realized it’s a beautiful box at a nice price.”

Those “cork dorks” are the group Monaco, of Kappy’s, describes when he says “there’s a different demographic that’s drinking this.”

Retailers indicate that the products in stayfresh boxes and single serve have the potential to fit many channels, from gas stations to manufacturers markets, as well as traditional package stores.

“I actually don’t know that boxes have a huge place in a bottle shop,” says Kamp. “You can hand-sell a bottle easier than a box. But in a big box store, a chain or drug, look out.”

Recently, Constellation began testing the sale of mid-priced wines through its beer distributors, selling it only by the case; other wine makers are trying to sell half bottles through convenience stores. It’s not that wine has gone downscale, it’s that knowledge has gone up, everywhere.

“We’re doing really well in all channels right now,” Sproule says of Black Box. “The only reason people weren’t doing it before was the stigma. Food and drug account for about 20 percent of our sales, and we’re also doing really well in Wal-Mart. There’s not a major chain we’re not in right now.”

Guess that means that, unlike his predecessors, the box wine guy now does pretty well at parties.