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Back In Growth Mode, DC&E Keeps The “Lifestyle” Brands Coming

November 5, 2013

It’s been a little over year since Diageo reorganized its U.S. wine business, Diageo Chateau & Estate (DC&E), naming Claudia Schubert president of the unit in September 2012 following a high-profile rollout of three new Millennial-targeted wine brands—Butterfly Kiss, Rose’n’blum and Stark Raving—earlier that summer. In the 12 months through this past June, DC&E reversed the trend on a portfolio that had been in decline, posting net sales up 4% on a volume increase of 1% (the previous year, the division’s sales had slipped 7% by value and 5% by volume). Diageo NA president Larry Schwartz credited “innovation and price increases” as contributing to the turnaround. Now that DC&E has righted the ship, Schubert says it will stay on the offensive in courting broad swaths of consumers with so-called “lifestyle brands” at around the $10-$15 mark, a segment that has accounted for as much as half the wine market’s total growth in recent years.

Since the introduction of Butterfly Kiss, Rose’n’blum and Stark Raving, DC&E has added three more completely new lifestyle labels—Girl Go Lightly, Once Upon A Vine and Velvet Crush. It has also extended its existing brands with wines aimed at key demographics. For example, Rose’n’blum has launched white and pink sparkling Moscatos in a sweeter style that appeals to multicultural consumers, and A By Acacia, another brand positioned accessibly in the $12 range, has added an entry in the fast-growing unoaked Chardonnay segment. Of those newest brand propositions, Schubert says Velvet Crush (including a Cabernet Sauvignon and a red blend) is geared toward male Millennials, while Girl Go Lightly is a female-oriented low-calorie line that includes Moscato, Chardonnay and Rosé. Once Upon A Vine, meanwhile, has a red blend, a Pinot Noir and a Sauvignon Blanc and is seen as tying in with the “adult fairytale” dramas that have been among the most popular TV and movie genres of late.

“Lifestyle consumers span different demographics,” Schubert says. “They’re not only Millennials, but also older consumers looking for a more casual approach to wine.” Butterfly Kiss, she notes, was designed for Millennials but is now attracting a diverse age range. While multiple age groups are involved, some clear regional preferences are becoming apparent within the portfolio, with Butterfly Kiss doing best in the grocery channel along the coasts and Stark Raving (male-targeted like Velvet Crush) seeing its strongest results in the Midwest. According to Impact Databank, Butterfly Kiss depleted 41,000 cases in 2012 in about a half-year on the market, while Stark Raving sold 32,000 cases and Rose’n’Blum was at 20,000. Overall, DC&E’s volume was down 7% to 3.8 million cases in calendar 2012.

As it continues to target the lifestyle market, DC&E is leveraging the capabilities of Diageo’s core spirits business in terms of research, marketing and sales. The spirits and wine sales teams have been integrated, and “(the spirits unit) helps identify specific flavor cues that we can take advantage of in wine as well,” Schubert adds. Cross-marketing opportunities—like the French Kiss cocktail, made with Butterfly Kiss Moscato and Cîroc Peach vodka—are also part of the strategy, and are being promoted along with other serving ideas on DC&E’s new Wine Bar website.

In terms of specific trends, Schubert sees opportunities to tap new consumption occasions with simple wine cocktails, and expects the thriving red blend category to remain among the key growth avenues for DC&E. “Red blends are now the size of Pinot Noir in this country. There’s an element of craft to blending that’s attractive to younger consumers,” she says. “That trend is real.”

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