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Gallo’s Barefoot, TWG’s Cupcake Pacing Off-Premise Wine Sales In 2011

August 22, 2011

Two of the U.S. market’s most vibrant wine brands of the past few years, E&J Gallo’s Barefoot Cellars and The Wine Group’s Cupcake Vineyards—both Impact “Hot Brands” for their 2010 performances—have again been driving growth for California wines in the off-premise in 2011, and they’re doing it at different pricing tiers.

Barefoot is now the fifth-largest wine brand in the U.S., at 8.1 million cases on a 25% jump in 2010, according to Impact Databank. Over the 24 weeks through August 7, Barefoot leapt another 24% in terms of dollar sales to $125.4 million in SymphonyIRI-tracked channels (including food, drug and convenience stores and accounting for around 30% of the market), while volume rose 24% to 1.87 million cases. Over that period, no other table wine brand in the U.S. came within $30 million of Barefoot’s sales in those channels (Trinchero Family Estates’ Sutter Home, also a “Hot Brand,” was closest at $95 million on a 3% increase). And, excluding Cupcake, no other brand within the top 20 matched Barefoot’s percentage growth by dollar sales in the most recent half-year, despite its huge base.

Part of Barefoot’s continuing value growth can be traced to its steady pricing over the first half. Averaging $5.59 per 750-ml. bottle in the most recent 24 weeks, Barefoot is one of only two brands among the top 20—the other being Gallo portfoliomate Livingston Cellars—not to drop price during the period.

By contrast, Cupcake, now selling at an average of $9.28 per 750-ml., took prices down by almost $0.50 a bottle in the half-year through August 7, the largest price cut among the top 20, excluding super-premium La Crema. But it’s hard to argue with The Wine Group’s (TWG) pricing strategy on the brand, which rolled out at $14 in 2008. Cupcake more than tripled in volume last year, reaching 1 million cases. And during the past 24 weeks its value rose 149% to $31 million in IRI channels, while volume jumped 162% to 278,000 cases. Indeed, the brand proposition has proved so successful that TWG followed up with Cupcake Vodka this past spring, including Original, Frosting, Chiffon and Devil’s Food flavors and selling for around $17 a bottle.

Cupcake is one of a host of newer California wine brands—others including recent rollouts like Treasury Wine Estates’ Sledgehammer and Constellation’s Primal Roots—aiming to take share from established labels and bring younger consumers into the wine category. TWG CEO David Kent says that effort is working. “Although the older brands and their consumers still constitute the vast majority of wine volume sold, all the category growth is coming from younger consumers and retailers have been over-weighting their space in favor of these brands to capture their fair share of opportunity,” he says.

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