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Seeking A Comeback, Cupcake Bets On Red Blend And Sparkling Segments

September 30, 2016

Launched in 2008, The Wine Group’s Cupcake Vineyards quickly rose to become one of the company’s top-selling brands, surpassing a million cases by 2010 and cresting 2.5 million cases by 2013, according to Impact Databank. The range, which generally retails at around $12 a 750-ml., proved a hit among millennial consumers, thanks to its diverse selection from California, New Zealand, Argentina, Italy, Australia and Germany. More recently, however, Cupcake has stalled, declining by about 2% in each of the past two years. But The Wine Group remains optimistic about the brand’s future, citing new product development as the key element of its rebound strategy.

“Innovation will continue to be a focus for Cupcake,” says The Wine Group vice president of marketing Eben Gillette. Late last year, Cupcake introduced a Black Forest red blend, which became one of the top 20 premium red blends in Nielsen channels for the 13 weeks ended June 18. Aiming to tap the current trend toward darker red blends, Black Forest is made from Cabernet Sauvignon, Merlot, Zinfandel, Petit Verdot and Petite Sirah, sourced from a selection of coastal California vineyards.

Cupcake is also investing in the sparkling category with Cupcake Sparkling Red, a red Italian sparkler made from the Brachetto grape, which is native to Italy’s Piedmont region. Cupcake Sparkling Red is slated to launch ahead of the holiday season and will join Cupcake’s existing Moscato d’Asti and Prosecco (both $16), which are among the brand’s fastest-growing offerings. According to Nielsen, Cupcake Moscato d’Asti and Prosecco rose 8.9% and 12.5%, respectively, over the 52-week period ended June 18. Earlier this year, the Prosecco was expanded with a new 187-ml. format, targeting the single-serve occasion.

In addition to innovation, The Wine Group is shifting some of its focus for Cupcake from retail to the on-premise, which the company believes holds major upside. “Cupcake’s on-premise growth has actually outpaced retail growth for several years, primarily because the product is so strong for the price,” notes Gillette. “It’s hard to find barrel-fermented Monterey County Chardonnay or Marlborough Sauvignon Blanc at this price point, and Cupcake is therefore an attractive by-the-glass option.” —Christina Jelski

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