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Jackson Family Wines: Reading The Off-Premise Surge

March 25, 2020

Wine sales in the off-premise have been exploding, and Jackson Family Wines has been at the forefront on the producer side—particularly with its Kendall-Jackson and La Crema brands. Kendall-Jackson has long been the U.S. market’s top super-premium brand at retail, with 2019 sales of $552.4 million and depletions of 3.3 million cases, while La Crema depleted 1.3 million cases and did $300 million at retail last year, according to Impact Databank. Over the past two weeks, both brands have seen unprecedented sales spikes.

“Looking back at the first three weeks of February, our week-by-week total wine sales (in grocery, mass and drug channels) were trending at plus or minus 2%-3%, which is basically what the overall category was doing,” said David Bowman, executive vice president of Jackson Family Wines, who oversees the company’s larger brands including Kendall-Jackson, La Crema, Murphy-Goode, and Cambria. “The lower end was declining, while above-$10 was continuing to grow, and above-$20 was rising faster. Then suddenly came the week of March 14, when we saw the huge spike.” Citing numbers from Catalina Marketing, whose data covers most of the U.S. grocery, mass, and drug channel sales of wine, Bowman said total dollar sales of the wine category were up 41% for the week ended March 14, while Kendall-Jackson rose by 61%, and La Crema increased by 85%.

In this buying spree spurred by the COVID-19 crisis, Bowman sees the rush to Kendall-Jackson and La Crema as a matter of people choosing tried-and-true brands. “In a situation like this, one of the first thoughts in a consumer’s mind is to simplify,” he said. “Everybody’s looking to simplify their lives, so they’re buying brands they trust—brands they know will deliver every time. It’s a flight to safety, and you’re seeing it across many product categories. This isn’t a time when consumers are inclined to experiment. They’re bringing home the wine, food, and other goods they can depend on.”

The key question now is how these trends will play out going forward. “Some of that will depend on our ability, and that of our distributors, to execute the supply chain—and also on whether any further restrictions come into play in terms of movement for consumers and for retailers,” Bowman noted. “But the reality is that we would expect to continue growing robustly.”

Jackson Family Wines is also heavily involved at the distribution tier through its wholly owned California distributor, Regal Wine Company. “At Regal, we’re spending a lot of time trying to ensure that our retailers have access to our products and that their inventories are flush,” he said. “Our grocery customers are having a hard time keeping up with stocking the shelves—but not because of any actual shortages. It’s literally about getting the products on the shelf and keeping them replenished.”

Another wrinkle, Bowman added, will be the ability of retailers to meet the skyrocketing demand for delivery. “Grocery has only started to invest in curbside and home delivery over the last couple of years,” he said. “If you go back 15-20 years, we saw the spectacular failures of (grocery delivery platforms) Peapod, Webvan, and others. But as Amazon has started to train the consumer, it has opened a new avenue for grocers and other retailers to think differently about home delivery and e-commerce. If anything, this shared experience with COVID-19 will accelerate trends that were already starting to catch on. It will be transformational for e-commerce and home delivery. We won’t go backwards.”

Amid the off-premise sales boom, Bowman, like others, remains deeply concerned about the shuttering of the on-premise. “What we’ve seen in past cycles, which weren’t as widespread and dramatic as this one, is that our restaurateurs, who helped build so many of our brands, get hurt badly,” said Bowman. “We’re trying to encourage people to think about the industries that have been heaviest hit—and in our world it’s restaurateurs. So the first thing we’re telling people is to go out and buy food to go from restaurants, as much as you possibly can.”—David Fleming

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