California vineyards are selling premium bottles in bulk to retailers across the country, who relabel the product under their own signature low prices.
California produces around 80% of U.S. wine. Due to inflation, changes in consumer drinking habits or U.S. customers moving away from wine as their drink of choice, vintners have recently faced overproduction.
Piles and piles of wine bottles have been left unsold to retailers as demand has decreased in recent years.
This large surplus may have consumer positives – bottles that typically sell up to $100 at local grocery stores under an original winery label might now be marked down as low as $9.99.
Why? While wineries are becoming increasingly overstocked with extra product, cases are being sold in bulk to retailers, who favor relabeling the bottles for sale under company signature branding.
With these drastic market changes being attributed to the drop in demand, wineries have been pushed to sell their unwanted bottles in even larger quantities to local retailers. In repackaging the bottles under their own labels, prices are marked down in hopes of drawing consumers in.
A premium winery-brand bottle of red might be repackaged and sold under Costco Wholesale Corp.’s Kirkland Signature. These bottles would prove more appealing to customers due to their affordability and quality taste. Retailer wines are now receiving higher ratings and all-around praise.
Since the initial slowdown in consumption across the U.S., a sudden dynamic shift in supply-demand has impacted buyers. Instead of purchasing winery cases in bulk in quantities such as 2,000, offers are coming that sell up to 200,000 cases at a time. Wineries are recognizing their ambitious overproduction and trying to compensate by overselling to their typical retailers.
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The sale of bottles to be relabeled by retailers is called a branded closeout. This helps wineries to unload product, but of course, it loads the product back into another retailer’s storage.
Will Americans once again turn to an affordable wine? Will wineries resort to tearing down sections of their vineyards, and therefore producing less wine? The deficit impacts every aspect of the production-to-consumer cycle and brings forth a curiosity about the repercussions.
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