Monday, December 18, 2006

Would You Pay $80 for 3 Liters of Boxed Wine?

Heck, some people ARE paying $80, and more.

This blog post at Tom Wark's Fermentation Daily Wine Blog referenced the Kinssies article which I posted yesterday (Tasting Is Believing). I'm re-running his post here because it raises some good questions; questions which only propogate more questions (no answers) in my mind. (My thoughts follow Wark's post).

Would You Pay $80 For Wine In A Box?

If the Australians, Swedes, English, Danes and progressively more and more Americans are ready to wrap their arms around premium wine in a box (also known as bag in a box), why aren't I?

While watching the Oscars I was chatting with a great friend who is a marketer at a North Coast winery. She was telling me about the investigation her winery was making into perhaps bottling (boxing?) ultra premium wine. Right off the bat I'm thinking, how better to kill an ultra premium brand that has a great reputation. She on the other hand thinks the "Ultra Premium Wine-in-a-Box" might just fly off the shelf. Ultra Premium in this conversation means $20 for 750 ml.

To appreciate her enthusiasm all you have to do is take a look at boxed wine sales.

50% of wine consumed in Australia is from a Box
60% of wine consumed in Sweden is from a Box.
The English are over 25%.

Boxed wines are getting big in America too, but not nearly as big as in Australia or Sweden. "Black Box" is making and selling over 250,000 cases of wine in a just 2 years.

Richard Kinssies, along with my wine marketing friend, believe that eventually American's will embrace wine in a box. Well, I think so too. At a certain price point.

Right now the best boxed wines, usually selling in containers that hold the equivalent of 4 bottles of wine, costs $20-$40 a box. That's about $5-$10 per bottle.

But what about boxes of wine that cost $80 per box---the equivalent of $20 per bottle. Will it sell? Is my wine marketing friend who's considering this off her rocker?

It's clear that for acceptance of the boxed wines, consumers need to feel like the wine in the box is far better than they thought it should be. Expectations need to be exceeded. That's what has gotten American's interested in boxed wines so far and it's what has led Australians to completely embrace the concept.

What kind of wine would you have to put in a box that sold for $80 in order to exceed consumer expectations? PDGW...Pretty Damn Good Wine.

What producers have going for them is that packaging costs are far less for boxed wines than they are for bottled wines...up to 80% in some cases. And apparently the box technology is great. Nevertheless, it seems to me that to pull off this feat of exceeding expectations, you'd have to work hard to convince consumers that the only relationship between quality wine and its package is the extent to which the package keeps the wine at its original high quality. Clearly this is the case. The only job of the wine package is to preserve and do no harm.

But we are a funny people. We like our packaging here in America. The light blue box that says "Tiffany" on it often stays on the dresser long after the broach inside it finds its way to the back of the drawer.

I'm skeptical that Americans in any number would accept the idea of paying $80 for a box full of wine.

Am I wrong? Am I just a snob?

Fermentation: The Daily Wine Blog: Would You Pay $80 For Wine In A Box?

I think American wine consumers will be much less likely to pay $80 for wine in a box if they cannot taste it first, either by purchasing a 750ml bottle, or by sampling at a tasting (or a wine wall). One of the problems with the box for many has been the prospect of possibly ending up with almost 3 liters of "cooking" wine (or worse yet, pouring it down the drain). A 750 ml unknown is a lot easier to venture into than a 3000 ml unknown. So will the mercants please give us those tasting opportunities? (I love the "tasting wall" in Germany).

Virtually all boxed wines these days are either types that are meant to be consumed young, or the are "pre-cellared" in bulk. This is because the film bag and the valve form an imperfect oxygen barrier, and for this reason, boxed wine should be consumed within 6-18 months.

Scholle Corp. claims they are getting closer to solving this oxygen problem. If the film technology is improved to form a more perfect oxygen barrier, then wine could be preserved for long periods in bag-in-box packaging. What would the customer think then?

If the film could be precisely engineered for a small but exacting degree of oxygen permeability, could the bag-in-box packaging then match the aging qualities of a bottle with a natural cork? How would such advances, and the possibilities for long term cellaring change the perception of the package?

As I said, lots of questions. No answers.

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