Be creative

These days, variety is everything in the beer, wine and spirits category. According to Oliver Colvin, chief operating officer of Novato, Calif.-based Winery Exchange Inc., todays consumers want innovative products, a variety of flavors and "something they can call their own."

"We see a move toward sweet flavors for wine. In the spirits category, its flavored vodkas," he says. And "theres been explosive growth in craft beer [with] lots of innovation around flavors and the creation of new brands."

And millennials – people aged 21 to 34 – make up a large part of those seeking these unique flavors and varieties out. According to "White Spirits and RTDs – US," a November 2012 report from global market researcher Mintel, this generation of 20- and early 30-somethings is experimental, adventurous and engaged. And at 77.7 million members, it is significantly bigger than its predecessor, Generation X, which numbers 49.7 million. With millennials greater numbers and assumed additional years of buying power, Mintels report advises marketers to inspire and foster loyalty in this youthful consumer group.

Do
consider retro-style graphics on packaging for own-brand beer, wine and spirits – millennials tend to find the style appealing.

Dont
shrug off hard ciders – theyre gaining in popularity.

Creativity flows

The creativity these millennials seek abounds in product development within the beer, wine and spirits categories. In particular, seasonal flavor trends give retailers an opportunity to introduce new and exciting flavors in each of the four seasons – especially in spirits and craft beer, says Bryan Siddle, director of operations for Ste. Genevieve, Mo.-based Crown Valley Winery, Brewery and Distillery.

"Creative retailers are taking advantage of seasonality to create consumer interest, keep the categories fresh and move product in and out of the store," he explains, pointing to pumpkin-flavored beer for autumn and pink-lemonade-flavored vodka for summer as examples.

Other exciting new products for consumers who prefer refreshing adult beverages are rum spritzer cocktails and "Voscato," a blend of vodka and Moscato, Siddle says.

Colvin notes that when it comes to private brands, its vital for retailers to be a "fast follower" of hot trends with beer, wine and spirits, while remembering that quality in the bottle is what brings consumers back again and again.

Win with your wine

Turning to the wine category, Rich Bouwer, general manager of Horsham, Pa.-based Saxco International LLC, states that its important for retailers to truly understand what consumers want – even if its not what they say they want. For example, although many people might say they prefer dry reds, in actuality, they mostly drink sweet wine.

"There is always a market for sweet wines like Moscatos and sweet reds," he explains.

Colvin adds that while retailers wont want to ignore Cabernet and Chardonnay – two wines that remain classics – they also wont want to disregard one major up-and-coming trend: blended wines.

"We saw wine blends come on strong about three years ago. Were very proud of that," he says, noting that the popularity of blended red wines has passed that of Merlot and is catching up to Cabernets popularity.

With younger consumers, sweet domestic and Italian Moscatos are becoming increasingly popular, Colvin reports. Prosecco and other Italian sparkling wines also are performing well, serving as a less-expensive substitute for champagne – and as the main ingredient in the popular Bellini cocktail.

In addition, Colvin says Pinot Noir and Pinot Grigio remain hot. Argentinian wines also continue to do well, and Spanish wines provide great value.

Give beer a boost

On the beer side, retailers will want to focus on craft beer, which has exploded in popularity, according to Bouwer.

"Twenty years ago, Budweiser and Coors dominated," he states. "Now, these craft beers make up 10 percent of the category."

Bouwer adds that craft beers no longer are considered "niche" – today, they are seen as mainstream.

"There are lots of local craft brewers and lots of variety," he points out.

And dont neglect hard ciders. According to Siddle, they also are gaining in popularity.

Target with packaging

Competition in the store brand beer, wine and spirits space goes beyond product quality and variety, though – packaging also plays a critical role in getting shoppers to make that first buy.

Do
consider offering blended wines under your own brands.

Dont
enter the private label beer, wine and spirits space with no plan and a half-hearted commitment.

With younger consumers, retailers could do well with innovative, tongue-in-cheek packaging, graphics and product names, Bouwer explains.

Siddle agrees, noting that retailers should target younger consumers with "funky, really-out-there designs" on packaging. Also popular are retro graphics – including black-and-white photography – that evoke innocence, politeness and a playful spirit.

In terms of the bottle, smaller sizes – including half bottles – are becoming more common for wine. Siddle says consumers want to experiment and try new varieties, but they are hesitant to spend a lot of cash for a wine theyve never tried – and might not enjoy. Smaller bottles allow consumers to go out on a limb and try something new.

Indeed, the bottle can speak volumes, Bouwer points out. He sees the adult beverage industry recovering from the recession as it offers more high-end products in heavier glass bottles. Wines with higher price points will be packaged in heavier bottles with larger punts, indicators that the wine should be of higher-than-average quality.

The glass bottle also plays an important role when looking to differentiate in the spirits category, Bouwer says, as it communicates quality. However, because glass-bottle molds require a substantial investment, it makes more economic sense to first customize and differentiate a private label spirit through its label – until the product takes off, Bouwer advises. Then, retailers should consider a custom bottle mold.

Make a commitment

Product development and packaging aside, before a retailer decides to enter the private label beer, wine and spirits market, it must consider the commitment such an effort takes.

"The organizations commitment to exclusive brands is paramount," Colvin states. "First, they have to have a commitment to grow that category. The next level of commitment is to the merchandise itself. [Retailers] want to make sure theyre in the right category thats going to lift overall sales, grow gross margins and returns. The third thing to consider is long-term development."

Colvin advises retailers to assess their support for the category at the store level. Does the store employ wine stewards? Does it have programs to educate consumers about whats in the bottle and what makes it special?

"Make sure youve got everything in stock," he advises. "Make sure its the freshest and best. Make sure its handled and merchandised properly. Make sure products are placed in the right position on the shelf. Make sure they are priced appropriately and consistently. Draw the consumers awareness to the product through advertising circulars."

Colvin suggests running promotions with a pasta company for Chianti, and with cheeses to pair with French wines. These types of efforts tend to drive both products, he adds.

And giving your store brands a "storyline" that creates a connection between the consumer and the store also can boost sales, Siddle says.