There are few absolutes in the world of wine. The words ‘sometimes’, or ‘often’, or ‘may be’ usually need to be appended to statements such as the title of this post. With that said, onto the thorny subject of own or private label wines.
Private label is on the rise. Increasingly, supermarkets are filling their shelves with own-brand wines, and there’s less space available for branded product. And the major UK mail order/internet wine sales companies have a model that has relied almost exclusively on private label.
Generally, private label is bad for wine, but I can see ways in which it could be positive, and some people do it well. So I can’t definitively state that private label is bad; I have to qualify my statement by saying that it’s usually a bad thing.
The most honest sort of private label is a supermarket own label, such as Tesco Finest, Asda’s Extra Special or Sainsbury’s Taste the Difference. To the customer, it is clear that the supermarket buyers have sourced the wine themselves, and have cut out a margin by bottling it under their own label. At least the customer knows what they are getting. The hope is that they are getting a wine that tastes like where it comes from, but this isn’t always the case.
The less honest sort is the soft brand, where a retailer makes it look like the private label wine is made by a producer, making up a name for it and designing a label to make it look like a producer-owned brand rather than retailer private label. This is almost always done to hide high margin.
For example, Laithwaites and Naked Wines have built their business around private label soft brands, which are exclusive to the retailer. These are high margin products which allow them to use powerful promotional mechanics and still make money. Naked’s twist on this theme is to use well known winemakers as buyers to source wine for them, label the sourced private label wine with the winemaker’s name, and make it look like this is the winemaker’s ‘own’ wine. In a sense, it is, but it is exclusive private label and the margin requirements are pretty bold.
Why is private label bad? It doesn’t give the producer brand equity. These days, the key challenge to wine producers is access to market, and increasingly they are having to use a multichannel strategy. Those less adept at selling through the various channels end up being in a very weak negotiating position, and may end up selling a lot of their wine without getting any brand equity. And without brand equity, you have no power in any negotiations. This helps fuel the race to the bottom in wine retail, something I have discussed before.
Private label is bad for the consumer, because most of the time they end up paying rather too much for a pretty mediocre wine. As a consumer, I want to know who made my wine. Even at the bottom end, I like the producer to get the credit.
Can private label ever be a good thing? The Wine Society’s Exhibition Series shows that when the buying is done well, from good producers, then the results are worthwhile. The same goes for the own label wines from the likes of Berry Bros & Rudd, Tanners and Fortnum & Mason (these are exceptional). In each case, it’s because the fundamental business of each retailer is sound, producer-badged wines that are bought for quality reasons. Marks & Spencer are an example of a retailer that just does private label, but who do it very well: they buy very well and proudly show the name of the producer on each wine.
But this is normally not the case. So I’d advise anyone not to shop with retailers who are largely or exclusively private label. It’s not good for wine, and it’s not good for the consumer.