Can U.S. Supermarket-Branded Wine Follow Europe’s Blueprint for Success?
“Supermarket brand Champagne. Hmm… F*ck it, why not?” Thus began my unabashed love affair with European supermarket private labels.
It was mid-2020, and Covid case numbers in Europe were in their first proper lull. Armed with stacks of masks and enough hand sanitizer to sterilize a Vegas motel, my then-partner and I finally executed our dream leap to relocate across the pond. The Portuguese visas were still stuck in pandemic limbo, but we figured a few months waiting it out in Scotland — even with its mandatory two-week quarantine — would be infinitely better than our makeshift purgatory in coastal California’s depressing summertime fog.
Though admittedly a bit worried I had just thrown precious resources at a bottle of Edinburgh’s finest grocery store garbage, I popped the £20 Morrisons Premier Cru Brut with the ceremonial shrug and YOLO so typical of the times.
“Wait a minute. Is this… Damn, it’s actually really good!”
The shock experienced by an American when faced with a legitimately lovely bottle of bubbly emblazoned with a supermarket’s logo would probably be lost on the current crop of European residents. They know it’s good. It’s normal for them. Hell, with zero hint of shame or irony, many are even comfortable bringing the mid-range and posher supermarket bottlings to nice dinner parties.
So what is Europe doing so right with its grocery private label wine culture that many outfits in the U.S. haven’t quite figured out?
American Insecurity Versus European Confidence
German supermarkets Aldi and REWE. U.K. institutions like Waitrose and Sainsbury’s. Grocery icon Pingo Doce of Portugal — the list goes on.
Supermarket private label wine programs have become a formidable category in Europe over the past couple of decades, with stubborn Covid- and conflict-induced economic pressures boosting the bargain-seeking trend to even greater heights over the last few years. The private label idea isn’t new or complicated: Source wine from a contracted winery, or buy it off the bulk-wine market. Have it bottled and self-labeled with a custom design. Sell it as the supermarket’s own selection — generally at a significant discount relative to actual winery brands on the shelf.
According to global consumer research firm NIQ (formerly NielsenIQ), U.S. supermarket private label programs across all product categories have climbed to a respectable 14 percent of FMCG (Fast-Moving Consumer Goods) sales, and are still growing. To be fair, it has been a bright spot in the U.S. wine market’s mopey moment, and given current economic headwinds, it’s likely to continue its domestic rise.
But western European counterparts — boasting an impressive 36 percent — have given the American numbers a reality check. In the wine sector, a substantial part of that may have to do with the historical differences in wine culture between the two sides of the Atlantic.
“My sense is in Europe, people are much more comfortable with wine and therefore able to seek out bargains. The general knowledge level is higher — including expectations for grocers — so there’s more room for trust.”
“Both in the U.K. and Portugal, consumers are more knowledgeable and experienced with wine. The former, because of decades of international wine tasting as leading importers. The latter, because wine has always been a part of our culture,” says Gonçalo Ribeirinho dos Santos, sales and marketing director for Portugal’s WineStone Group, an umbrella company which, in addition to traditionally branded wineries, also produces wine for a roster of private-label clients.
As an American transplant, it’s a cultural difference I encounter in everyday life: blue-collar tradespeople on their lunch break sitting down together over a bottle, or the availability of quality wines at the most humble of snack counters. Wine here feels like a birthright. Yet for Americans, wine still carries the baggage of a stuffy reputation, and many segments of society remain a bit uncomfortable with the beverage.
“We’re still, after all these years, a little insecure about it,” says Benjamin Lorr, author of supermarket exposé “The Secret Life of Groceries: The Dark Miracle of the American Supermarket.” From his perspective, most Americans unconsciously require an authoritative seal of approval when it comes to buying wine — in relative contrast to traditional U.S. comfort with beer and spirits. “Since we can’t trust ourselves or our taste buds, value is still something that needs to be certified or validated by someone we do trust. And we very much do not trust mass-market grocers to do that certifying,” he says. While the debatable guidance offered by 90-plus-point shelf-talkers might help, wine selection when navigating a supermarket’s extensive, fluorescent-lit canyons can still feel like an intimidating chore.
“My sense is in Europe, people are much more comfortable with wine and therefore able to seek out bargains,” Lorr adds. “The general knowledge level is higher — including expectations for grocers — so there’s more room for trust.” While an outsized proportion of U.S. consumers consider price the most important factor when buying wine, bottles emblazoned with a supermarket logo may currently be one step too far for many Americans requiring validation for wine purchases.
Consequently, American supermarkets have a higher hurdle to overcome due to the inherent difference in wine cultures. Domestic private-label program strategies must be just right to catch fire with consumers. So, how to build the beast?
Building a Private Label Wine Juggernaut
First and foremost, the wine has to be good. And despite a general lack of wine self-assurance, American consumers can still usually tell when something tastes like absolute trash.
“As they say, confidence in a brand — be it wine or any other kind of brand — takes years to build and a moment to destroy,” Santos says. “This confidence is only possible with quality wines.” If that private label Cabernet sourced from the cheapest dregs of the bulk wine market reeks of sweaty cabbage and tastes akin to cough syrup, it’s going nowhere.
“It’s less about selling units, and more about selling quality,” says Shehnaz Hansraj, London-based wine expert and head of research at Viking Cruises U.K. “Building trust, creating trust, keeping trust.” Supermarket private labels in the U.K. have even gone toe-to-toe in blind tastings with prestigious wine producers and won — much to the glee of British consumers, and serving to strengthen the perception of quality in their minds.
But it can’t just be quality. When building above that essential foundation, another component to the success of a supermarket private label wine program seems to be the inception of a consumer whisper campaign that inspires bargain-flexing.
“Brands like Aldi have kind of created these moments of ‘aren’t I smart,’” Hansraj says. “It’s no longer an ‘embarrassing’ thing. It’s a ‘smart’ thing.” And when this outstanding quality to price reputation is tied to an element of mysterious mythology, the product can become viral consumer catnip. “I do quite like the ‘who done it’ guess-the-winemaker [idea],” she says.
Alternatively, some programs negotiate deals to actively reference either winemaker or winery itself on the label. Chains like Pingo Doce in Portugal have employed this potent substitute tactic — sacrificing the lure of playing detective for the additional confidence that comes with outright endorsement. “I love [the idea of] featuring winemakers and showing sources,” Lorr says. “What a way to build trust in the product.”
“Costco’s Malbec is yummy, but it’s got that Kirkland Signature logo plastered on [it]! I’m still too much of a wine-insecure American to be flashing that bottle around for guests.”
In all fairness, when it comes to spirits (and recently beer), Costco has built a cult following in the U.S. via the value perception and origin myth technique. “[Costco] knows who their members are up, down, right, and left. No surprise their private label plays are as successful as they are,” Lorr says.
And to be clear, there’s no denying that its wine program also does exceedingly well in raw numbers. By that measure, it’s a definitive success. But the strategy that built a cultural mystique around Costco’s distilled offerings hasn’t yet lent its wines quite the same viral buzz.
According to Lorr, the issue might lie in the label itself. “Costco’s Malbec is yummy, but it’s got that Kirkland Signature logo plastered on [it]!” he says. “I’m still too much of a wine-insecure American to be flashing that bottle around for guests.” While that milquetoast Kirkland Signature logo works in the spirits and beer space as a consumer smart-buy badge of honor — akin to the ingenious anti-brand-styled label of Tito’s Vodka — wine is still seen as the bougie outlier of the beverage triplets, and in Lorr’s estimation, a befittingly reworked logo may help the Costco wine program achieve cult status like its siblings.
In the States, though, there is one clever chain that deserves credit for successfully leveraging the complete pyramid of trusted quality/price ratio, cult-like brand mystique, and inspired labeling. And no, it won’t come as a surprise to anyone.
The Private Label King From California
It took relentless dedication, consistency, and patience over decades, but it’s hard to argue with the results.
“In the 1970s, Trader Joe’s built a wine program from scratch. Joe installed a tasting table at headquarters, complete with urinal spittoon, and he and his buyers uncorked a half dozen bottles a day,” Lorr says. “They tasted in the blind and took notes. [They] held discussion groups. And they did this for years.” Lorr points out that most grocers would rather sell shelf space or haggle over margin to pad the quarterly numbers than develop legitimate food and beverage expertise. Conversely, Trader Joe’s found a very un-corporate way to achieve a resounding corporate victory.
As for how other U.S. supermarket-branded wine programs can model the Trader Joe’s example and overcome private label biases, Lorr points to a linchpin tactic in TJ’s playbook: the concerted efforts it makes to actively engage customers. It’s something that he says most haven’t bothered to do. “They need to showcase their knowledge: tastings, comparisons with known brands, customer education, highlighting regions, connecting their program with producers, and transparently discussing the effort they are putting into sourcing,” he says. “Rare is the chain that would devote that much time and energy.”
It seems the rug that really ties the room together may be that most elusive trait in modern corporate culture: years of consistent, detailed effort. “The U.S. needs more time and commitment,” Hansraj says. For the sake of American shoppers looking for good wine at good prices in these shaky times, let’s hope U.S. supermarkets can model Europe’s determination.
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