THINKING INSIDE THE BOX 1996

RICHARD TURCSIK

The odds are stacking up in favor of wine boxes. "The 3-liter category in wine bottles is almost nonexistent today. The boxed wine has taken over," said Bob Jennings, buyer and merchandising manager at Raley's, West Sacramento, Calif.

Lightweight, shatterproof packaging; portability; spigots for easy pouring; freshness dating and air-tight seals that keep the wine fresh for months after the box is opened are just some of the advantages that wine boxes offer over their glass jug counterparts, retailers and industry experts said.

"As far as popularity, boxes are very hot," said Duane Smith, merchandiser of beer and wine at Haggen, Bellingham, Wash. "The boxes sell well year-round. In the summer a lot of people are buying them to take camping. During the Christmas holidays a lot of people are buying them to serve at parties."

Seaway Food Town, Maumee, Ohio, recently doubled the shelf space allotted to wine boxes.

"We are seeing the wine boxes growing substantially," said Tom Roesner, Seaway's beer, wine and liquor buyer.

"The convenience of putting a box of white wine in the refrigerator, or a box of red wine on the shelf in the kitchen, and just pulling out the spigot and pouring a glass makes it so simple."

Seaway has been cutting back on the 3-liter glass packages, said Roesner. "The glass bottles can break, are hard to pour and are just not convenient," he said.

Even in California, where bottles of wine can be as commonplace as Coca-Cola and Snapple, wine boxes have made substantial inroads.

"Box wines also offer retailers several advantages. They are lighter and there is no breakage," said Jennings of Raley's.

One of the reasons consumers buy wine boxes is that they can take them on picnics and to areas where they don't have to worry about the container breaking, said Terry Fowler, director of deli and liquor at K.V. Mart Co., Carson, Calif.

"It is an easy access, and a larger container. It also fits easier into the refrigerator," Fowler said.

Wine boxes are popular among the core wine consumers, those who drink wine on a weekly or even daily basis, said John Gillespie, executive director of Wine Market Council, a Larkspur, Calif.-based industry trade association that seeks to increase the table wine market in the United States.

"The shrinking bag is great and it really works perfectly because there is no way for oxygen to get in. You have an oxygen-free environment. If you store wine in an oxygen-free environment, where it isn't subject to varying degrees of temperature, especially heat, you can keep it for a long time," said Gillespie.

Boxed wines continue to gain in popularity, according to ACNielsen figures provided to SN by the Wine Group, the San Francisco-based manufacturer of Franzia, the leading boxed wine, with a 68% share of the category.

For the 52-week period ended Aug. 6, 1996, winetaps (boxed wines) accounted for 18.6% of wine sales, up from 13% in 1993. By comparison, 3-liter glass jugs declined to 11.9% of the market from 16% and 4-liter glass jugs dipped to 6.8% from 8.2% during the same period.

"Almost one of every five glasses is poured from a winetap," said Robert W. Walker, vice president of marketing operations at the Wine Group. "We believe winetap sales will continue to grow rapidly and will soon have over a 20% share of total table wines."

However, Walt Sumner, corporate beer and wine manager at Charlotte, N.C.-based Harris Teeter, said growth of wine boxes is actually occurring in pockets, centering around middle-class stores.

"In our stores that are middle of the road demographic we are showing significant increases. In our higher demographic stores we are showing moderate to insignificant gains in the box category," he said.

Because of limitations on shelf space, Sumner said, Harris Teeter is in the process of discontinuing Peter Vella and Almaden, the second and third largest brands, respectively, to concentrate on Franzia.

Tedi Burris, a spokeswoman for Gallo, Modesto, Calif., which produces Peter Vella, said boxed wines are carefully blended and aged to provide a high-quality, consistent product.

Mitchell Schwartz, director of table wine marketing at Canandaigua Wine Co., Canandaigua, N.Y., which counts Almaden and Cribari among its brands, said the boxed wine peaks in the summer, because of picnics, and in December-January, due to Super Bowl and Christmas parties.

Schwartz said a major advantage of wine boxes is their relatively light weight and space-saving design.

"A 5-liter box weighs less than a 4-liter bottle of wine," he noted.

Next month, Canandaigua is introducing a new Wine Masters series of varietal boxed wines enhanced with natural flavors in Chardonnay, White Zinfandel and Cabernet.

Larry Goetsch, direct store delivery director at Ingles Markets, Black Mountain, N.C., said while boxed wine sales have remained constant, his chain has been concentrating on the Franzia and Peter Vella brands.

Boxed wines sell better among the white "Anglo" population than among minorities, said Kevin Garner, wine merchandiser at Fiesta Mart, the Houston-based chain that specializes in Hispanic merchandising.

"Our sales of box wine are up, but we don't do near the box wine business that several other stores do because of our heavy ethnic clientele. It is not a good ethnic item," he said.

To try and spur sales among Hispanic consumers, Garner is stocking a 1.5-liter box in his ethnic-oriented stores and liquor stores "to see if they will pick up the box if the price is right." However, at press time it was too soon to see how the box is selling, he said.

While the wine boxes have a lot of pluses in their favor, retailers noted there are a couple of minuses. Along with a shorter shelf life than bottles, boxes have low margins, retailers said.

"The margins are ridiculously low just from competitive pressures," said Sumner of Harris Teeter. "Everybody is taking them as a loss leader because the club stores have set the pace."

Haggen's Smith noted that while margins on the box and glass items are comparable, he prefers the boxes.

"We make a little more money on the boxes because they cost a little more money. They are about $10, while a 3-liter bottle of wine is about $7," he said.