With the global economic crisis in full swing liquor stores and wine bars are seeing their older, high-priced wines gather dust.
Bronco Wine Co. in Ceres, Stanislaus County produces more than just box wine like Franzia. The group is also behind other affordable brands such as Charles Shaw, Crane Lake and Napa Ridge.
Year to date, Bronco's Wine sales are up 25% on volume. Charles Shaw alone is currently selling about 6 million cases a year. The company has aspirations of eventually
moving 100 million cases a year.Where do they expect to find the bulk of their buyers? You guessed it, China.Next month, the plan is to unveil a new Australian Chardonnay by the name of "Down Under."
It will sell for half the price of Yellow Tale, currently one of the most consumed, affordable, white wine around the world.
Fred Franzia, who sold his brand to Bronco wines, had the following words to offer to offer the SF Chronicle,
in this article.
"His only worry seems to be that he might run out of wine - even though he controls reportedly 40,000 acres and buys far more in bulk. "We'll probably have to allocate. Imagine that."This is the year, after all, when cult-wine allocations are being busted, when retailers can cherry-pick the finest wines. And yet many wineries still won't flinch on pricing. Suddenly, Franzia's crusade against high prices - he still believes no wine should cost more than 10 bucks - has an eerie resonance.
Mir Global Wine Corner Analysis
It does not take a genious to figure out Franzia's market strategy, especially when it comes to China. In general, Franzia hopes to capitalize on the rising consumption of wine in markets like the United States, China and Russia by tempting people who like to drink with cheap prices and wine that doesn't taste like rubbing alcohol.
Franzia box wine and Charles Shaw do taste better than the majority of Chinese wines I sampled in the past. That does not however mean that they are by any means... good.
In the United States where a great variety quality wines from Chile, Argentina and Australia are widely Franzia will get lucky if this recession forces consumers to substitute slightly higher priced, quality wines from these countries for their poor alternative.
If Franzia is able to slightly improve its quality and hook consumers however, I can see their strategy working out to a certain extent.
As for China. This is great news for companies like my own Mir Global Marketing Co., which specialize in South American wines.
If Franzia goes through the trouble to promote their cheap products in China and are able to successfully get the Chinese consumers buying cheap, lower quality Chinese wines to switch to their wines, they will be doing South American wines a great favor.
One of the main difficulties for Argentine producers at the moment is convincing the very brand conscious Chinese to trust the quality of their products. France remains synonymous with quality when it comes to wine, while wines from Italy, Australia and Chile had to struggle for years to build a trusting image with Chinese consumers.
Franzia already has a decent customer base in China where wines are outrageously over-priced. Although something just does not sit well with me when you must pay $6-8 for a glass of Franzia.
What if there was a Chardonnay from Argentina listed on a menu just Franzia's selection?
If Franzia's marketing and promotion of their own wines have worked, this will inevitably mean the Chinese consumer has become more educated about wines and that his/her tastes have evolved.
I have a feeling, after drinking a few glasses of Franzia, the sophisticated wine drinker in China will decide to spend a few extra RMB for a much higher quality glass of wine.
So let me say the following:
"Thank you Franzia."
Bennett Reiss - International Trade Consultant at
Mir Global Marketing Co.
