Beverage Dynamics

Beverage Dynamics Nov-Dec 2015

Beverage Dynamics is the largest national business magazine devoted exclusively to the needs of off-premise beverage alcohol retailers, from single liquor stores to big box chains, through coverage of the latest trends in wine, beer and spirits.

Issue link: http://read.dmtmag.com/i/599364

Contents of this Issue

Navigation

Page 45 of 83

www.beveragedynamics.com CASE STUDY IN PREMIUMIZATION Treasury Wine Estates announced in October 2015 that it would acquire the majority of the wine assets of Diageo PLC's US and UK operations for $600 million dollars. The move adds high-profile Chateau & Estates brands like Beaulieu Vineyards, Sterling and Acacia to TWE's existing American wine portfolio head- lined by Beringer, Chateau St. Jean and Étude. "This acquisition doubles the size of Trea- sury's Luxury and Masstige business in the United States," explains TWE spokesperson Megghen Driscoll, "and makes us one of the strongest suppliers in the industry in wine's two highest-growth price segments." In TWE's internal classification system, Luxury wines are those that sell for over $20 per bottle, led by iconic brands like Stag's Leap and Penfolds, while the $10 to $20 range is considered Masstige, and includes classic labels like Chateau St. Jean alongside newer ones like 19 Crimes (first coined in beauty products and the fashion world, the term 'masstige' blends the concepts of 'mass-mar- ket' and 'prestige' to describe affordable goods produced by a luxury brand). The move to expand the company's high-end portfolio makes perfect sense in light of the recent pattern of growth, where momentum has clearly shifted to wines over $10, and where those over $15 are posting the biggest year-over-year gains. But it's import- ant to note that chasing a sales trend in the near term is not the sole motive. The acquisition of Diageo's Chateau & Estates assets includes significant vineyard holdings and grape contracts, which will prove invaluable for the success of Treasury's premium brands in the longer term in a market that is becoming fiercely competitive as fine wine demand rebounds. This bold move gives Treasury an enviable position in a number of important American wine categories, most notably tripling its sup- ply of premium California Cabernet Sauvignon in key regions like Napa Valley and the Central Coast. "We are now twice as large as our nearest competitor in the critically important sub-AVA's of Napa Valley, including Ruther- ford, St. Helena and Oakville," Driscoll says. "These are a finite resource - Napa just isn't that big." The deal lifts TWE to the number-one position for Cabernets over $20 and bumps it to number-three in those over $10. 46 Beverage Dynamics • November/December 2015

Articles in this issue

Links on this page

Archives of this issue

view archives of Beverage Dynamics - Beverage Dynamics Nov-Dec 2015