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Should We Bag the Bottle? : Marketing: Just as the trend-watchers decided that Americans were starting to prefer quality wines over quantity jug wines, along comes a packaging concept from Australia called bag-in-box. And college-age wine drinkers may make up the bulk of the buyers.


The best-selling Chardonnay in the San Francisco Bay area for the last four months is a brand called Franzia and it comes in a box, not a bottle.

The sudden sales increase in the wine category called "bag-in-box" is the latest consumer shift to confound wine marketing executives.

"I have puzzled over this for a while and it doesn't make any sense," says Ed Everett, a wine marketing consultant and president of New World Wines of San Francisco. "I asked myself, 'Who is buying all this bag-in-box?' Everybody said we are going toward quality, not quantity. And jug wine sales are off, so what's happening?"

Everett suspects college kids. "(There's) a huge emerging group of young people who didn't get the message that they are not supposed to drink jug wine," he says. Instead, they've discovered the convenience of wine that comes in boxes.

Another likely reason for the uptick in boxed wine is the collapse in sales of wine coolers. Statistics show that wine cooler shipments were off 43% in 1993.

The leader in the U.S. bag-in-box market is the Wine Group, a San Francisco-based firm whose Franzia, Summit and Colony brands account for more than 70% of all sales in the category. But the recent surge in bag-in-box sales has prompted two major wine firms to leap into the field.


The E & J Gallo Winery of Modesto introduced its first bag-in-box line of wines just a few weeks ago, under the brand name Peter Vella. The suggested retail price of $8.99 for five liters works out to $1.35 per 750-milliliter bottle (the average size of a wine bottle)--and introductory discounts have the wine priced much lower.

Wine industry executives say Gallo may have been reluctant at first to join the fray because it has its own state-of-the-art bottle-making plant and would have to buy the bag-in-box packaging. But the company entered the boxed-wine game after wholesalers complained that Gallo's 3-liter Carlo Rossi wines were losing market share to Franzia's 5-liter boxes.

And Canandaigua Wine Co. of New York, the third-largest wine producer in the nation, is test-marketing bag-in-box wines under its Cribari brand. Richard Sands, president of Canandaigua, says the Cribari line of varietal bag-in-box wines will be introduced nationally in late spring.

Bag-in-box wine is already a proven category in Australia, where it was invented in the 1970s and where an estimated 70% of all wine sold is in a box.

In this country, the first winery to use the box concept was Almaden in 1977, says Dick Fromm, president of Vintner's Service Systems Inc. of Novato, which markets the packaging for bag-in-box wines. But the category languished until 1987, when Art Ciocca of the Wine Group pushed the idea into high gear, focusing on varietal wines.


That year, Fromm estimates, 5.6 million cases of bag-in-box wine were sold. In 1993, Fromm says, sales of bag-in-box wine hit 10.2 million cases. This year he estimates that sales will hit 23 million cases.

"I think Dick is being very conservative," says Ciocca. "The category is growing very fast."

Fromm admits he might have been low in his projection. "It depends on how strongly Gallo pushes the advertising, but I could well imagine that between the Wine Group and Gallo, shipments this year could be 20 million cases."

"A box is a better mousetrap," says Ciocca. "Cardboard and plastic are a hell of a lot less expensive than glass bottles. They're also a lot lighter, and our new package takes up a lot less space." He points out that the new narrower box fits better into most refrigerators than the former squat, square boxes.

One benefit for the consumer of boxed wine over bottles is the fact that air can't get into the bag.

"The worst thing about a big bottle is when you drink half of it and then stick it in the refrigerator for a week," says Everett. "By the time you're near the bottom of the bottle, the wine has lost a lot of its flavor. Air can't get in the bag because the bag collapses."

The first wines in boxes were generics like Chablis. Ciocca pioneered Cabernet Sauvignon in boxes in 1992; last year he introduced Chardonnay. All wines thus far have been non-vintage, but Ciocca says he would introduce a vintage-dated Franzia Chardonnay by mid-year.


Ciocca says A.C. Nielsen sales figures for the four-week period ending Jan. 22 showed that in Dallas, 25% of all table wine sold was in boxes; in Omaha the figure was 27%. Other major cities in the survey included Portland, 26.7%; Sacramento, 23.7%; St. Louis, 20.6%; Boise, 35.3%. He says all figures were higher than for the prior four-week period.

In Southern California, only 12.7% of all wine sold was in boxes during the period, he says, but the figure is growing. Southland grocery company wine buyers declined to comment on boxed wine sales, but one, who sought anonymity, says: "The boxes are cannibalizing that everyday drinker who buys the big jug bottles, which are not doing very well. I see the boxes as a category to reckon with, so I am going to develop a quality private-label 5-liter box wine that I can price less than the advertised brands."

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