The makers of cheap wines sold in cardboard boxes have discovered a clever way to boost profits and make their product even more appealing to novice wine drinkers: Just add water.
A loophole in the federal government's wine standards has allowed makers of boxed wines to water the stuff down while still using classy varietal names such as Merlot and Cabernet Sauvignon on the labels. The tactic has made this stagnant segment of the business, which accounts for about 7% of all wine sales, attractive again. However, the strategy is drawing fire from California wine grape growers and premium wine makers who say the labels mislead consumers and create unfair competition for the rest of the industry, which must adhere to strict federal standards.
Pressure from these groups, along with evidence that consumers are indeed misled by the labels, has prompted the Bureau of Alcohol, Tobacco and Firearms to review the labeling standards for much of the $200-million-a-year boxed-wine category, a process that could take a year. Art Libertucci, assistant director of the alcohol and tobacco division of the ATF, said the agency will also consider forcing certain brands to change their labels.
However, Canandaigua Brands, which each year churns out 30 million cases of boxed wine under the Almaden name, says it isn't giving up the category without a legal fight. The new formulas have not only been more popular with consumers, they can be less expensive to produce, say executives from Canandaigua and E&J Gallo.
"A government agency can't change their mind after companies have already made a large investment in developing these products. That would be incredibly unfair, if not illegal," said Robert Sands, Canandaigua executive vice president.
To most consumers, the labels on these so-called formula wines are virtually indistinguishable from those on traditional table wines, using descriptions such as "Chardonnay with natural flavors." However, a large portion of the content of popular brands such as Almaden, Peter Vella, Carlo Rossi and Franzia can include water, sugar, fruit juice or a distilled grape alcohol in addition to actual wine. Virtually all of these formula wines are sold in boxes; at least one, Carlo Rossi is sold in a jug.
Most consumers don't know they're drinking something other than varietal wine, at least according to a survey commissioned by the ATF a year ago.
