A private label wine is a wine brand that is proprietary to a particular retailer, restaurant, event center or individual. These wines are only available for purchase at that business location. If the wine is for an individual or private business, the wine cannot be sold.
Some retailers such as Sam’s Club, Costco, Whole Foods and Grand Hyatt Hotels are linked with wineries to make wines that are exclusively available to their customers. Costco’s original private label, Kirkland Signature wines, was launched in 2003. Today Costco sells 17 different wines. Their global wine sales reached an excess of $1.8 billion. Their private label wine sales reached roughly $270 million.
When I first decided to become involved in the wine business I started a wine distribution company, Tiedemann Wines, under an Indiana Wholesale License. This type of license allows you to purchase wines from a winery and distribute them only to licensed retailers, restaurants, stores, etc. You cannot sell wines to anyone who doesn’t hold a retail license. This means I cannot sell wine to friends, family, clients, etc.
Shortly after starting the long approval process for my license I decided to start my own private label wines. I did so by engaging several winemakers in Napa Valley to produce the wine for me under my label design. I will openly admit that the thought of having my own brand and label did stroke my ego a bit! Our various private label wines are distributed in Indiana, Michigan and Chicago.
There are a number of approaches to getting your own brand and personal label.
- Making your own wine at home with your personal label is going to be the most cost-effective method.
- Contracting with a winery somewhere in the country to produce your wine with your personal label is most likely the second most cost-effective method.
In this case there are many factors to consider which have a huge effect on the price of your wine. There is typically a minimum case order required which will run from one pallet (56 cases) to as much as 500 cases or four to five pallets.
Your selected winery may make a large quantity of a particular wine and label it for a number of companies or individuals. The more wine that is made, the lower the case price but that also depends on the variety of wine. Currently I would suggest that the Napa Valley Cabernet Sauvignon is the most expensive wine to produce.
Let’s look at an example. Let’s assume that you can get 56 cases produced at a price of $75 to $100 per case including labeling and shipping. In this price range you will invest approximately $6,000 to $8,000 for 672 bottles of wine with your own personal label on it. If you are required to have a minimum order of 500 cases, you would invest around $30,000 to $40,000.
- Another approach is to form your own wholesale company. Let’s use the State of California as an example. You would file for what is called a 17/20 Wholesale License. This license allows you to make your brand and sell it to other wholesalers across the country. You are also allowed to sell your wine directly to consumers in 15 states under this license. As you can imagine this takes a much longer commitment and investment of $50,000 to $100,000 to get started.
- The last option is to become a Licensed Winery. In California, the best license to use is known as a Type 02 License. This license requires you to lease space and purchase services from an existing winery. This can also be an expensive approach to having your own brand. This method can run in the $50,000 and up range. This license requires you to produce between one and 5,000 bottles of wine every 24 months.
I have done private label wines for a friend over the years and have had a number of requests for such wines. The projects I have done weren’t for resale but for private use only. Most of the time people are unwilling to invest the amount of money it takes to produce your own label and rightfully so, it is expensive.
There are a couple of very important factors to consider when doing your own private label.
- Always use a reputable winery and winemakers.
- Know your total cost per case before you agree to the contract. I say this because there are a number of costs the winery doesn’t cover such as tax, freight, labels and warehouse costs, etc.
- Always taste the wine you blend before you agree to bottle the wine.
- If you choose a method that allows you to sell your wine, you should have some experience at selling wine, if you don’t have experience, be sure to contract with a firm or individual who does.
There is much planning and many decisions to be made when you undertake making your own wine. Be sure that you do your homework and watch the process closely. Having your own private label of wine is very exciting and rewarding.
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Until next week,
Calendar of Events
- November 7th – International Merlot Day
- November 12th – International Tempranillo Day
- November 15th – International Zinfandel Day
- December 16th – National Wine Club Day
- December 20th – National Sangria Day
- December 31st – National Champagne Day