According to groundbreaking new research from ACNielsen, dollar sales of wines under screw cap have grown 51 percent over 2005, three and a half times faster than the 750ml category as a whole. Overall, screw-capped wines are responsible for just under 3 percent of total wine sales by dollar volume.
The Wine Business Monthly Closure Report (see page 16) found that 25 percent of respondents use screw caps on at least a portion of their wine portfolio, an increase from just 3 percent in 2002. While these figures and the ACNielsen figures seem to be incongruent, they in fact are measuring different things. The WBM survey seeks to quantify if any percentage of the wineries' overall volume is under screw cap whereas ACNielsen looked at what percentage of sales are accounted for by screw-capped wines. "We also found that many wineries had at least some of their product in screw caps, consistent with your survey," said Danny Brager, vice president client service, beverage alcohol team at ACNielsen. "However, the percentage of sales accounted for by screw caps is still relatively small, though growing quickly."
While the 51 percent sales growth in the category is promising, some feel that there are some simple factors that are skewing the results. "Some of that growth is just because it's a new thing and it's going off of a very small base," said Donny Sebastiani, director of marketing at Sebastiani & Sons. Sebastiani & Sons, which uses alternative closures for its entire portfolio, has three brands under screw cap.
Andrew Browne of Precept Brands, which has several labels under screw cap in its large portfolio of wines, feels that much of the growth in the category can be attributed to growth in screw cap-heavy regions. "Some of the categories that screw caps are in are experiencing phenomenal growth. The New Zealand category almost doubled last year. And some new brands, like Twin Fin, have had some very good success from the get-go. The screw cap industry has been fortunate to have some really successful brands and growing categories out of the gate," said Browne.
Indeed, the ACNielsen research found that imported screw-capped wines have a larger share of the screw cap market than their domestic counterparts. Of the total dollar share that screw caps represent, New Zealand wines account for 36 percent of sales. Chilean wines follow with a 16 percent share, German wines account for 5 percent, Australian wines for 4 percent and Argentinean wines represent 3 percent of sales.
ACNielsen also noted that screw caps are found on 40 percent of Australian wines and more than 70 percent of New Zealand wines.
"They are generally a little bit quicker on the uptake than we are," said Randall Grahm of Bonny Doon Vineyard, who has moved his entire portfolio to screw cap closures. "Many of the countries adopting screw cap technologies are young industries with fledgling brands. Sometimes it is far easier for a new brand to make the jump to a new technology. I think that established brands worry too much about their customers freaking out with the appearance of a new closure."
Browne agreed, saying that fear of a backlash may prevent some domestic wine producers from switching to screw caps. "The California wine industry is the leader, and some very large companies are leaders. I don't think any of them were willing to jeopardize the market share on their existing brands to move to an alternative closure."
Likewise, Sebastiani also pointed out that because the largest wine companies in the U.S. are reluctant to move to screw caps, the advancement of the closure has suffered. "I probably would have told you 18 months ago that there would be more guys jumping onto screw caps," said Sebastiani, "but it's not instant gratification, and some of the big companies aren't willing to take the time to see it play out. Those guys are just getting into synthetic corks."
The reasons for using screw caps rather than traditional cork or synthetic closures are varied, but many producers cite quality control as an overriding factor. "The initial motivation to move to screw caps was my profound unhappiness with the quality of corks at the time," said Grahm. "While there is no doubt that corks have improved in recent years, I have grown to love the screw cap and find it a superior closure to the cork for the following reasons: (1) absolutely no issues of either cork taint or the imparting of non-TCA cork flavors to the wine; (2) more reliable mechanical seal, vis-à-vis issues of leakage, oxygen intrusion, etc.; (3) more airtight seal, which means wines retain greater freshness and are capable of longer aging, and sulfur dioxide use can be minimized."
According to the ACNielsen research, white wines are more likely to be found under screw cap than red wines. White wines claim a 3 percent share, red wines take 2 percent and blush wines account for 1 percent. Again, the success of New Zealand Sauvignon Blanc as well as the increasing popularity of screw cap closures on Australian white wines likely account for a good portion of the white volume.
"I can see most white wines being in screw cap," said Browne. "I don't know if that's going to be true two years or four years from now, but once it becomes the industry norm, people will race to get to screw caps. I think with white wines it will become the norm. I think we will have a much longer road to hoe when it comes to red wines than it comes to white wines, though."
However, some feel that the screw cap will become more popular for red wines, especially for those designed to be cellared. "I think that screw caps are absolutely brilliant for red wines and in fact make tremendous sense for vins de garde (i.e., wines to be aged at least 10-15 years)," said Grahm. "Screw caps actually slow down the aging process of red wine so that the wine will actually age more gracefully. It is like being able to buy your wine in a magnum or double-magnum but with the convenience of a 750ml. The issue of the potential problem of 'reduction' in red wine under screw caps that reactionary cork proponents bring up is, I believe, nothing more than a red herring."
In 2001, Bonny Doon was the first large American winery to move entirely to screw caps. While Grahm concedes that it was "a bold move from a sales and marketing perspective," he was satisfied that the screw cap closure offered an advantage over other closures. "The only real risk was that of consumer acceptance."
ACNielsen found that 10 percent of 750ml consumers purchased a wine under screw cap in 2005. While this is not an unimpressive figure, it still leaves a significant amount of room for improvement. "We are kidding ourselves if we think there is 100 percent acceptance by wine consumers, that they prefer screw cap over a cork closure," said Browne. "There are consumers out there that will absolutely not buy a screw-capped wine. I haven't found any consumers that will absolutely not buy a cork-finished wine."
Still, Browne is optimistic that, eventually, consumers will be as willing to accept screw caps as they are any other wine closure. "We are changing the consumers' perspective; we are telling them it's okay to try something new," he said. "It's going to take time, but my gut feeling is that screw caps are going to pass the test in the long run and will become a closure that Middle America will accept over time. It's not going to happen tomorrow, but it won't be 20 years from now either."
However, Grahm feels that consumers are not so opposed to screw caps as some may think. "One of the most shocking results that we found was that perhaps in the abstract, consumers might prefer corks; but when they were confronted with a bottle that they liked that just happened to be sealed with a screw cap, the type of closure was essentially a non-issue."
Consumers are generally very concerned with the quality (and others' perceptions of quality) in this newer wave of screw-capped wines. After all, they remember decades of value-priced wines, occasionally with reputations of poor quality, using the screw cap closure. It is precisely because of this reputation that many winemakers have chosen to bottle some of their most attractive wines under screw cap.
ACNielsen found that the average price for a bottle of screw cap wine was $8.64. The relatively high price point does not surprise Sebastiani, whose Mia's Playground and Screw Kappa Napa brands both cost more than $10. "We definitely made it a feature to place our screw cap wines on the upper end [of our portfolio]," said Sebastiani.
"More often than not, those wines under screw cap are better than other comparably priced wines not in screw cap. If you put a bad wine in those bottles, you lose," Sebastiani continued. "Wineries are compelled to put good wines under screw caps." However, many feel that as the screw cap gains more consumer acceptance and more large brands move to using the closure, the average price will begin to fall. wbm
* Note that ACNielsen data is collected from in-store sales scanners in grocery, liquor and mass merchandise stores in 34 U.S. markets. To conduct the screw cap sales study, ACNielsen contacted an extensive list of wineries and importers from January to March 2006 to obtain screw cap wine information, including release dates and if the brand was new or converted. The company surveyed, among others, the Top 30 U.S. wine companies as measured by Wine Business Monthly, the top 25 companies based on ACNielsen data and all clients of ACNielsen/BDN and their partners. Analysis only included wine products currently being sold in the marketplace under screw cap.
Mary-Colleen Tinney Mary-Colleen Tinney is the associate editor for Wine Business Monthly.