Why Low-Calorie Wines Sour on American Shelves

May 2, 2015

(WSJ) - Americans love wine—and they are concerned about their weight. But low-calorie wine still faces tough sledding in the U.S., global winemakers say, because it is seen as compromising on an indulgence.

After investing in multimillion-dollar promotional campaigns in the U.S., vintners including Treasury Wine Estates, one of the world’s biggest winemakers, have pulled several brands, such as The Skinny Vine, from shelves there because of disappointing sales.

The reaction of U.S. consumers is in contrast to Europe, where these wines are taking root, helped by favorable tax policies for low-alcohol products. France is among the most promising markets for the wines, according to a recent survey by research firm Wine Intelligence, with a 31% increase in buyers of lower-alcohol wine in 2014 compared with a year earlier. France is the world’s third-biggest wine market, after China and the U.S., according to research firm Euromonitor.

To be sure, the U.S.’s larger number of consumers still makes it the world’s biggest market for lower-alcohol wines, with about 37.8 million buyers last year compared with France’s 12 million. But doubts over quality are increasingly a barrier to purchase, the Wine Intelligence survey found.

“With alcohol, along with things like chocolate, people are buying into the full flavor, the full taste experience,” said Simon Marton, chief marketing officer at Treasury Wine, which sells the mass-market Beringer label and the premium brand Penfolds Grange, among others, in the U.S.  “They don’t want winemakers to remove things from their wine.”

The challenge for winemakers is similar to that faced by soft-drink makers Coca-Cola Co. and PepsiCo Inc. years ago when they experimented with low-calorie sodas to counter concerns about sugar intake and obesity. The key was convincing consumers that flavors weren’t compromised in reduced-calorie products such as Diet Coke.

The alcohol reduction process also cuts calories: Winemakers typically strip the alcohol from wine after the grapes are pressed and fermented, using a filtration process that takes calories with it. They can also pick the grapes before they are fully ripe, a method that reduces sugar levels, but can also remove some of the flavor.

“Wines are not typically promoted for their nutritional properties,” said Ryan Lin, a senior industry analyst at research firm IBISWorld. “The types of grapes used, and whether it’s a white or red wine would give the discerning drinker enough indication of the general makeup of the wine.”

The U.S. wine market is notoriously faddish, according to industry experts. Sales of Pinot Noir—a lighter style with lower alcohol levels—rocketed after the release of “Sideways,” a 2004 movie that featured a Pinot fan. Pinot Noir sales grew 66% in 2005, according to Nielsen, but growth quickly fell back to the low 20s and by 2011 was only 11%. Moscato, another lower-alcohol wine, enjoyed a similarly meteoric rise in popularity several years ago—with sales rising 78% in 2011, according to the research firm.

Australia-based Treasury Wine ventured into low-calorie products in the early 2000s with White Lie, sold under its Beringer label in the U.S., and more recently in 2013 with its The Skinny Vine label—Chardonnay, moscato and Zinfandel rosé blends with 25%-30% fewer calories than the regular product. White Lie was discontinued in 2005, while The Skinny Vine began disappearing from store shelves this year.

Accolade Wines, a global wine company based in Adelaide, Australia, briefly marketed in the U.S. a low-calorie range called The Light Grape in 2013. The private equity-controlled company targeted consumers using the Weight Watchers weight-loss program with a print advertising and email campaign, promising 80 calories per 5-ounce serving—about 30% fewer calories than regular wines.

“In the U.S., consumer tastes can change very quickly and it’s a matter of staying on top of things,” said Anita Poddar, Accolade Wine’s head of global external affairs. “Otherwise you end up with stock in warehouses instead of in consumer hands.”

It is a lesson Treasury Wine learned the hard way in 2013 when the company was forced to destroy thousands of gallons of wine—including lower-alcohol varietals—that had passed its prime after it vastly overestimated U.S. demand. Inexpensive, lower-alcohol wines such as White Zinfandel, a key Beringer varietal, don’t have nearly as long a shelf life as high-end Chardonnay or many red wines, according to industry analysts.

Accolade is pushing ahead with low-alcohol wines in the U.K., where it launched a tea-infused alcohol free sparkling drink under its Echo Falls label in January. Accolade is the No. 1 wine company by volume in the U.K. and Australia. It owns California’s Geyser Peak Winery, along with the Atlas Peak and XYZin.

To be sure, some U.S. brands have found success in selling low-alcohol wines in niche markets. Reality-television personality Bethenny Frankel launched Skinnygirl—a brand of low-alcohol, low-calorie beverages overtly marketed to women—several years ago. The limited-release range includes vodka, bottled margaritas and wine.

U.S. shipments of several Skinnygirl products, including wine, grew by a double-digit percentage in March, albeit from a relatively low base, compared with the year-earlier month, according to Megan Frank, a senior director at Beam Suntory, the world’s No. 3 liquor company by sales. Beam Suntory, the owner of Jim Beam bourbon, bought Skinnygirl in 2011.

Skinnygirl’s pinot grigio wine—with an alcohol content of 10% and 100 calories per 5 oz. serving—had the highest reorder rate of all new Beam Suntory products in 2014, Ms. Frank said. Beam Suntory declined to disclose revenue or sales volume for Skinnygirl products. When it acquired Skinnygirl in 2011, the Deerfield, Ill.-based company said sales volume exceeded 100,000 cases a year, a relatively small release. The biggest winemakers produce millions of cases of standard wine varietals a year.


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