Cans represent a very small segment of the overall wine category, but it’s growing rapidly, and there are good reasons that key industry players are making moves or at least keeping tabs on it.
Wine industry veteran, Jim Doehring, launched his new in cans only brand, Backpack Wines, in September last year after a period of market research that convinced him the market was ripe for it.
“Total sales in 2016 was up 122% from the year before according to Nielsen; it could become a very significant segment of the market,” says Doehring. “We did a number of focus groups and panels. The majority of the consumers in our focus groups were millennials ages 22 to 35, and the feedback was overwhelmingly positive.”
What sparked the idea of Backpack Wines for Doehring was his own failed picnic adventure with a bottle of Sauvignon Blanc that for lack of a corkscrew and cracked cups ended up less romantic than he’d hoped for. And the reason he primarily surveyed and targeted millennials is their on-the-go lifestyle where the convenience of the can is a great advantage. “It’s for anyone who has an active lifestyle where they’re outside at a picnic or BBQ and just want the convenience,” asserts Doehring.
Wine Market Council research backs up Doehring’s insights about millennial’s lifestyle. They are the generation that drinks the least wine at home, but report that 7% of their wine drinking occasions are neither in a home nor on-premise.
Jordan Kivelstadt, CEO and Founder at Free Flow Wines, recently announced that they’re opening up a canning line for wine at their Napa facility, and he agrees with Doehring. “I think what’s held wine back from some of those casual drinking experiences is the fact that you need a glass for every way that wine is served, and for corks you need a corkscrew too.With a can you don’t need any of that, you just pull out the can and drink and I think that’s why beer has been more successful than anything for that outdoor drinking experience.”
In the competition between beer and wine, beer generally performs better in the lower age groups, supposedly before they mature to wine. How much of that advantage can be ascribed to packaging advantages remains to be seen, but the portability, single serve, and less formal format of the can are all aspects that speaks to the young millennial and potentially skews them toward beer.
The Infinite Monkey Theorem is one of the canned wine pioneers, and to owner Ben Parsons the pretense of wine is one thing that’s he tries to shed in competing for the millennial consumer. “From my brand’s perspective, I’m going after that craft beer drinker as well. I’m going after the younger demographic that’s just wants to have fun and not think too hard about the vineyard and all the pretense.”
Parsons and the Infinite Monkey Theorem is featured in the Canning Manufacturers Institute’s campaign about innovative wine brands opening up to cans (video above).
Growing Industry Interest
Sherrie Rosenblatt, Vice President of Marketing and Communications at the Canning Manufacturers Institute, sees a rise in winemakers choosing cans and also flags millennials as the target consumer. “One of the first places we saw this was Sofia’s minis from Francis Ford Coppola Winery, that made the small cans available, targeting millennials who wanted portability and accessibility at casual outings, giving them the beverage choice in a package that was easy for them to transport.”
While recognizing that cans are a nascent segment, Kivelstadt believes that the conversation around cans is changing and that the industry is excited about it. “A number of our existing customers have expressed interest, and at Unified the response was extremely strong,” says Kivelstadt. “Because of our partnership with Ball, people went to the Ball booth to learn about cans, and then Ball said, ‘go see the guys at Free Flow Wines; they’re launching a canning line,’ and that combination has been very very powerful.”
Doehring agrees, “just being in the industry and chatting with people, they’re taking a very serious look at cans. A few years ago there was almost nothing on the market, now you can go into convenience stores and see eight or ten selections, and granted that’s not a lot compared to bottles, but we know they’re coming.”
The canned wine and single serve market segment has been maturing in recent years, but one reason that it has not seen a huge number of new brands might be the barriers of entry that make it hard for small and mid-sized brands to test the segment without a huge commitment.
“What I believe has held canning back from becoming more prevalent in the wine industry is that there hasn’t been an option like what we’re offering,” says Kivelstadt. “You had the option of guys in Modesto, huge minimums, high loss rates, no expertise in wine, or these mobile canners who just don’t have the quality control to the level that Free Flow does. Or the speed or efficiency, so the costs are so much higher. So what we want to do is break that middle ground, we want to provide high speed, high quality line that allows wineries that are interested to get in.”
The minimums for custom printing cans are usually a container, which is 110,000 cans per SKU or 5,000 cases. Kivelstadt explains that Free Flow Wines has invested in a sleever that will allow them to put a custom branded shrink wrap on blank cans, called “brights”, so that brands can enter the segment with a smaller commitment and still use the full canvas of the can for their branding. “They’re amazing,” he says, “unless you really look hard, it looks like it’s printed on the can.”
Does Quality Wine Fit in a Can?
There are some constraints on what wine can go in a can. Wines with a very high acidity, ph below 3, can dissolve the interior liner and make contact with the aluminum, and copper in the wine beyond 0.2 parts per million risks being extracted from the solutions and boring into the aluminum. Also, the can is an inert environment, so wines must be made ready to drink, but this doesn’t mean it can’t hold quality wines.
“There’s a number of new packaging options on the market, and people will always take a look at them and wonder,” says Doehring. “That was something we needed to overcome right away, and what we decided to do was create a good quality product in a can. That was our way to address their concerns.”
The SMRP for a four pack of 250ml Backpack Wines is $19.99, the 750ml bottle equivalent of $15, which fits within Kivelstadt’s price points expectations for canned wines. “I really don’t see this getting above $20 retail per bottle anytime in the near future. Maybe I’m wrong, I’d like to be wrong, I think premiumization is where the industry is going, but I’m thinking a lot of wines between $12 and $18 a bottle.”
Because the 250ml can isn’t a legal standard of fill and therefore must be sold in four-packs as opposed to the 375, which can be sold single-serve, Kivelstadt expects the canned wine market to segment based on can size. “I think the 250ml segment is going to move toward the lower end of the market,” says Kivelstadt. “And I think the 375ml can, which I will give Underwood a tremendous amount of props for leading that charge on, will become sort of the premium end of the segment.”
Convenience is at the top of the list when explaining why cans appeal to millennials, but the sustainability benefits are something that speaks to both millennial sensibilities and many wineries.
“It’s amazing to see how environmental concerns play into the millennial mindset more than any other generation,” says Doehring, “It’s something that we definitely think about, and we know our consumers think about.”
Aluminum cans are infinitely recyclable, and according to the Canning Manufacturers Institute have a 67% recycling rate, which is higher than any other beverage container. It also has significant shipping benefits; where a palette space that takes 56 cases of bottled wine can hold 100 cases of cans.
“At Free Flow, we’re all about environmental stewardship and alternative packaging,” says Kivelstadt. “Kegs were a first step, and we’ve taken 15 million pounds of trash out of landfills so far with kegs. This is now another opportunity to continue that commitment to quality and sustainability. We’ve always been focused on the on-premise, which still is about 20% of the overall industry, so this gives us an opportunity to enter the other 80% and offer what we think is a high quality sustainable package.”
By Kim Badenfort