Pinot Noir: Breaking the $20 Ceiling

Pinot Noir has long been typecast as a Premium wine for  good reason: the grape varietal is notoriously difficult to grow and equally difficult to vinify, even when Mother Nature obliges. From a winemaking perspective, it's easy to understand why the Premium  perception of Pinot Noir has stuck with consumers. In the not-so-distant past, Pinot Noir was relatively hard to source. According to the Wine Institute, vintners crushed 245,751 tons in 2014 as compared to 53,050 tons in 2000. Improvements in vineyard canopy management and irrigation have enabled growers to expand the vineyard tonnage of this temperamental grape’s cool-climate comfort zone, driving down prices and helping to upend the long-held belief that Pinot Noir had to be expensive in order to be good. 

And yet, with the increased demand of Pinot Noir coupled with the proliferation of moderately priced offerings, one thing is true in retailing Pinot Noir – there remains a degree of uncertainty about the varietal  amongst wine consumers.

SHARE OF VOLUME BY PRICE CATEGORY

Compare bottles sold of Pinot Noir at Super Premium, Ultra-Premium, Luxury Plus to Cabernet bottles sold¹

Over the past decade, the retail price sweet spot for the majority of  Pinot Noir drinker peaks  around $15, and rarely  surpasses $20. Retailer commentary in a recent Market Watch issue describes this reality: “A lot of suppliers are trying to come up with deals and programming to stay under that $20 price point,” according to Bear Dalton, wine buyer for a large Texas chain.² At a single outlet 18,000 square foot store in Los Angeles, Glen Knight, senior salesman and domestic wine buyer notes, “It's strange, my shoppers have no problem paying $15 for a Cabernet from Paso Robles, but need our vote of confidence to buy a $15 Pinot Noir.” ³ Further, in a recent survey of Pinot Noir consumers who regularly spend over $15 per bottle, respondents indicated that they felt “safe” as long as they spent at least $15.⁴  While a floor of $15 often times makes for brisk sales, the question remains, What can be done to gently nudge consumers toward and over the $20 threshold?

WHO WILL TRADE UP OR OVER?

In a recent varietal switching study,⁵  Luxury Plus ($20 and above) Pinot Noir demonstrated growth  as new buyers experimented with new and different taste profiles.  The study indicated that the strongest interaction and the largest  net gains for the Pinot Noir category were the result of buyers switching from the  Luxury Plus “All Other Varietal,” and  Luxury Plus Cabernet Sauvignon categories. Perhaps the easy-drinking, fruit-forward elegance of domestic Pinot Noir is an attractive alternative to consumers of red blends and Cabernet Sauvignon. More importantly, the largest gains in Luxury Plus Pinot Noir  were witnessed from consumers who currently shop Super Premium Cabernet Sauvignon, Sauvignon Blanc and Pinot Noir, along with Premium Merlot. Again, this explosive growth may suggest that consumers are migrating to the varietal due to Pinot Noir’s diverse offerings, easy-drinking profile and perceived price/quality perception.  

HOW TO AFFECT TRADE UP

When speaking  with Pinot Noir consumers, many  expressed  appreciation for the versatility of the varietal. They also confirmed that they have recently tried a new Pinot Noir brand based on the recommendation of a friend or of a trusted retailer.⁶ 

Here are some ways to entice the consumer into Luxury Plus  Pinot Noir.

STAFF FAVORITE SHELF TALKERS

Obviously, ratings influence buying decisions, however, a thoughtful staff recommendation can easily outperform the most respected critic’s accolade. When you highlight a Pinot Noir wine above $20 as a staff favorite, you’re overcoming the potential for remorse  of over-spending. A description of the wine’s profile, referring to its range of fruit flavors, soft body and delicate tannins will help assuage consumer hesitancy. The most effective shelf talkers include a photo of the staff member who is making the recommendation.

IF YOU LIKE THIS, TRY THIS...DISCOVERY MERCHANDISING

Remember, the biggest source of trade up into Luxury Plus Pinot Noir is seen  from Super Premium Cab, Pinot Noir, and Sauvignon Blanc consumers. A “Discovery” merchandising feature helps likely switchers to easily identify the higher-priced Pinot Noir bottle. Choose to leverage your broadest base Super Premium Cab, Pinot Noir, and Sauvignon Blanc. Next to each one, offer a comparable $20+ Pinot Noir and the rationale for why you are recommending that the consumer discover this wine. Include staff written tasting notes on each wine’s unique flavor profile, noting its drinkability and versatility. For the Cab and Sauvignon Blanc drinker, packaging similarities may serve as a visual cue for selecting the wines in your display. The same packaging attributes that drive  consumer  confidence in Super Premium priced offerings will perform the same function for Luxury Plus priced Pinot Noir. Heavier bottles, script, and texture of the label all provide assurance to the consumer that they’ve made the right decision.

SAMPLE THE DIFFERENCE

Show consumers the differences by conducting a sampling of a range of wines — again targeted primarily at the Super Premium Cabernet, Sauvignon Blanc, and Pinot Noir shopper. The best way to overcome risk aversion is to “get liquid to lips,” while demonstrating that the wine is delicious.

As we have seen, most consumers are already in the habit of shopping for Pinot Noir starting at $15. With a relatively small amount of effort, you can introduce them to this profitable category, and at prices over $20.

IN THE NEXT ISSUE: Using the Red Blend Trend to Promote Old World Wines