On this episode of the “VinePair Podcast,” hosts Adam Teeter and Zach Geballe discuss the growing number of higher-end, private-label wines and spirits at certain retailers. The two then try and figure out who the audience is for these pricey bottles attached to chain store brands. Tune in for more.
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Adam Teeter: From VinePair’s New York City headquarters, I’m Adam Teeter.
Zach Geballe: And in Seattle, Washington, I’m Zach Geballe.
A: This is the “VinePair Podcast.” Zach, man, what have you been drinking?
Z: I actually got a chance to go out for a relatively rare evening out. Went to, actually, a live podcast taping — not ours — from another podcast that I listened to. Then afterwards went out with a friend for a couple of cocktails at a bar that I’ve talked about on here before called Roquette here in Seattle. I had one particular really interesting drink that was interesting to me on two levels. The first was an experience that I can only describe as that thing where you learn a new word and then all of a sudden you keep hearing it everywhere or reading it everywhere. We did an episode, Tim and I, while you were out, with Steven Soderbergh about Singani 63. Of course, I opened the cocktail menu at this place and what did I see but a cocktail with Singani 63 and I was like, “Well, I feel like I should order that drink.” Especially when combined with a very interesting name called Panic Button, which I will explain, and a very strange but appealing to me garnish, I decided to order it. The drink is functionally a sour, made with egg white. It’s gin and Singani 63 with grapefruit, orgeat, lemon, and then egg white. Served up and then with what they call a Szechuan Buzz Button, which is like not a Szechuan peppercorn, but I think the flower. After the bud has opened — it’s about the size of a small raspberry and it was set on top of the egg white. The bartender explained to me — I was like, “Well, obviously, I’m supposed to incorporate this into the drink somehow, right?” He said, “Yes. What we tend to suggest to people is that they eat the flower about halfway through the drink.” For those who might not be super familiar with what Szechuan peppercorns do, the best way I can describe it is they basically take your taste buds on a weird trip so things taste different. It makes your tongue very tingly or numb depending on how much you have. It was wild to have it midway through this drink because the drink starts out as a very pleasant floral, like I said, gin sour, and then you eat the Szechuan Buzz Button and all of a sudden it’s like a very different drink. I think the fruitiness of everything comes out more. Instead of just the citrus fruits, but a lot of banana and mango, and the florality amps up. It’s really wild. It was a really fun drink. A cool interactive component, I suppose, and, like I said, it was like getting two drinks in one. That was definitely the highlight for me last week. Anything you’ve had, Adam, that’s been particularly exciting? Are you able to go out and drink anywhere or are you still just slugging back whiskey at home at night?
A: I have not been slugging back whiskey, actually, but we had Josh over for dinner last Saturday night.
A: We opened two nice bottles of wine and one was — he brought over Catherine and Pierre Breton. It was a Bourgueil from 2002, which was really cool. We’re very lucky that, in New York, there are some wine shops including the one that’s near Josh’s apartment and our office called Flatiron that just always seemed to have some older-vintage stuff for pretty fair prices. He grabbed that and brought that over. Then I had a 2009 bottle of Château de Beaucastel Châteauneuf-du-Pape.
A: We popped them both and I’d made steak frites and it was a lot of fun. We put the baby to bed and Naomi drank with us and it was a really good time, but that was the only really drinking idea over the last week. Not much else going on there. I’m excited because I think maybe this weekend we’ll have a little bit more of an opportunity, but then in two weeks, I’m super pumped because Naomi and I are going to Lancaster over the Cinco de Mayo Derby weekend to see her parents and bring Esty there for the first time. We are getting the afternoon and night off on Saturday to go to the Horse Inn, which is, as everyone who listens probably knows, one of my favorite bars and restaurants. Of course, they would be, because their name is the Horse Inn, throwing an epic derby party. That should be a lot of fun. I’ll report back on that. Otherwise, just hanging out. Not really hanging out. Just doing my thing.
Z: Just existing. I know the feeling.
A: I think one of the things we want to talk about today is the idea of private labels, and especially private labels on the high end, and the reason we want to talk about that is for two things that happened this week when we were going into thinking about recording prior to this podcast that caused us to want to talk about it. One is in the VinePair offices, we have been tasting all of Kirkland’s private-label, high-end wines. Tasting seemed just like something that we did with Trader Joe’s a few years ago. I thought it would be really interesting to try the Kirkland Barolo, the Kirkland Brunello di Montalcino, that kind of stuff. Then in addition, Zach, you had slacked me about a new whiskey that was being released by Total Wine and Total Wine only that’s like their competitor to all of the super high-end Buffalo Trace whiskeys. What we started chatting about is like, who are these for? Would someone who would normally, for example, buy Blanton’s, which is who this bourbon says they’re targeting, ever buy this instead? I think private labels have always been really interesting to me because, obviously, that’s Trader Joe’s almost entire business as a concept. Almost everything there is private label. That is Kirkland or Costco’s business to an extent but I think that one of the things that’s so interesting is that in terms of wine and luxury products and spirits, especially, they are luxury products. I feel like luxury products often — people who consume luxury products, so high-end are, I think, a lot less interested in private labels. I often wonder who the really expensive private labels are for. Now, I’m not talking about the $8.99 Cab at Trader Joe’s where they’re telling you that this is a $100 Cab that they bought with bulk juice. Whatever, that’s for a consumer that wants to think that they’re smart and there’s a lot of those consumers. What I’m talking about is like the Kirkland Barolo that’s still like $30-something and has been rated by James Suckling, and they have a huge sticker on the label, and they say it’s 93 points. Or even this bourbon that is at — sorry, now I just blanked on the-
Z: Total Wine.
A: Total Wine. Sorry. Even this bourbon that’s at Total Wine that is like, I think, $60 or $70.
Z: Well, and their single barrel is like $200.
A: Yes. Who is this for? Because these are private-label brands. Brands created by these — I think Total Wine is a little bit smarter in that, actually, they gave it a brand name. They’re not just saying it’s Total Wine bourbon whereas at Kirkland, these are Kirkland-branded wines, but both exist. Trader Joe’s is very well known to have Trader Joe’s selections and then also these brands that — wink, wink, nudge, nudge, nudge — are brands you can only find at Trader Joe’s because they are the same kind of thing — just with a fake brand and pretty label, et cetera, which is what this bourbon is at Total Wine. I don’t know. Who do you think these brands are for?
Z: Oh, see, to me, I think these brands are mostly for the same general class of person who says, “Oh, man, there’s this $10 bottle or this $8 bottle at Trader Joe’s, and you can’t tell the difference between this and the $25 or $30 bottle of wine.” To me, these are just that same concept scaled up and given — not given. They are, in the case of the Kirkland Signature wines — it’s a Barolo, for sure. It’s a Brunello di Montalcino. They’re not misappropriating that name, but they’re just acting functionally as a negociant or at least whatever, the bottler and labeler or something, or whatever. They’re slapping the Kirkland Signature label on existing products, but I think it’s to the same person who wants to feel a certain cleverness or like they’re getting one over on people by saying like, “Oh, you like Brunello di Montalcino? Well, I got a Brunello di Montalcino, and you paid $80 for yours, and I paid $35 for mine. Aren’t I smarter?” I’m making it seem like these people are morons, and that’s not really what I mean. I think there’s a question to some extent of whether in some cases, and I’d be curious to hear if you can share what the staff thought of the Kirkland Signature wines. I think in a lot of cases, these private-label products can be good. There’s a long history, I think, especially actually in spirits and bourbon and whatnot of some of these private-label bourbons and whatnot being highly desirable as collectors’ items many years after the fact because they’re often made by highly reputable distilleries and often in the same fashion as their more famous counterparts. I don’t necessarily think that’s what’s going on with this specific bourbon from Total Wine, which I have tried and was deeply unimpressed by, but I think it’s not out of the realm of possibility to think that you could get quality product, wine, spirits, whatever, in the semi-generic packaging that comes with these private-label brands, or at least not a recognizable standalone brand available at other locations. I think for some people, that’s just there’s an appeal to saying, “I paid less for this product than someone paid for what they view as a comparable product.” That is what I think these are largely trading on, just at a higher price point.
A: For me, I always have thought that that market really is still on the lower end, meaning it’s the person that wants to pay $12 for a Cabernet Sauvignon than $100 and says that that’s what they’re getting. I think when you look at the wine clubs that are popular for doing the same kind, those are the price points they’re operating in. I wonder who is buying the Kirkland Barolo or Brunello. I’m sure you are right, but they are still not cheap wines. The problem is they’re also not good. When we tasted-
Z: Well, that is a problem.
A: -them — because I do think that for some of these super-high-end wines from these regions, some of the prices are justified because they are expensive to make with very expensive land. The best — making these wines in bulk to achieve the price you have to achieve to it, the masses of Kirkland, and be available at all the Costco’s, et cetera, is really difficult, which means you’re basically going to a co-op, and if you’re going to a co-op — the high-end wines — I don’t think co-ops do very well. I think a co-op can for sure deliver a really delicious — let’s take the Langhe region of Italy where we have Barolo and Barbaresco, et cetera. I’m sure that in the Langhe where they also have Moscato, you can get a really great private-label Moscato from a co-op, but can you get Barolo at a massive, massive, massive scale that you need for Kirkland to still somehow be able to sell it for $30? I really don’t think so. From what we tasted, you don’t, the wine was just bad. Same with some of these other wines. Now, again, if — so then the only reason they sell is because you truly are appealing to that one person who wants to say, “Ha, you paid $100 for your bottle of Barolo, I paid $30.” Then I would argue that that person doesn’t only really cares about the wine so they can say that, because if they’re interested in wine — even Keith was saying to me when we were tasting them — like, “If you’re just interested in having really delicious Nebbiolo at a better price, then buy Langhe Nebbiolo, you don’t have to buy Barolo.” Those are the things that I think are so interesting about these for me. I do wonder then like, what’s the point of submitting it? Who are you trying to sell these to? I feel the same with bourbon because what this all then just is is a cash grab. It’s a way to make the margins bigger for the retailer. That’s why everyone does this. They’re assuming that what you as the consumer want is just the ability to say that you have a Barolo for $30 when someone else is paying $100 and actually the retailer’s probably making $20 on that or $25. That’s what ensures that the wine’s not going to be very good. The other question I have is, are people pulling this out at dinner or do private-label wines, especially the ones that are branded by the retailer with the retailer’s name on it, suffer the same issues that box wine does? Which is like, maybe you are getting a better value for money, but are people going to serve that at a party for friends at dinner, et cetera, or are they going to somehow try to hide it in a decanter? That, I think, is something that especially in the American wine market, is still very challenging. Consumers want to have a bottle on the table that they can feel is saying something about them. If you put a bottle on the table of Kirkland’s signature wine, that says something about you for sure. I don’t know if most consumers would be pleased with what that could say about them.
Z: Definitely, I think you’re right that there is a weird slight, or I should say there’s some contradiction in terms in a way with these higher-end private-label wines. I don’t doubt that there are lots of people who are very willing to open a bottle of private-label wine that’s a $13 red blend or an $8 Sauvignon Blanc or whatever, and they like wine. They want to have something at dinner and they’re having people over or not or whatever, and they’re not looking at the choice of wine, their wine consumption, the wine they serve to people as being something that makes a statement for them other than we have provided you with wine. For the kind of person who might gravitate towards recognizable regions like Barolo et cetera, then yes, maybe those people are crossing into territory where they are, I don’t know if sophisticated enough is the right way to put it. They’re aware enough of the reputation of these regions or they’ve tasted enough of these kinds of wines to know that it’s something that they like, and it may be that these wines are largely wines that people consume behind closed doors. A lot of people drink wine with just their-
A: Yes, totally.
Z: -families or whomever, and that may be the thing. It’s their wine that they have when they’re not having people over, and when they’re having people over, they open the brand-name Nebbiolo. I don’t know. I do know this, I’ve known a few people who worked for Costco in the wine department over the years, and they are incredibly knowledgeable about what their customers want. That’s why when you go to Costco and you look at their wine selection, they have a huge range of different things, including lots of well-known name brand wines of various types. Then also the Kirkland Signature stuff. They obviously don’t get to where they are by putting a bunch of stuff on shelves that doesn’t sell. I don’t mean to say they never make mistakes, I’m sure that they do, but I imagine that they have a pretty good idea of the type of consumer who’s going to buy the $30 Kirkland Signature Barolo. Folks, if you’re listening out there, if you work for Costco or one of the other private-label companies and you want to let us know a little bit, tell us what we’ve got right or wrong. Please, firstname.lastname@example.org. Adam and I love to get that kind of feedback. It helps us better understand the industry, but I do suspect that there is a market for these wines. I don’t think — especially Costco is pretty careful about the Kirkland Signature brand, as funny as that might sound to you.
A: Oh no, they are.
Z: It’s something that I learned from knowing these people a little bit, is that they are very — it is not as much of a — to pose it against some of the other examples you’ve made. I don’t know anyone at Trader Joe’s. They may have been just as disciplined and particular about their private-label stuff. I suspect not, or at least they have a different aesthetic and different market in some ways, but with the Kirkland Signature stuff, it’s a very big undertaking to decide what exactly they’re going to produce. At least from the people I’ve known who’ve worked there to hear them tell it, they have a lot of recognizable producers who come to them. Now, sometimes maybe it’s because they have excess or they just know that Kirkland Signature is going to be a place where they can move product, and they may have had a bumper crop or who knows what happened, but for whatever reason or another, it’s not just Costco out there on the bulk juice market being like, “Eh, what can we get? Whatever, slap a label on it, call it good.” I don’t mean to say that these are the finest wines on the planet. It may be that when you get into these well-known-to-us regions that have a very specific typical taste profile and a lot of high-end, very high-quality producers that you’re inevitably going to be stacked up against when it comes to something like Barolo or Brunello, that that may be a tougher spot for them to succeed than some other categories. I do know that they are, like I said, they protect that reputation quite carefully and they do have end consumers in mind whenever they choose to go through with these private-label projects.
A: Yes, that makes sense. I think the thing that’s interesting to me about all of it is just this idea that there would be this massive market out there. I do think that what makes it so curious is why we are so obsessed as a consumer base with drinking a Brunello di Montalcino, wanting to have that experience, but being okay with drinking something that is so, so, so much cheaper and not then questioning why it might be. I think a lot of that comes from the fact that it’s just not as good.
Z: Adam, I think I want to actually make a point here too, because this reminded me of something I wanted to say really quick. I think there’s also — this is trading in on a widely known, widely observed, I don’t know, trope, whatever — that the cost of fine wine is all bullsh*t. It’s all a scam.
A: That’s true.
Z: Like you’re paying $100 for wine because the people who think that way are like, “Well, it’s not Costco who’s the one who’s ripping me off. It’s the $150 bottle of Barolo.” Like, “How could it possibly cost that much? It can’t possibly be worth it, whatever. The whole thing’s a scam.” Look, “Costco can sell a $30 bottle of it. How could it possibly cost $150, $200, $300 for this?” I think — probably most of the people listening to this podcast — certainly you and I, understand that even within relatively highly controlled appellations like Barolo, there are still wide ranges in terms of not just quality, but specificity, and production methodology to some extent and scale and all that stuff. I don’t think we need to go out of our way to defend why two bottles with the same appellation on them might cost widely different amounts of money. I do think there are a lot of people who like the idea of spending a decent amount of money on wine. They don’t necessarily want to buy grocery store bargain wine, but they see themselves as being too smart to fall for the con that is high-end fine wine.
A: I think that’s definitely a fair point. I think that makes a lot of sense to me. Obviously, there’s a market for it or, as you said, no one would do it. Again, I think it’s so interesting that we do have this market that exists in alcohol because so many people are so convinced they’re getting ripped off, right? Therefore, there’s another opportunity for the retailer to, instead of trying to help educate the consumer as to why that is not the case for some things, she says, “I’m going to take advantage of that misinformation that you have and that knowledge gap that sits there and exploit that by actually selling you something that’s a higher margin for me, that makes you think that you’re actually getting a better deal.” It’s brilliant. It’s really brilliant. That’s where I think this is different than, for example, like — because I’m sure some people are just going to say to me, “Well, Adam, no, this isn’t the same as fashion or automobiles.” No, because if you are buying, I don’t know, if you’ve done all the research and and learned that a Suitsupply suit is of the same quality as, I don’t know, a $1,000 one from Armani, you did the research yourself and Suitsupply — they are a brand and they’re selling you that story and you’re still wearing a Suitsupply suit. You didn’t go into Walmart and buy the Walmart suit that’s a different kind of thing, or same with the cars. A Genesis is of the same high quality as other European luxury automobiles, but it’s made by Kia, I think. That’s a very different thing. That still is Kia trying to build a luxury brand. I find it very different from what exists here in alcohol and this idea that everyone’s trying to screw you. Let’s take advantage of that by making a liquid that we are going to just tell you, “Trust us, it’s just as good,” because you’re never going to have that liquid anyways because everyone’s trying to screw you with that liquid, but this one is only going to cost you $30, or in the case of the bourbon at Total Wine, $60 or $70, but trust us, you never want to go searching for Blanton’s and this is basically the same thing.
Z: It definitely is a thing where these stores have the advantage of having a tremendous amount of knowledge about their customer base to identify these particular spots where they think maybe they see, “Hey, we tried bringing in $60, $70 Barolo, it didn’t sell, but we know that our consumers want something like that, so what if we do a Kirkland Signature version of it?” Or, “Hey, we know people come in all the time asking about Blanton’s and we know we’re not going to ever have any — we’re almost never going to have any — but we have to have something to sell them and why not direct them to what we can tell them is a credible Blanton’s alternative?” In this case in particular, it doesn’t say Total Wine on it, it’s just a house brand that people don’t necessarily know about. It’s got a horse on it. Maybe that makes them happy. It’s wild. It’s such an interesting part of the landscape. The other part of it, and the last thing I wanted to say is, despite, I think, our comment that no, there’s certainly some people who buy this and then are a little bit ashamed of it. It also, I think, makes up a bigger share of sales than we’re aware of. These private-label brands are a bigger part of the alcohol industry than, I think, is commonly thought of or-
Z: -talked about, but because they’re never on bar menus, they’re never on wine lists of restaurants — or any kind of wine list, but certainly not wine lists that get any kind of attention — they tend to fly under the radar of, for lack of a better word, media and “us” types because we just don’t encounter them that often, and yet — like I said — I think volume-wise, they probably make up a bigger part of the industry than we would think.
A: Well, I think the dirty secret that no one probably wants to talk about is that I don’t think that private-label wines just exist in restaurants. From people that I’ve spoken with and wine producers that I know and talked to about this, there’s a lot of private-label wines that exist in restaurants too, especially for restaurant groups. Again, it’s for the same reason, that wine can be a massive margin for the restaurant. That’s why this random rosé from Portugal is always on the list and always by the glass, because the restaurant’s getting it themselves through some supplier and they’re private labeling it. Then also, you can’t go find it and most consumers don’t care to go find it. They want a nice glass of rosé at the restaurant. They don’t really care, and the restaurant gets to make a higher margin. It is everywhere, and it’s really interesting that it’s such a big part of the industry and we don’t talk about it as much as we should.
Z: For sure.
A: All right, Zach, I’ll talk to you next week. Let us know what you think. Hit us up at email@example.com and have a great week.
Z: Sounds great.
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