Creating a Private Label Wine
Starting a Wine Brand?
We’ve had an increased number of inquires regarding private label wine (and whisky!). A major influx!
Considering many people have the same initial questions, this seems like a timely and useful piece to share.
First, let’s address some common misconceptions.
Wine is amazing, right? It seems like a fun business and it really is. However, it’s also incredibly difficult to navigate licensing, compliance, sales strategy and marketing. Wine is a perishable good, so making the right choices in every step is needed to ensure you don’t end up wasting money and product.
Misconception 1- Easy, I can just make my wine with a bulk winery and create an online store to sell it!
Yes, you can. But you’ll need a retail license in the state which you’re based (some states now offer e-commerce only licenses). With that license you can sell and ship to people in your licensed state. There are only 13 states that allow intrastate retail shipping. Most will require an out-of-state sellers license for you to be able to ship into their state to consumers. You’ll have to pay taxes in each and keep up with your compliance sales reporting, which can be monthly, bi-monthly or quarterly depending on the state. You’ll also need to be sure you’re using approved shippers and have a plan for both fulfillment and customer service.
Misconception 2- I’ll make wine and sell it in my local market to stores and restaurants.
Yes, you can do that too. But you’ll need a federal and state wholesale license or a partnership agreement with a local wholesaler. You’ll also have to factor in the wholesale margin, prior to your retail pricing. If you’d like to self-distribute, you’ll be responsible for sales efforts, compliance reporting, customer account set-up and management, warehouse and fulfillment, and accounts receivable.
Misconception 3- If I sell all my wine, I’ll make lots of money.
Well, probably not. At least not starting out. Unless you are a restaurant, retailer or club already, with a built-in customer base, sales will be slow to start. As with any business, a plan, pro-forma or forecast will be important to factor in all related expenses and scenarios. If your final bottled and labeled wine has cost you $10 a bottle to make, you’re looking at a $20 retail price to come close to break even. If you’re utilizing e-commerce, shipping and fulfillment costs will eat up 25-40% of your revenue on a small scale. Once you are selling in higher volume, these numbers shift to a more manageable place. But any wine company, whether a single brand or a whole portfolio, can expect about 3 years as a reasonable timeline to positive revenue. And that’s only when done right.
So who should consider private label wine and why?
Restaurant Private Label Wine
If you have purchasing power and a solid forecast of your top-selling wines and yearly sales, the time may be right to create your own label! It is a great addition to your brand portfolio, allows you to control costs and quality in high-margin categories, and can expand your relationship with a preferred vendor.
Private labels are also ideal for franchise businesses to create consistent menu options.
Common Fuel will analyze your sales data, source production, and help negotiate your contracts to make this a lucrative addition to your operation.
You’ll commit to a predetermined order quantity and sell-through date.
Upfront costs may be zero, or may include a percentage of the production which will be applied to future orders from your vendor. Most often you’ll pay at least for your label design.
Country Club Private Label Wine or Private Club Private Label Wine
Very similar to the restaurant model, you’re able to provide your most requested varietal(s) with your own branding. Clubs often have an even more focused view of their members preferences and detailed forecasting due to the structure of access to their properties and members.
You’ll work directly with a preferred vendor to facilitate ordering and storage for your wine.
Upfront costs will likely include label design and a portion of the production costs. The more wine you can store in your own club, the more savings you’ll be able to see.
Retail Private Label Wine
People are most familiar with retailers like Trader Joe’s or Aldi having their own wine brands. These stores are not wineries, obviously. They are just creating private label wines in large volume. You don’t have to be a national chain store to do this. In fact, a retail environment is the ideal place for private label products, whether you’re a neighborhood shop or have a location in every town. You have a captive, often repeat, audience to sell to and you know what sells. Nail down your most requested styles/varietals and target price point, and create your brand. If you’re in one of the few states that allows retailers to also hold an import license, you are able to source and purchase directly while increasing your margins on these select products.
Entrepreneur Private Label Wine or Celebrity Private Label Wine
You love wine. You have a following or successful business. These people can expand their personal or professional brand with the addition of a private wine label.
In these scenarios, more broad market research is usually recommended to chose your ideal varietals, regions or price point.
Depending on the business or individual, the sales strategy will vary. If you operate in a mostly online world, e-commerce may be the best avenue sell the wine. If you are well known in a specific region or state, partnering with a local importer or distributor to carry your products will allow you to do in-person promotions and for locals to get your wine at their favorite store or restaurant.
Common Fuel helps create a plan and offers consultation or full development packages for these clients!
Depending on sourcing and the individuals involved, upfront costs will include licenses, third-party vendor set up, web design, label design, and inventory. This can range from $40,000 and up.
Wine Lover Private Label Wine
These are the individuals who find the world of wine alluring and want to dip their toes in. They’d love to explore the wine business while keeping a day job, or want to go all in but need an entry place.
Full transparency, this is the hardest of the list here. It requires commitment and marketing and sales…..and capital.
However, the process of getting started is manageable for anyone! Common Fuel is a great resource to navigate and do this right.
Anyone considering starting a wine label should plan to spend a minimum of $25,000 before seeing any revenue. Depending on the style of wine you want to create, the type of business you build around your product(s), and your plan to market, that number can be much higher too.
Common Fuel offers hourly rates for guidance and concept-to-market project rates, as well as almost everything in between. Like all other client needs we work to customize our fees and services to your specific needs.
If you are considering a private label wine, we have created a “first steps guide” that we are happy to share for free.
You can also book an exploratory call here.
