Jackson Family Wines Integrates White Rocket

FILED AUGUST 1, 2009

Dear Client:

The millennial arm of Jackson Family Wines, White Rocket Wine Company, is being absorbed into the parent company right away, spokeswoman Caroline Shaw told WSD. As a result, White Rocket is laying-off “about 6-8 people,” she said, “which isn’t too big given the size of our company.”

This is an interesting development following reports that K-J already laid-off hundreds of employees earlier this summer. Upon hearing the news, we immediately questioned whether it reflects the strength of the company or if it’s a sign that wine companies focused on millennials have a harder time standing alone. We put these questions to Caroline and here’s what she had to say:

“This was just an evolution given the economic times...the White Rocket brands are staying and will now be reinforced with our phenomenal sales and marketing team.”

Prior to the consolidation, White Rocket was housed in a separate building from Jackson Family Wines headquarters, making it “not cost effective” to run the separate units.

Finally, Caroline also told us that “millennials are still drinking our White Rocket Wines and wines from Murphy Goode as well.”

Recently Don Sebastiani & Sons announced plans to spin off “The Other Guys” (TOG) division as a stand along company by the beginning of 2010. Cousins and siblings from the Franzia family also started Panther Rock Wine Company, which focuses on wines that appeal to Millennials and Gen X.

CONSUMERS WANT VALUE, THEN TASTE

A recent study conducted by Ipsos Marketing, Consumer Goods confirms what industry insiders have been saying for months now: consumers crave value. The report did not touch on the drinks industry specifically, but noted that almost two-thirds (64%) of global consumers indicated that value for their money is most important when making decisions to purchase food, household and personal products on their most recent grocery store trip.

When shopping for food, global consumers were most likely to consider value and taste, with nearly two-thirds of them citing these as decision-making factors. Next, consumers were most likely to consider the quality (55%) and expensiveness (50%) of the food product and then healthy ingredients (44%).

We think this study backs up what many markets in the wine and spirits industry are saying. Consumers want value for their money, meaning a good, solid product that meets their needs for a reasonable price. Interestingly, convenience was a more important factor in household and personal product purchase decisions than in food purchase decisions (48% vs. 34%). Clearly taste is much more important for a food (or beverage) since it’s something that you consume. Approximately 1,000 interviews were carried out between October and November 2008 in 22 countries.

MONSTER SALES RISE ABOVE ENERGY CATEGORY

We rarely cover energy drinks but found this bit of news rather interesting especially since they’re often used as mixers at bars and at home (much to the chagrin of states AGs, we’re sure). Monster sales are ahead of Red Bull although the energy category as a whole declined 2.1 million cases in the 13 weeks through June 27, 2009 in c-store, grocery and drugstores. Sales of Monster increased by $3.2 million as compared to sales of Red Bull which decreased $9.4 million. Sales of Rockstar were down by $11.6 million, while Amp lost $8.3 million cases and Full Throttle was down $6.9 million.

In other Monster news, the company recently announced plans to partner with Carl’s Jr earlier this week. The fast-food chain will now offer Monster Energy drinks in more than 3,000 restaurants throughout the nation.

CAMPARI FOCUSED ON PAYING DOWN DEBT

In an interview with Il Giornale, Campari chief Bob Kunze-Concewitz said the company plans on reducing debt from the current 2.6 times earnings before interest, taxes, depreciation and amortization in order to raise cash. Campari will also avoid acquisitions in the next 12-18 months after the recent Wild Turkey buy-out, which Bob believes has “enormous” prospects globally.

FORMER K-MART CHIEF APPEALS CIVIL TRIAL VERDICT

Lawyers for former K-Mart chief Charles Conaway asked a judge yesterday to throw out a verdict in a civil trial that claimed Conaway misled Wall Street about the company’s health in 2002. His defense argues that the verdict was tainted by bad jury instructions, reports the AP. As a result, the Securities and Exchange Commission is seeking $22.5 million from the former head. Conaway claims that he relied on his cfo and was not aware he was withholding critical financial news about K-Mart. The judge said he would not make an immediate decision. As you might know, K-Mart has since emerged from bankruptcy and is now part of Sears Holdings Corp.

WSD BRIEFS:

THE LA LAKERS HAVE STRUCK A PARTNERSHIP WITH Proximo Spirits and 1800 Silver Tequila as the team’s first spirits brand sponsor. The multi-million dollar investment deal includes TV advertising and on and off-premise logo rights.

WINE CREEK LLC HAS HIRED Pat Kane, former vp of trade development for Icon Estates (a division of Constellation Brands) to serve as the company’s national sales manager. Prior to joining Icon, he was vp of sales for Vincor USA. Wine Creek markets and imports wines from Quivira and Torbreck Vintners.


Until tomorrow, Megan

“The reward for conformity was that everyone liked you except yourself.”
Rita Mae Brown

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