DOING THINGS BY HALF MEASURES

Not this.

I've written and complained many times at the lack of availability of 375 ml (half) bottles of wines in New Zealand. This is very annoying and I believe that wine manufacturers in New Zealand are missing out on opportunities.

As long as supermarkets control wine retail though, this is unlikely to change.

In a December 2018 post I wrote:

Producers have decided that consumers (or not enough of them) are willing to pay the premium that production of smaller size bottles demands. It's not just the cost of the volume of wine or the tax that makes up the cost (half) as the cost of the bottles, labels, packaging and bottling labour costs are nowhere near half of that of the 750ml variant and in the case of small production runs can be more expensive. Bottling lines are configured for 750ml runs and anything outside of this is a costly hassle.
Furthermore, wine retailing is stacked in favour of big chains whether supermarket or not to a factor of 80:20 and these customers just want to move as much product as quickly as possible so can't be arsed about fiddly other sized packaging. Bugger what the consumer wants.

In a September 2019 post I wrote:

Years ago many brands carried 375 ml variants (and bigger formats) of their best wines but this fell away when bigger production volumes demanded greater efficiencies and reduced costs and price points. 375 mls fell out of favour with stockists who presupposed that the consumer didn't want to pay more than half price for a half bottle of wine. In a way they were right given that 750ml bottles are so often on special so the price difference between the two sizes has become greater but they have misread the possible demand through convenience of the smaller format.
The economies are easy to work out. While there is only half the cost of the wine and the excise in the bottle the cost of the bottle, the label and the carton of the 375ml might actually be higher than the cost of the 750ml bottle, the label and the carton due to smaller production runs.

In May 20190 I wrote:

I opened a 375ml bottle of Penfolds Bin 28 Kalimna Shiraz 2006 last night. I expected it to be good and wasn't disappointed. This is seriously good wine and has been consistently so for many vintages. If there is dumbing down of it (which is to be expected under the new ownership regime and the heavy discounting of the brand) it has not yet ruined it.
The reason I bought a case of this wine and the reason I opened it last night, apart from its pedigree and my appreciation of it, was the fact that it is in a 375 ml format (half bottle). Unfortunately these are becoming very rare. Most wine companies have discontinued the practice of bottling some of their production into either magnums (2 bottle size) or half bottles. This is not because of quality considerations (although half bottles do age quicker than full bottles but magnums age more gracefully than 750 ml bottles) but due to cost considerations. A half bottle cannot be just half the price of a full bottle. The bottle can cost the same as will the cork, capsule, labels and cartons. Sensible consumers realise this and will pay the extra. The new power that retailers have now is the problem. They feel that their customers won't pay more than half the normal price of a bottle (have they asked them?) and so won't stock the smaller bottles. They have done the same to the magnums in that they have decreed that as they are more expensive there will not be the same stock turnover therefore it is better to only present the consumer with the one package size - 750
ml.

OK - in summary:

• A half bottle of wine will not have the same production cost as a full bottle of wine, it will be more because the cost of the bottle, capsule and label will be the same and, due to economies of scale bottling costs will likely be higher.
• In New Zealand producers don't really care whether there is a consumer demand or not for smaller bottles because they can promote and sell the full bottles so easily.
• Supermarkets that control the majority of the retail market are just interested in moving through volume.
• Many consumers won't pay comparatively more for a half bottle (which would probably be 3/5th) to 2/3rd the cost of a full bottle - before discounting.

Outside of New Zealand however half bottles, while not being as abundantly available as in the past are generally still available from the most modest of producers right through to top Chateau French wines. We are being done a disservice here.

What to do?

If I was younger I would take advantage of a market gap here. It may not be huge but I believe that it could be lucrative and, sooner or later someone will take advantage of it.

Specialise in importing half bottles

The rise of on-line wine retailing (I buy from at least 5 different on-line sellers and there are many more) provides an excellent opportunity for specialty or niche products. The on-line business model isn't dependent on having to suck up to supermarkets and retail chains, to pay the usurious listing fees and to have to supply them at low cost and lower margin. The product can be sold direct to consumer who pays the delivery cost thus protecting full margin unless, for any reason the product needs to be discounted in order to quit it.

There is an opportunity for someone to set themselves up as a select provider of half bottles that can be imported from around the world (including the few from New Zealand producers). The specialty nature of this business can, for a time at least, guarantee exclusivity. Frankly, I wish that I'd considered this many years ago.

Specialise in the production of half bottles of New Zealand wine.

The 'Kim Crawford' model that has been copied by many producers now is to contract with wine companies for bulk supply of wine to be bottled under a bespoke label. The wine can be bought off a 'list' of availability or produced to spec following a recipe of instructions. The wine is purchased when finished and shipped to an agreed bottling company who bottle, seal, label and package into cartons to be shipped to the brand owner's warehouse. This model could be easily used for specialty production of 375 ml wines which, across a variety of styles and varietals would provide volume and then economies of scale to secure glass manufacturing cost advantages.

This requires a lot of set up capital, not in manufacturing but in warehousing and stock purchase but, once product starts to move, cash flow will carry it. Ask the Crawfords who became multi millionaires doing this before selling up to international companies.

You can see that  a combination of imported and locally produced wine can cover nearly all wine styles and price points.

I'm an old man and won't be doing this myself but I'd like to see someone pick up and run with this.