Private Label Profit Makers
What’s the value of your own concept’s brand? Chain operators know the restaurant’s brand is what differentiates it from the competition — an important point in the battle for share of wallet today — and some are now applying that thinking to their beverage programs by creating private label wines. Romano’s Macaroni Grill’s own Chardonnay and Chianti has graced that concept’s menu and tables since 1988, and now Hyatt Hotels and Resorts, P.F. Chang’s and Maggiano’s Little Italy are investing and subsequently reaping the benefits of adding their own private label wines to already well-established lists.
This past April, the Dallas-based Maggiano’s wanted a wine to call its own — something that would pair nicely with its food offerings — so the company partnered with Ruffino winery in Tuscany, Italy, to create Salute Amico, an Italian Cabernet Sauvignon and Sangiovese blend meaning “Cheers Friends.”
Angie Eckelkamp, Maggiano’s marketing manager, says the reputation of Ruffino winery plus the growing trend and opportunity in creating an in-house label was incentive enough to develop the wine. “Salute Amico is a first-class wine produced by Ruffino whose reputation is synonymous with exceptional quality and taste,” she says. “It’s a great addition to our already classic Italian wine selection.”
Partnering with a winery that enjoys a strong reputation and whose approach complements your business style is important. In 2006, Hyatt partnered with Folio Fine Wine Partners and the Michael Mondavi family in Napa Valley, Calif., to create its private wine label Canvas, introducing the new label in June 2007 with Chardonnay, Merlot and Cabernet Sauvignon vintages from a 2004 harvest. Barry Prescott, corporate director of beverage for Hyatt Hotels and Resorts, notes that this exclusive wine label is a marketing and financial boon for the Chicago-based company.
However, Prescott knew that in order to market this wine at each of its 129 units, he would have to offer multiple varietals at different price points, and that meant selling private labels that complement Hyatt's in-house Canvas label. Hyatt features two other private label wines: a medium-priced Pinot Noir by DeLoach and a higher-priced Hyatt Chianti Nipozzano, a wine that was named on the “Wine Spectator Top 100” list three times in the past four years. Newer wine drinkers enjoy the entry-level Canvas label's Michael Mondavi wine for its quality and affordability while more mature wine drinkers enjoy the Pinot Noir and Chianti Nipozzano private labels. Hyatt has figured out a way to incorporate its private label wines within their overall wine program to ensure that they sell across the board to all wine drinkers, from novices who want a quality yet inexpensive wine like the Canvas label to those with a more developed palate who are less concerned with price.
The real profit booster, however, comes from selling the Canvas label during banquet events, Prescott says. In fact, this was the impetus for its creation. “Canvas was developed with the banquet event in mind because they are evenly balanced to appeal to a wide range of taste preferences, and our catering and convention services managers know they will have satisfied guests with this product,” Prescott explains.
P.F. Chang’s Vineyard 518 Label debuted this spring, but it has been in the works since a year and a half ago. P.F. Chang’s offers two varietals in its private label: a Sauvignon Blanc and a Syrah blend. Both are produced in Yorkville Highlands in Mendocino County, Calif., sold by the glass for about $7 and available at its 198 locations except for Arkansas, which doesn’t sell private labels.
In Chinese numerology, 518 means “I will prosper,” and the Scottsdale, Ariz.-based P.F. Chang’s uses this mantra in the creation of varietals for the label, offering something new every year. This, says Beverage Director Mary Melton, gives P.F. Chang’s an edge over its competition. “We may use a different winery or varietals…just whatever we feel is trending well with our guests and fits the strategy of the brand,” Melton says. And the opportunities are endless for P.F. Chang’s. “Maybe next time we’ll make Pinot Grigio in Italy or Malbec in Argentina,” Melton muses.
Though some establishments might hesitate to risk time, energy and capital on developing a private label product, Hyatt, P.F. Chang’s and Maggiano’s found the process rewarding, although one with big learnings along the way. For Melton, finding the right winery to partner with is important — look for a vineyard that creates quality wine for a reasonable price, she advises. Another tip P.F. Chang’s learned: By using 10-liter recyclable boxes, the company cut down on production costs.
At Hyatt, Prescott emphasizes solid wine training and good marketing, which keeps guests coming back for more, often staying at Hyatt hotels specifically for its private label wines. “Some guests have told us that they choose a Hyatt property because they enjoy one or more of our private wine labels,” he says. The expense to create Canvas paid off, too. Since its inception, Hyatt has seen a 45 percent increase in overall wine sales companywide and is expected to hit 80,000 cases of Canvas for 2010.
Maggiano’s is still new to the in-house label game, so promotions are important in selling Salute Amico. The restaurant announced the wine’s launch through e-blasts, Facebook, Twitter and its website. Maggiano’s also offers food promotions including selling 2-ounce sample for 25 cents and offering complimentary flatbread with the purchase of an $8 glass or $32 bottle of Salute Amico; this promotion is currently running through the end of June.
Having a well-rounded and comprehensive wine list is important to guests looking to experience new flavors and varietals. A private wine label works for establishments that want to market themselves in innovative ways, creating another weapon in their arsenal to gain profits through their own brand. And for Hyatt, P.F. Chang’s and Maggiano’s, selling private label wine that is high quality and affordable is proving to be a success.