Puget Sound Business Journal

Wine in a box gets newfound respect — and revenue

By Heidi Dietrich, Staff Writer

In a state known for premium bottled wines, a handful of vintners are trying their hand at affordable boxed wines.

At least four Washington wineries Precept Wine Brands, Tefft Cellars, Revelry Vintners and Powers Winery - are selling boxed wine, and the vintners say the category represents the fastest-growing segment of their business.

With consumers increasingly strapped for cash in the slumping economy, winemakers see rising interest in wines that offer both savings and quality. Boxed wine also keeps longer than bottled wine, making the product attractive for wine drinkers who consume a little at a time and don't want their purchase to spoil.

"Right now, people are trying to save money everywhere," said Joel Tefft, owner of Tefft Cellars in the Yakima Valley. 'For us, this boxed wine thing has blossomed.'

Unlike the California companies that popularized inexpensive boxed wine, Washington wineries are attempting to produce a higher-end product in a box,

"We've taken the bargain basement ment mentality and shown you can put a premium wine in a box,' said Andrew Browne, CEO of Seattle-based Precept Wine Brands.

Boxed wine consists of a plastic bladder holding wine inside a cardboard box. As someone pours the wine from a spout the bag collapses to prevent air from touching the wine, thus extending its shelf life. Boxed wine typically comes in larger sizes than the traditional 750-milliliter bottle, with most bags holding between two and six liters.

The Washington wineries selling boxed wine are making strides in market penetration. Tefft Cellars signed a distribution deal for boxed wine with Costco. Wine giant Precept already makes a three-liter boxed wine and, due to its success, plans to launch a new brand for a boxed wine that will be the same size as a regular wine bottle.

Another company, Revelry Vintners in Seattle, created its entire business around boxed wine, and has only recently added battles. Powers Winery in Kennewick hunched two boxed wines three years ago; sales are now 10 percent of the winery's revenue.

Acceptance has only recently become widespread. When Joel Tefft told people in 2000 that he wanted to make boxed wine, one individual in the business said he'd ruin Washington's wine industry. Now, other wineries are approaching Tefft to ask how he entered this business.

"There is virtually zero stigma now," said Greg Powers, owner of Powers Winery.

Bob Betz, owner of Betz Family Winery in Woodinville, doesn't make boxed wine but said he hasn't heard any negativity about it in the Washington industry.

"Having wine available to all consumers, regardless of price point, is a good thing," Betz said.

To be sure, not all wine buyers are sold on the idea. Jared Burns, owner of Revelry Vintners, said some restaurants don't want to display a box at their bars. When Bums first began to pitch his product, buyers told him he was a couple of years ahead of his time. But other wine enthusiasts love the idea of the bag in the box, and have no problem displaying Revelry in restaurants.

Washington is not alone in its increasing affection for boxed wine. It's been the fastest growing segment of the wine market since 2005, according to Wine Business Monthly. Though these wines account for just 1 percent of American wine sales, the share is far greater in many other parts of the word, and analysts expect the U.S. to follow suit.

Consumers appreciate the savings that come with buying in bulk, as most boxed carry to two to four times as much as a standard wine bottle. Revelry, for instance, sells it's wine in a 750-milliliter bottIe for $11 to $12 and in a box that's twice as big for $16 to $18.

Perhaps most attractive to wine drinkers, boxed wines don't go bad as quickly as opened bottles. Boxed wines last some 45 days - compared to the few days an opened bottle remains optimal.

Powers Winery started producing red and white blended boxed wines three years ago. Due to successful sales, owner Greg Powers launched a boxed cabernet sauvignon a year ago, and wants to add a boxed chardonnay, soon.

"It is the fastest-growing part of our business," he said.

Joel Tefft of Tefft Cellars started producing two varieties of boxed wine in 2000 because customers consistently told him that they saved his wines for special occasions. Tefft wanted to give them something they felt they could drink on any old night.

"Everybody in Washington is trying to be super premium, and that's fine if you want to make 100 cases, but that's not a living," Tefft said.

Tefft Cellars' boxed chardonnay and cabernet blends are now in eight Costco stores in Washington and one Costco in Idaho. The winery will sell 5,000 cases of boxed wine this year to Costco, which is a quarter of Teift's total revenue.

Precept Wine Brands, which has bought six wineries and partnered with 10 others, entered the boxed wine market two years ago under its Washington Hills label. Since then, boxed wine sales have doubled each year, and now make up 10 percent of Washington Hills' revenue. Precept CEO Browne believes the share will jump to 20 percent of the Washington Hills brand's total revenue within the next three years.

"I'm really intrigued by the boxed wine category," Browne said.

Jared Burns, owner of Revelry Vintners, encountered some initial  skepticism when he introduced boxed wine.

Bums started his Revelry Vintners in 2006 specifically to capitalize on boxed wines. Revelry sold 3,500 cases of boxed wine last year, and Burns hopes to triple that Has year. The company's boxed wines can now be found at grocery and wine stores and a number of restaurants.

Some restaurant owners tell Bums they aren't interested in displaying a cask at the bar, but others appreciate the fact that they can open numerous casks for a singleglass pour without worrying about the wine quickly going bad. The boxed wine can even attract customers due to its oddity. After Seattle wine shop McCarthy & Schiering displayed Revelry at its tasting bar, numerous customers asked about it.

Though Bums had planned to run his business entirely around boxed wines, Revelry just released two varieties of bottled wines. Burns said he responded to restaurant wine buyers who didn't want to add Revelry, to their by-the-glass list if they couldn't also offer customers the bottle.

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