The wine tie-in

Doing licensing deals with big media is proving lucrative for some wineries. Jeff Siegel reports.

Photo: Jdanr13 - stock.adobe.com
Photo: Jdanr13 - stock.adobe.com

Wine sales in the US are flat, and what growth there has been is in wines costing about $15. So how did Wyatt’s Wet Goods, a liquor retailer in Longmont, Colorado, sell 18 cases of $20 wine in one day? The answer? They were Game of Thrones wines, licensed by the owners of the hit HBO fantasy series – another example of the power of movie and TV tie-in products. 

The four wines – a California Chardonnay, a Paso Robles red blend, a Napa Cabernet Sauvignon and an Oregon Pinot Noir – sold out even more quickly than the less expensive Kendall-Jackson Chardonnay, always one of the store’s bestsellers, said Wyatt’s Dylan Dinsmore, something “that doesn’t usually happen”. 

Movie and TV tie-ins aren’t new, even to the wine business. Princess Bride wine, anyone?

 

A new tie-in era dawns

But the age of social media seems to have given impetus to wine-related tie-ins. There doesn’t seem to be any other reason for wine tied to the 50 Shades of Grey movie series or Bachelor TV shows, does there? In all of this, say marketing experts, the idea is to extend the show’s or series’ brand far beyond the television, phone or movie theatre, and to make it even more a part of pop culture and viewers’ lifestyle than it already is. These viewers, who are not necessarily wine drinkers, see wine as an affordable luxury, as something that’s a step up from a T-shirt or a mug. So it fits that marketing niche perfectly.

“When you think about it, there are many reasons to do tie-ins, but they’re really not about the actual wine itself,” says Kathy LaTour, associate professor and Banfi Vintners Professor of Wine Education and Management at the School of Hotel Administration at Cornell’s SC Johnson College of Business in New York state. “It’s about the movies and TV shows, and getting them off the screen and into the family room. It’s not likely anyone is ever going to open the bottle and go, ‘This is such a great wine!’.”

Because it’s not all about the money

The list of tie-in wines seems endless: they’re available for series ranging from the original Star Trek to Hello Kitty, Top Chef and Mad Men to The Walking Dead and Friday the 13th. And this doesn’t include wines offered by clubs such as the one run by Turner Classic Movies, which focuses on vintage Hollywood films, and Cellar Wine, which specialises in pairing wines with characters from movies and TV. So the money – for both the producer and the brand owner – must be the ultimate motive?
Not exactly.

“There are specific economics to the TV and movie tie-in and licensed products, and especially for wine,” says Michael Stone, the chairman and co-founder of Beanstalk, a global brand extension licensing agency whose clients have included Diageo. “But the economics aren’t about the money. I don’t know if anyone gets rich off of this.”
To terminology and technicalities first, and then two reasons why money isn’t the main goal for those who do tie-ins. The brand owner licenses the right to use the brand name to the winery or producer (and sometimes even a distributor). The winery/producer, called the licensee, pays the brand owner a royalty.

The royalty is the crux of the economic matter. First, tie-in wines are usually limited releases, so most of the time there isn’t enough wine made to ensure large profits, even for the producer. Second, most licensing agreements give the brand owner 5-10% of the wholesale price, says Stone. Hence, a brand owner would get 60c to $1.20 a bottle on a $20 wine (based on a $12 wholesale price). Sell 100,000 bottles, and that’s just $60,000 to $120,000 – a nice piece of change, but not all that much for a company as big as HBO. There are exceptions; Treasury Wine Estates reportedly formed a joint venture with the brand owner for its Walking Dead wines with an augmented reality label. 

Licensing arrangements, as well as discussions about sales figures and the winemaking process, are some of the reasons why producers and brand owners don’t like to talk about this part of their business. Typically, but with some important exceptions, tie-in wines are sourced on the US bulk market. Price and availability may matter as much as grape quality, given the economic constraints inherent in the process.

Lot 18, the New York tie-in négociant whose products market everything from Elvis Presley to Saturday Night Live and Portlandia, didn’t respond to several requests for an interview. Vintage Wine Estates, which has done the Game of Thrones wines for the past three years, declined a request for an interview. In a statement, the company said, “Our limited production Game of Thrones wines have seen strong interest since they were introduced in 2017. This year we saw a significant increase in demand for the wines in advance of the final season premiere. With the release of new vintages, we were able to get most of the wines back in stock, but demand remains very high.”

Certainly selling the wines is not difficult, it seems. For one thing, retailers and wholesalers don’t have to do much marketing to move product off the shelf. “From a wholesaler’s – and retailer’s – perspective, wines like these are fun and easy,” says Alfonso Cevola, a consultant and formerly the Italian wine specialist for Southern Glazer’s in Dallas. “There is already a demand, and if one doesn’t have to allocate them, which might be the case with really hot wines like Game of Thrones, a salesperson can sell all he or she wants to. It’s quick money and it doesn’t cut into everyday sales. I wouldn’t use the phrase ‘no-brainer,’ but it’s pretty easy to see the allure. It’s not a ‘push’ item, it’s a ‘pull’ item and wholesalers and retailers love these kinds of things.”

More than just another souvenir

The shows’ fans probably don’t care about any of that – none of the people interviewed for this story, and especially the retailers, expected consumers to drink their tie-in wines. Said LaTour: “They’re much more likely to put the bottle on Instagram than to drink it. Because the reason for buying it is to show themselves with the wine, to show how important they are because they have the wine.”

Which is exactly what the brands want.

“The tie-ins are a communications tool to help the brands further engage with fans,” says Stone. “It gets the brand out of the hour limit that is imposed by the show, and allows the fan to show their enthusiasm for the show outside of the limits of the show.”

Best yet for the brands, wine tie-ins allow them to find an audience that they might not necessarily be able to reach. “Is something like Game of Thrones going to reach an audience interested in wine? Probably not,” says Stone. 

Jeff Siegel

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