Dive Brief:

• Target has introduced a second store brand line of wines called The Collection at a price point of $9.99 per bottle, which will be available starting March 3. Shoppers can choose from five California-grown varietals including cabernet sauvignon, red wine blend, pinot grigio, chardonnay and rosé. The labels were designed by in-house artists and feature pastel designs and abstract images.
• Grapes for The Collection are grown at Delicato Family Vineyards, which is the second largest winery in Napa Valley. It specializes in wines offered in the $8 to $12 range. Each varietal comes with tasting notes and pairing suggestions, such as matching its rose option with light pasta, rice dishes and soft cheeses.
• The Collection will join a few other low price point brands that are carried exclusively at Target, including the $5 label California Roots, which is also running new bottles beginning March 3. The Cube, another Target exclusive, is adding a four-pack of cans featuring bubbly white wine or bubbly rosé for $10.99 per set.

Dive Insight:

Target's new wine offering is just one of many recent moves by the retailer and its competitors to appeal millennials and their growing thirst for affordable brands. In August 2017, the company introduced its California Roots line at just $5 per bottle. The launch was well timed. Between October 2017 and October 2018, wine sales rose 5% to $71 billion, according to BW166, LLC. Millennials guzzled over 40% of those sales, Wine Spectator reports. Fourteen percent of the generation have also had wine from a can, nearly double what other generations report.

Millennials are driving wine brands to offer unique varietals, according to SevenFiftyDaily. Rosé was once a lesser-known option, but sales of the pink beverage exploded 53% in just 2018 alone. Part of the generation's fondness for wine, SevenFiftyDaily reported, could be attributed to growing up with parents who were more apt to pour a glass with dinner. As the younger group has grown up, they are looking to expand their oenology beyond the basics.

Target though is not the first player in the affordable wine game. Trader Joe's famous Charles Shaw wine, more frequently referred to as "Two Buck Chuck," has been a cult favorite for years and has even claimed well-known wine awards. It’s the super affordable wine option so many major retailers are trying to copy on their own shelves to keep up with wine fever. In May 2018, Walmart introduced 10 private label wines at $11 per bottle under the Winemaker’s Selection label, including a rosé option.

Costco also sells more than $1 billion in wine annually and runs its own Kirkland Signature private label wine brand, as well as Whole Foods which has a range of store brand wines including Animist, Criterion, Wine Farmer and Songbird Celler. Kroger also offers its own line of wines like Acronym and Parker's Estate. Meanwhile, German discount grocers Aldi and Lidl are well known for their award-winning wine collections and strong connections to winemaking regions throughout Europe. 

Now, the private label wine segment is packed to the gills, meaning Target may not have an easy go at swaying millennials to sample its private California collection with so many other competitors to choose from, especially since Vinepair's blind taste panel suggested that quality of its California Roots line may be an issue for some types. Another issue retailers may need to contend with is whether the cheap wine trend is losing some momentum. Major beer and wine manufacturer Constellation Brands is discontinuing 40% of its wine portfolio, primarily when it comes to $11 options.