The closure problem in new package development at Buried Cane

No, I don’t mean getting decisions made. We’re pretty good at that. I’m referring to the fact that we often bottle wines with custom corks or screwcaps. While a label might be scraped off a bottle, and a new label applied, it isn’t really practical to pull corks or remove screwcaps, to seal the bottles with a new design.

I’ve been working through sales projections to try and synchronize the release of new Buried Cane labels. It looks like we can figure out everything, including previous decisions about potential products to discontinue, except for about 5,500 cases of Cabernet Sauvignon. An entire vintage already packaged with custom screwcaps … custom “previous design” screwcaps … screwcaps that aren’t compatible with the new label.

Once you release (often, as soon as you announce, well before release) a new package, the old package wine becomes orphaned. Everyone wants “a deal” or refuses to accept old label goods. It doesn’t work to release one item with a new label, without releasing all items with the new label. Therefore, if we release a new package on Chardonnay in the summer of 2011, we better be prepared for the expectation that Cabernet Sauvignon and any other wines will also be released with a newe package in the summer of 2011.

5,500 cases of “old label” is a lot of for us to work through. Particularly if we move our largest single customer, Anthony’s Restaurants, into new label Chardonnay and Cabernet Sauvignon at the same time, in eight or nine months. It could take an additional 18 months beyond that to deplete the “old label” Cabernet Sauvignon, without the sales stream of Anthony’s to help reduce that inventory.

What are the options? Well, it’s pretty clear we can’t keep selling old label goods if all the other wines have changed label. We could keep selling old label, putting that old label on new wines, until we sell through the 2008 Cabernet. That’s a bit difficult, however, when we’ve already shown some customers the new label. It’s one thing to show someone the new label and say, “You can have that next summer.” It’s a very different thing to say, “You can have that new label in a few years.” Most folks won’t sustain interest that long, no matter how great your new packaging.

We could try and sell all that Cabernet at a low price as distressed goods. We’d lose money and risk some brand reputation, if we did that. And, in this case, the wine is quite good, and the subsequent vintages (2009 and 2010) are lower in quantity, so we would end up short of wine.

Or we could relabel. Scrape off the old labels, and put on new ones, and ask the designer how to cope with the non-compatible (image-wise) screwcap. We started that process with the designer today. It looks hopeful, if not perfect.

DAH is David Anthony Hance