Reaping the Benefits of Custom Packaging

Many studies have proven the important role that wine packaging design plays on consumer acceptance and perception of value. Aside from the obvious benefits that wine packaging provides, such as protection and preservation of the wine during shipment, wine packaging can add substantial value in the mind of the consumer, allowing you to achieve higher price points and higher margins.

Additionally, effective wine packaging can boost sales by making the wine attractive and accessible to the neophyte buyer. It can also differentiate your wine from competitors’ on the retail shelf. Finally, design that calls for lighter-weight bottles and less packaging materials will also reduce the impact on the environment. At the same time, successful packaging design will reinforce your brand image and messaging through the use of appropriate bottle shape, color, and embellishment; label color and design; and closure style and efficacy.

The Role Packaging Plays in Buying Decisions

A study co-authored by professors Orth (The University of Kiel) and Malkewitz (Oregon State University), found that consumers make the decision to purchase a wine in a POS situation according to two general responses: the affective response (attractiveness) and cognitive response (quality)—also referred to as extrinsic and intrinsic factors—both of which can lead to different price expectations. Their report states that “Consumers who value aesthetics base their price expectations more strongly on the package’s attractiveness, whereas consumers highly involved with wine infer price expectation more strongly from quality perceptions.”

But what constitutes “attractiveness” varies considerably and depends on the consumer’s age and his or her experience with wine. Another interesting study, The Influence of Verbal and Non-Verbal Information on the Consumer Decision, by researchers Dr. Gergely Szolnoki, Dr. Dieter Hoffman, and Dr. Roland Herrmann provides evidence that packaging attributes affect different wine market segments differently. It shows that younger consumers (younger than 26 years) with little or no experience with wine are heavily influenced by the bottle form and color when making their wine purchase decisions. On the other hand, older wine connoisseurs (over 45 years) appear to be more influenced by the brand name and country of origin. However, it was also noted that older wine buyers “try to minimize the influence of appearance,” even though subconscious visual cues are at play. Consumers in the mainstream segment (between 30-40 years) look for information on the label, with 60% of their buying decision based on overall visual cues.

Equally interesting, the same study analyzed how verbal and non-verbal factors influenced the perceived taste of the wine, this time dividing respondents into five segments: Younger consumers without experience, price sensitive consumers, older wine connoisseurs, red wine enthusiasts, and older wine drinkers with high income. This time packaging played a significant role in all of the consumers’ perceptions of the wine’s taste, scoring at the top of influencers for all of the study’s respondents.

Testing on the Shelf

While most packaging research is done in focus groups or laboratory settings, some researchers believe that the best way to measure packaging performance is by monitoring consumer behavior in an actual retail environment. An article by Scott Young, who is President of Perception Research Services, entitled Measuring Success: Using Consumer Research to Document the Value of Package Design” and sponsored by The Design Management Institute, found that direct questioning of consumers can be misleading because it’s difficult for shoppers to accurately gauge how much packaging influences their purchasing decisions. In fact, consumers will often downplay the importance of packaging because “they are reluctant to admit that aesthetics drive their purchase decision,” much like the “older wine connoisseurs” mentioned earlier.

Therefore, Young maintains that testing packaging in a competitive context is the best way for marketers to determine the strength of a particular design. Does the packaging enhance or detract from the consumer’s interest in the brand? Does the packaging enhance or detract from the brand’s competitive positioning? “Interestingly,” he notes, “in at least 25 percent of the studies, we’ve found that a brand’s current packaging is actually detracting from brand perceptions, positioning, and preference.”

Because differentiation is the key to success, it’s important to remember that trying to mimic the packaging of a category leader can backfire, not only with expensive legal consequences (see Fundamentals of Trade Dress Protection http://www.escm.com/uploads/publications/traded1.htm) but also by damaging the integrity of your brand and, thus, its power in the marketplace. To quote Young again: “Packaging is unique because it ‘lives’ on the cluttered shelves, and it has to make an impression within the limited time (often only a few seconds) that shoppers typically spend making their purchase decisions.” In other words, good packaging design should always be judged according to how it stands out—not blends in—from the competition.

However, packaging innovation can also be detrimental to a brand so don’t assume your new wine-in-a-pouch will wow consumers. When Skippy peanut butter introduced a new squeeze packaging system, consumers failed to recognize it as peanut butter, negatively judging it as more difficult to open and reseal. According to Young, any new packaging design should be measured on four factors: Shelf visibility (does the new system help the brand break through the clutter); Preference vs. competition (does the brand consistently win against the competition); Price expectation (does the packaging drive higher price expectations); and Satisfaction and usage frequency (does the packaging enhance satisfaction and/or lead shoppers to buy the product more frequently and/or in new situations).

These days, every expense needs to be justified, including packaging. because it can represent a significant portion of your product’s total cost. Therefore, it’s reasonable to expect your new package design to result in a positive ROI.

Is Custom Packaging Worth It?

In my earlier White Paper, How Price Positioning Impacts Your Bottle Choice (http://globalpackage.net/category/news/white-papers/), I discussed how the Four Ps (Product, Price, Place, and Promotion) influence the bottle you select for your wine, especially the price point at which your wine will be sold to achieve a sustainable profit margin. Of course, quantifying the value your packaging will have on sales is difficult to determine. However, some studies have attempted to do just that. One, in particular, a 2010 research paper based on real market observations, by Simone Mueller and Gergely Szolnoki—“Wine Packaging and Labeling; Do they Impact Market Price (in the US)?”—is worth noting.

Here are a few salient excerpts:

- Story or history information on the front label resulted in a price premium of $1.64, while additional wine specific information, such as estate grown, single vineyard, reserve or old vine attracted a premium of $3.22.
- Packaging characteristics follow as second most important in determining a price premium, specifically label style and label color.
- Packaging can be related to 42% of predicted price differences.
- Packaging and front label information contributes to price in the U.S. by 8%.
- Origin has the largest impact on wine prices.
- Wine packaging is almost as important as origin as it relates to price differences.

What about the bottle? Apparently size and shape do matter, not only in consumers’ perceptions, but also in their willingness to pay for a higher priced wine. For instance, results in the above research found that red wine in Burgundy bottles sold at $1.41 above average while Bordeaux bottles attracted a discount of $1.31, probably because of the subconscious association in the consumer’s mind of a Burgundy bottle with higher priced wines. While it’s generally estimated that the cost of the bottle is less than 10% of the price of the wine, the cost obviously goes down when the volume goes up. We also know that more expensive wines generally have expensive packaging, which has imprinted a correlation in the consumer’s mind between price and quality. Of course, bigger, heavier bottles are also generally regarded by winemakers to be better for aging wines, which also means wine aficionados are willing to pay more for wine in a heftier bottle.

While the industry’s recent focus on the environment has resulted in lighter-weight bottles, this doesn’t mean that aesthetics are compromised. In fact, innovations in glass production have created lightweight bottles that have the same forms and colors as traditional, heavier styles. Global Package’s Elegant Light line of bottles is a good example. These bottles provide the same aesthetic, but with lower manufacturing and shipping cost, hence reduced environmental footprint. Our new Fiona bottle and the soon-to-be released Claire are great examples.

The Fiona boasts a daring look with a bar top and strong shoulders. It has the appearance of a heavy bottle with presence, but, in fact, weighs only 600 grams. The top can have a traditional tin foil closure and the height is comfortably just a bit taller than a standard bottle. It’s a perfect partner for other tapered bottles and for coupling with an elegant burgundy shape.

The Claire is an elegantly appointed Burgundy bottle that will be available in Spring 2012. It’s an addition to the handsome line of lighter-weight, larger-neck bottles. Its curvaceous lines make it sensually appealing, with a label area that’s extended for labeling presence.

Bottle Embellishment

As wine and spirits producers look for new ways to individual their products, the Glass Packaging Institute recently noted that there’s been renewed interest in embossing glass bottles. Here’s a bit of background:

Prior to the development of inexpensive paper labels, food and beverage producers often relied on embossed glass bottles to carry the name of their brands from store shelves to consumers’ pantries. In fact, from the mid-19th century until the early 20th century, embossed glass bottles were ubiquitous, the product of their functionality as much as their aesthetic appeal.

In recent years, embossed glass bottles have been making a comeback. While the process never fully went away, brands looking to separate themselves from the pack have begun to utilize the process more aggressively, in some cases doing away with paper and painted labels entirely.

A favorite designer, Barrie Tucker of Barrie Tucker Company, with whom I’ve worked for many years has distinguished himself with gorgeous embossed designs on bottles, creating one-of-a-kind packaging for such renowned brands as Stag’s Leap and Voss Vineyards in the US, Mission Hill Winery in Canada, Nautilus in New Zealand, and Penley Estate, Yalumba, and Greg Norman Estates in Australia, among many others.

A recent project for two Australian Smith & Hooper Merlot brands entailed creating the Smith & Hooper logo in a sophisticated, flourishing script, which was embossed across the shoulder of the bottles, as well as featured on the label. His S&H icon design was debossed and then embossed in a diamond shape into the front surface of the bottles. For the super premium, limited edition Merlot product, the S&H icon was also be acid etched, giving it a superior quality appearance and a point of differentiation between the two products. You can find a case study describing the Smith & Hooper project here: http://globalpackage.net/category/news/case-study/

As mentioned in our previous White Paper, the price you pay for the bottle, as well as the customization of your packaging elements, has to be considered in view of your pricing strategy. Bottle embellishments will cost more as will unusual label configurations and substrates, so it’s important to start at the end—determining your wine’s price point—and then work your way back through the production cycle to establish your packaging budget. That said, there are always ways to reduce some costs while preserving a portion of your packaging budget to create a unique package.

For instance, with the incredibly wide range of bottles that are in stock and readily available, you are likely to find a bottle that suits your brand and budget without incurring the expense of creating a new mold. You can also save by selecting a lighter weight bottle in the same shape and color as one that’s heavier and more expensive.

Of course, the expertise Global Package brings to your project will ensure you reap the benefits of custom packaging, without breaking the bank.