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LCB's in-house wines get best shelf positions, records show

  Sean Stipp | Tribune-Review
TableLeaf wines, one of the state Liquor Control Board's in-house brands, is prominently displayed in some state stores, including the Wine and Spirits Store in the Salem 22 Plaza in Westmoreland County.

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Saturday, Dec. 29, 2012, 12:01 a.m.
 

Walk into many state Wine & Spirits stores, and it's hard to miss TableLeaf wines.

And that's just the way the Pennsylvania Liquor Control Board wants it, according to documents obtained by the Tribune-Review under the state's Right to Know Law.

TableLeaf wines, the LCB's controversial flagship in-house brand, are nearly always displayed in some of the best sales positions in stores, according to agency marketing directives to its store managers about where various products should be located.

TableLeaf wines garnered the No. 1 sales position in many stores in 13 of the product's first 20 months on the market, documents show. The brand earned one of the top five spots 17 times from March 2011 through October 2012, accounting for more top placements than any other brand during that period, records show.

Marketing experts say store position is crucial to a product's success, and they question the agency's motives, given that the LCB does not make a larger profit on its private-label items than on other brands.

TableLeaf is one of eight in-house brands of wine and spirits started by the LCB. Two other in-house brands, Dialed In and LA MERIKA, each earned top floor placements for seven months during their first year in stores.

Earlier this year, LCB Chairman Joseph E. “Skip” Brion began an internal investigation into how the in-house products were brought to market.

Larry Shapiro, founder of Grape Consulting, a Dallas-based wine and spirits and restaurant consulting firm, called the LCB's treatment of its in-house brands “spiteful marketing.”

“That makes no sense,” Shapiro said. “If (the LCB) is not making any additional revenue off of the brands that are their house brands, then it makes absolutely no sense for them to be positioning those items in any better position than they'd position anybody else's items.”

LCB officials construct monthly marketing calendars that rank products for each group, or cluster, of stores. Stores are grouped in clusters based on what products sell well there and the demographics of potential shoppers, said LCB spokeswoman Stacy Kriedeman.

The top five wines and top five spirits on the marketing calendar are guaranteed spots on prized floor displays for each store in the cluster. Stores also can choose to display products with lower rankings from the list on their sales floors, Kriedeman said.

LCB officials would not answer questions regarding which stores are assigned to each cluster or the criteria used to determine top floor positions and forced the Tribune-Review to file a Right to Know Law request, which is pending with the agency.

But sales figures show that products in top positions are not always top sellers.

TableLeaf white zinfandel in 750-milliliter bottles spent five months in top-five positions in its first year on store shelves, yet it ranked last of four wines in its category. The 1.5-liter size earned six months in a top-five position, but ranks ninth out of 10 in its category, according to sales figures through Oct. 28 provided by the LCB.

TableLeaf moscato and sweet red, which debuted in February, each spent seven months in the top five positions, though the 1.5-liter moscato ranked nine of 10 and the sweet red 750-milliliter size ranked last.

TableLeaf's 17 top-five placements outpaced Yellow Tail wines, a best-seller out of Australia, which earned 10 top-five positions, records show. Dialed In and LA MERIKA tied for the fifth most top positions.

“When we get new products, we do want to give them prominent placement so consumers take note of them,” Kriedeman said.

The LCB expects to debut an end-cap display (at the end of an aisle) in about 100 stores early next year that will feature six to eight new products each month, she said.

“We have a responsibility to sell the product (the in-house brands) as long as we have product available. Promoting the product helps us do that,” she added.

Diagrams of state store shelves, obtained under the state's Right to Know Law, indicate the LCB's in-house brands also garnered eye-level shelf space in most regular shelving configurations in 2012, once again considered a prime spot by marketing experts.

Many in-house products are stocked on the top shelf of a three-shelf unit or the second shelf of a four- or five-shelf unit, diagrams show.

“Generally, the premiere selling position is where people's eyes go first,” said Cait Poynor Lamberton, an assistant professor of business administration at the University of Pittsburgh.

Lamberton said placing a new or weaker brand at eye level may get that product consideration in consumers' mind and build brand awareness.

“It might take awhile before that translates to sales,” Lamberton said. “Potentially, there's a substantial advantage to building a brand, but it's going to happen over time.”

Audrey Guskey, an associate marketing professor at Duquesne University, said the LCB has undertaken “a very aggressive strategy” for marketing their products in stores.

“Placement is absolutely critical,” Guskey said. “They obviously have thought through this. They're purposely doing this to increase sales, and they can do that.”

Kriedeman said it should be noted that profits — whether from in-house labels or other brands — are funneled into the state's general fund to pay for essential services for citizens.

Still, some critics decry the placements as unfair.

“Competing for shelf space with government is certainly not what free enterprise is all about,” said Jay Ostrich, spokesman for the conservative Harrisburg-based Commonwealth Foundation.

“They can rationalize an anti-consumer, anti-business measure all they like, but this just underscores why there needs to be last call for government-sold alcohol.”

Kari Andren is a staff writer for Trib Total Media. She can be reached at 724-850-2856 or kandren@tribweb.com.

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