As one of the major players in value wine, owning Charles Shaw (aka “Two Buck Chuck”), Bronco Wine Co.’s new CEO, Dom Engels, believes that the wine industry needs more innovation and focus on creating new entry points for younger consumers. From packaging to labels, Dom discusses how he’s navigating Bronco through the turbulence of a shrinking market for value wine from both the cost and innovation side.  Detailed Show Notes: Bronco - Top 15 winery, owner of Charles Shaw (aka “Two Buck Chuck”)Has its own CA distributionHouse of >200 brandsLarge winery in Modesto, bottling in Napa, a boutique winery in Santa RosaOwns ~40k acres, ~30k acres vineyards, but farming <10k todayOwns Bivio, a logistics companyCharles ShawNo created by Bronco, acquired by Fred Franzia (co-founder of Bronco)Was a successful, premium, luxury Napa brand, 1st vintage 1978Went bankrupt in the 90s, Bronco bought the trademark in 19991st product in 2022 - $1.99 for good quality wineLow pricing enabled by low margins and Fred Franzia’s “genius” in bulk wine tradingPartnership w/ Trader Joe’s through shared belief in creating accessibility and substantial cultural overlapBelieves the industry needs more good entry-level wines to get younger generations a start in wineThe ethnic makeup of younger people is not the same as that of older generations“Not your father’s Cadillac” - young tend to rebel against what their parents did11,400 wineries in the US create a diffuse set of interests, a lack of clear messaging (e.g., craftsmanship, agriculture) to separate wine from alcoholAccessibility could be driven by the right packages (including formats) and labels; good labels drive trial, good liquid drives repeat salesSignificant marketing spend is difficult due to low marginsIndustry covers the right price points (e.g., Charles Shaw $3.49 in CA), but needs other elements, not a lot of great innovation or marketing at low price points (some pockets of innovation, e.g., XXL focus on high ABV)Need more transparency - ingredients, nutrition, ownership, provenance - Bronco is adding more back stories to brandsEnhancing social interactions is important; e.g., Jack Daniels’ ad that getting together with other people is healthy tooNew Bronco company motto, “better times at every table,” similar to Pernod Ricard’s “conviviality”Believes dislocation of restaurant price vs retail is a core driver of wine industry decline, $14 IPA and $25 cocktails make people drink lessNavigating lower volumes requires being more efficient, sees opportunity in winemaking (most capacity utilization at wineries now <50%), distribution (reduce inventory), and retailLikely too many brands in the US and too much shelf space in retailMothballing a lot of vineyards due to oversupplyCan’t bring back in 1 year, but can in 2-3Cut buds down so vines don’t produce fruitStill requires some maintenance costsVineyards in less optimal areas are to be pulled first, and he does not believe there will be an overcorrectionCompeting in value vs internationalCan’t compete on laborNeed to compete on quality, provenance, and tasteEven tariffs won’t solve the cost gapEU subsidies help democratize wineTariff impactsSome input cost increases (e.g., China for glass)A good thing overall for the US industry, which will lead to more US wine being consumedLikely no structural change Hosted on Acast. See acast.com/privacy for more information.