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Why Major League Baseball Got Into…the Wine Business?

Hint: Because someone would be very, very unhappy if the MLB made its own beer.

Why Major League Baseball Got Into…the Wine Business?
Seattle Mariners Wine Bucket

The Philadelphia Phillies Reserve 2012 Central Coast Proprietary Red wine “balances power and finesse, much like the Phillies lineup, while going long on the flavor fans demand.” The Chicago Cubs 2012 Central Coast red “is a mix of players, combined to make a bold, fruit-forward blend whose whole–like the Cubs–is greater than the sum of its parts.” And the New York Yankees 2011 Cabernet has the “richness, depth, and character following Yankees tradition.” With muscular descriptions like these, one half expects the bottles to jump out of the crate, suit up, and start belting homers.

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The tasting notes come from Major League Baseball, which sees team wine as a new, blossoming seven-figure business. But the product is also a creative solution to a market challenge: Fans will pony up for team-branded bottles of alcohol, but the MLB can’t violate its very lucrative, exclusive beer deal with Budweiser.

“Chances are there are a lot of wine enthusiasts that are baseball fans,” says Michael Napolitano, MLB’s Vice President of Consumer Products, Hard Goods. (There is also a VP of Soft Goods, hence the clarification.) And that’s why, last Wednesday, the league was pouring from its new collection at the Fan Cave, its event space in downtown Manhattan. This was a chance for fans and media to try the wine, but also, quite likely, to just get used to the sight of people kicking back and watching baseball while gently holding wine glass stems.

All-star Game Wine

Team-branded wines are an extension of MLB’s two-year-old program that produced event-related booze–championship champagne for the World Series winner, and red and white All-Star game wines. This season, seven teams–the Giants, Yankees, Mariners, Red Sox, Rangers, Phillies, and Cubs–became the first to hawk custom blends. Bottle prices cost $25 to $30 on average. While the Yankees pull grapes for its Riesling from the Finger Lakes region and the Mariners source from the Columbia Valley, most of the wines are made in central or northern California. (Were you expecting a locally produced chardonnay from Dallas?)

League execs are so far thrilled by the response. The initial order across all seven teams was 11,000 cases. High demand led to a recent second order of 14,000 more cases. (The Yankees accounted for 6,000 total cases and the Giants requested 4,000.) The bottles are sold online, in local wine shops, and will soon be available in larger national chains, including Whole Foods and Costco. At the current price points, the retail value of the operation is just under $10 million.

MLB realizes that there might have been more buzz around, say, an Angels Ale or Pirates Pilsner. But those would be complicated beers to make. The league has a longstanding partnership with Budweiser as its exclusive national sponsor for both alcoholic and non-alcoholic malt beverages. (The terms of Budweiser’s current six-year deal aren’t disclosed, but industry estimates peg it at $40/million a year.) Individual teams have wiggle room; they can sign their own local beer sponsorship deals, which can include uses like in-stadium pours and local television. But national distribution of a team-specific beer would be a no-no, and any marketing related to those beers can’t have the MLB logo.

That’s why wine is a simple, creative solution, and fits in with the league’s embrace of boundary-pushing licensing deals. The league has about 300 licensees–including Hello Kitty and the handbag company Dooney & Bourke. “Being a mature brand, we are always looking to expand by doing cross-licensing agreements,” says Napolitano.

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New York Yankees Wine

In this case, MLB’s licensee is Wine By Design, a Napa Valley lifestyle marketing company founded by Diane Karle. She saw the synergy potential between sports and wine while working in business development at IMG, and in 2007 struck out on her own. Her company manages the production process, from finding the winemaker to submitting the wine labels to liquor authority boards to facilitating distribution. Karle landed the New York Jets as her first client in 2010, and the team’s cabernet sauvignon–an offering tied to the opening of the new Meadowlands stadium–sold roughly 5,000 cases at prices between $15 and $30. She then pitched MLB and became its first wine licensee. The biggest challenge to selling bottles, she says: “We had everyone anticipating it was going to be bad wine, and we have to get people over the hurdle that our wines aren’t a gimmick.”

The MLB agreement is designed to create legit wine: Through Wine By Design, teams can select from different, well-respected vineyards and wine varieties. Mumm Napa made the Giants’ sparking wine. Anthony Road Winery in upstate New York made the Yankees wine. And the Mariners’ wine is made by Maryhill Winery, which the San Francisco International Wine Competition just named the top winery of the year. “We can manage the category so you can have more wines that resonate with the teams, market, and fan base,” Karle says. Wine By Design shares the revenue with Major League Baseball and the teams according to the league’s licensing fee structure.

Now that the first bottles are out, what will the future of MLB wine look like? Napolitano says he wants all 30 clubs represented–and for some teams to have more than one bottle. “A Red Sox or Yankees will eventually have six different varietals with price points to match that,” he says. Additional teams have already inquired about joining the program next season. But it’ll still be a while before seventh-inning stretchers sing, “Buy me some peanuts and a nice cabernet with notes of cherries and a hint of chocolate.”

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