Results from Wine Business Monthly's 2006 Capsule Survey indicate that the capsule-the sleeve that covers a wine bottle's neck and closure-remains the most popular way to finish a wine bottle. Eighty-one percent of respondents indicated that they use capsules (Chart 1), a 14 percent drop from 2004 when 95 percent of respondents used capsules. (The Wine Business Monthly Capsule Survey is conducted every other year.) Although capsules serve many uses-identifying the wine, protecting against tampering and preventing contaminates from settling into the wine-the drop in usage may be explained by the increasing use of alternative closures that render capsules unnecessary, such as screw caps.

Seventeen percent of respondents reported that they use screw caps to finish their wines (Chart 2). In 2004, WBM did not specifically ask about the use of screw caps; however, 2 percent of respondents reported using "other" materials, a category that included screw caps, to finish their bottle packaging.

Small wineries, those producing less than 50,000 cases, are almost entirely responsible for the booming usage of screw caps. While the survey found that large wineries account for 4 percent of screw cap usage, fully 20 percent of small wineries are using screw caps for all or part of their portfolios.

"We have all our whites in screw cap, which we started doing a couple of years ago," said Shaun Richardson, vice president and winemaker at Clos Pegase near Calistoga, California. "But we are holding off on putting all our reds in screw cap. I don't know that consumers will accept high-end Napa Valley Cabernet Sauvignon under a screw cap-or at least not all Napa Valley Cabernet Sauvignon under screw cap. I think consumers are going to accept screw caps as an alternative. I don't think they'll totally take over from corks, though."

Lisa Giglio, director of brand development at Sonoma Wine Company, which does private and control label production as well as contract bottling and other custom winery services, said she has seen "a dramatic increase in screw cap usage" among her clients. She also said that there is rising interest in other alternative closures as well, such as the Zork or Alcoa's glass Vino-Seal™ product.

However, Giglio feels there will always be a significant place in the wine industry for the traditional capsule with a natural or synthetic closure. "I would expect that in the future, the increase of screw cap and other alternative closures could possibly cut into [the capsule business]. But, I don't see it declining dramatically. For the next 30 to 40 years, at least, natural cork and capsules are going to be the standard, especially for high-end wines."

Cameron Parry, assistant winemaker at Chateau Montelena in the Napa Valley, said the company is very unlikely to move to an alternative closure. "This is a very classic house; we hold firmly to tradition and we believe in using the cork and capsule," he said. "They are doing very good work on screw caps, and I believe there's a place for it in the industry, just not in our house."

Use of a wax finish has also declined, dropping from 3 percent among wineries of all sizes in 2004 to 1 percent in 2006 (Chart 1). In 2004, large wineries comprised almost the entire category, with 16 percent of respondents indicating they used wax finishes. In 2006, zero (out of six) respondents of large wineries (over 500,000 cases) reported using wax.

"Wax was a great innovation," said Giglio of the flange-top bottle with the wax stamp finish. "It was initially introduced at the high end as a luxury [designation], then it was adopted by popular premium wines ($9 to $12) and lower-cost wines. [Because] so many people [decided to use it], it became a liability for the higher-end wine companies." Eventually, perhaps because of consumer perception, it seems that most wineries have abandoned its use.

Capsule Characteristics

The choice of capsule material depends largely on how the individual winemaker wants their final packaging to look. Each material has its own look and feel, and wineries are careful to choose the substance that works best for the brand.

Tin capsules are known for their sleek, seamless look, and oftentimes have embossed and painted tops. Wineries value the material for its ease of application while consumers appreciate its ease of removal. The one-piece tin capsule is silk-screened prior to application and is placed on the bottle by being spun snugly down onto the neck without wrinkling. A capsule made of soft tin can be easily removed and decreases any chance of abrasion-a concern with early versions of aluminum capsules. Tin capsules have been perceived to be an indicator of high-quality products and are thus found frequently on premium and luxury wines.

PVC (polyvinyl chloride), the least expensive of the capsule choices, is a popular choice for mass-market wines at the lower end of the price scale. PVC capsules are two-piece, usually seamed capsules (though there are some vendors who offer seamless PVC) that are heat-shrunk onto each bottle. As such, PVC can be used for bottles with differing diameters.

PVC capsules are versatile in their look. Artwork can be printed or hot-stamped (including hot-foil stamping) onto the skirt while the top discs (which can be made from PVC or aluminum) can also be printed, custom embossed, or embossed and painted. Some capsules are perforated for ease of removal while others still are found with tear-tape. Prices for the capsules depend on several variables, including number of colors, quantity ordered and customization.

Polylaminate capsules offer wineries a look and feel similar to that of tin at almost half the cost. The capsules are fabricated using a "sandwich" of aluminum, LDPE (Low Density Polyethylene) and aluminum. Polylam capsules differ from tin in that they are flat-printed and applied as a two-part capsule with a seam; polylam also varies in thickness depending on the supplier. Application of the capsules uses the same spinner equipment as is used on tin capsules, but polylam can also be applied by hand.

Like PVC, polylam capsules are extremely versatile, perhaps even the most versatile of the capsule materials. Artwork can be printed, embossed and hot-stamped onto both the skirt and top disc. While PVC capsules offer many of the same decorative techniques, the plastic, which shrinks when exposed to heat, may not respond as well to embossing and hot-stamping.

Aluminum capsules have an appearance similar to tin: they both are seamless and have a clean finish. Aluminum can also be decorated and finished in much the same way as tin, but offers a lower price point. However, aluminum is much thinner than its costly metallic counterpart (aluminum ranges about 60-80 microns compared to tin's 110-120 microns). The result is that the aluminum capsule is more delicate and has sharper edges when cut. Although aluminum still maintains a following, its popularity has been waning, likely due to lower-priced options and concerns about consumer perception.

Capsule Trends

Today capsules come in a variety of forms and are most commonly made of tin, aluminum, PVC plastic, or plastic-aluminum laminates, such as polylam (see sidebar, "Capsule Characteristics"). Many wineries, especially large wineries, report using a mix of capsule materials for their wines. The most commonly used capsule material is tin, which is being used by 56 percent of survey respondents, compared to 37 percent in 2004 (Chart 3).

The growth of tin capsules has come at the expense of other capsules, which have dropped slightly in usage since 2004. PVC capsules, which are being used by 19 percent of respondents, have taken the hardest hit-down 11 percent from 2004. Polylam capsule use suffered almost as much; use of polylam was reported at 15 percent in 2006, an 8 percent drop from 2004. The least popular capsule material is aluminum, used by 8 percent of respondents in 2006, a 2 percent drop from 2004.

Small wineries are far more likely to use tin than their large winery counterparts. Small wineries report using tin capsules on 62 percent of their production, far more than any other material. By contrast, only 16 percent of small winery production carries a PVC capsule, the second-most popular material. Polylam follows with 11 percent, and aluminum claims 9 percent of small winery bottle finishes.

"We investigated all of the different choices," said Jacque Wilson, sales and marketing manager and co-owner of Pilot Peak Winery in California's Sierra Foothills. "We are a boutique winery, so we wanted to make sure the capsule conveyed that sense of quality and uniqueness. There are some capsules that are pretty heavyweight now, and you look at those and think, 'How many people will really notice?' But for now, we really like how the tin is working for us."

Wilson is, however, open to using other capsule materials on the winery's second label, Peakaboo. "That is a candidate for polylam or screw cap," said Wilson. "It's a less expensive, more of a drink-now kind of wine. We would be looking at packaging cost with that so we could stay competitive. We went through the whole gamut, and we will be looking very heavily at other materials for the Peakaboo line."

Large wineries, on the other hand, are using tin on only 18 percent of their production and are using PVC for 44 percent of their packaging. Polylam is also far more popular among large wineries-which use the capsule type 33 percent of the time-than small wineries. Aluminum is again the least-used capsule material, with only 4 percent of large wineries choosing it (Chart 4).

Bottle price and consumer perception are major drivers in capsule material choice. While tin, which is the most expensive of all four materials (about $.12 per capsule) might make economic sense for wines selling at $11 or above, the extra cost could be prohibitive for a $5 bottle of wine. Small wineries-many of which are carving out a high-quality, boutique niche-are thus more likely to use tin. Large wineries, which generally have a greater presence in large-volume retailers at the popular premium $5 to $10 range, are therefore more likely to use capsules that make economic sense for wines at that price range.

Mike Eaton, procurement director at Diageo, which uses nearly all manner of capsules and closures, including some wines under screw cap, said price is a major consideration for what type of capsule or closure goes on the bottle. "When you're looking [for a capsule for an] under-$7 wine, consumers are less concerned about the feel of the package. If you pop a PVC capsule, it feels plastic; the consumer at that level is less concerned about that. As you move up the price tier, consumers are looking more at the look and feel of the package. They are looking for a more premium product, and they have expectations of the quality of the wine."

Eaton indicated that the mid-tier wines, priced between $7 and $15, generally use a polylam capsule while wines priced above that feature a tin finish-a choice that is made partly because of aesthetics. "One thing you notice is you get seams in PVC and polylam. We put everything above $15 in tin because it doesn't have the seam-it's what people expect from a higher-quality wine at that price point."

Capsule Pros and Cons

Respondents were asked to rate the four types of capsules on consumer perception, performance on the bottling line, price and overall, using a five-point scale, one being "very negative" and five being "very positive."

Tin capsules earned the highest overall rating, 4.2 in the 2006 data (Chart 5). While aluminum and polylam rated at 3.4 and 3.0 respectively, PVC capsules garnered just a 2.5 rating. (There was very little change between the overall ratings in 2004 and 2006.)

Survey respondents are fairly neutral about the price of capsules. PVC, the least expensive capsule material (around $.03 per capsule), rated the highest, at 3.6 while aluminum, which costs around $.10 per capsule, rated lowest, at 3.1. Although the most expensive material is tin (which costs around $.12 per capsule, if not more), respondents viewed it equally as well as polylam (around $.05 per capsule), each garnering a rating of 3.3 (Chart 6). Both tin and aluminum were rated more favorably on price in 2006 than in 2004 while PVC and polylam remained almost exactly the same. Price of capsules can vary depending on the level of decoration and quantities ordered.

Anecdotally, capsule producers report that the use of polylam, which is less expensive than tin, is on the rise. Some feel that there has been some "competitive discounts" on tin capsules to keep the cost more comparable to polylam. The competitive pricing of tin capsules has also likely been helped by the raw metal's decline in cost since 2004. In November 2005, the cost of raw tin was at its lowest point in two years. However, metal prices are volatile, and tin has been rising steadily since the New Year.

Even without discounts, wineries have demonstrated a willingness to pay the higher price for tin because of its ease of use on the bottling line. Cameron Parry of Chateau Montelena said that tin "is exceptional on the bottling line," a feeling shared by many of his peers. Tin, with a 3.8 rating, scored the highest in performance on the bottling line (Chart 7). Aluminum, with a 3.3 rating, was second while polylam's 3.1 rating fell third. PVC rated the lowest at 2.8.

Matthew Reid, winemaker at Seavey Vineyard in St. Helena, California, said that their winery's use of tin capsules was a request from their mobile bottler. "We had been using polylam capsules, but our mobile bottler had some problems with it on the line. So, it was a strong request from them not to use polylam anymore. I don't know if that's the case for all mobile bottlers, but it was for us," he said. "I guess most small wineries, if they use a mobile bottler, might be in the same position. Larger wineries with their own lines could probably control that equipment more and have more choices."

Tin was also rated quite highly in consumer perception, earning a 4.4 score (Chart 8). The popularity of tin capsules has been greatly helped by the belief (in both the trade and with consumers) that tin is used to finish a higher-quality wine than PVC, polylam and aluminum capsules. Respondents also rated aluminum fairly high in consumer perception, garnering a 3.4 rating. Polylam earned a 2.9 rating, and PVC finished last with a 2.5 rating. (These scores are nearly identical to those in the 2004 survey. )

Although aluminum rated highly on bottling performance and consumer perception, and was not ranked particularly low in any of the four categories, its use is fairly rare. Giglio felt that the scarcity of vendors offering the material is one issue. One vendor who carries aluminum capsules indicated that interest in aluminum is "miniscule" compared to other materials, largely because there is only a small difference in price between aluminum and tin.

Roger King of King Andrews Vineyards, in California's Suisun Valley, thinks that the material is hampered by ease-of-use concerns. "I find that aluminum is very awkward to get off the bottle. They don't come off that clean; tin comes off a lot easier."

Despite the difference in cost between tin and aluminum, it seems many wineries are willing to pay a higher price for tin because of its performance. "Aluminum is not widely used because it doesn't give you a lot," said Mike Eaton. "Tin is easier to apply, so the price discount between them isn't much of an advantage. It's also harder to find somebody who supplies aluminum."

There are several factors involved in capsule choice, ranging from cost and compatibility with bottling equipment to aesthetics and consumer perception. Whatever material or finish is chosen, each comes with its own drawbacks or disadvantages, including questions of whether or not an alternative, capsule-free closure is more appropriate for the wine. Capsule manufacturers are now charged with researching new, more efficient methods of production, discovering new innovations and delivering high-quality products that make economical sense for their customers. wbm

 Methodology: During the month of June 2006, Wine Business Monthly polled 52 wineries from the U.S. and abroad, notably Australia, New Zealand, Canada and Mexico, via a questionnaire administered through the Internet. Results from the survey were tabulated based on size of the winery and capsule material. Capsule materials were defined for this survey as tin, polylam, PVC and aluminum. Respondents to the survey were overwhelmingly from smaller wineries. The survey targeted those who are actively involved in their wineries' decisions regarding capsule use (winemakers, owners, buyers, marketers, etc.).