The diversity and complexity of the wine category: friend or foe?

Lessons from other categories and the search for the sweet spot

I have in front of me a packet of potato crisps, sea salt flavoured, in which the salt comes specifically from Maldon in Essex.

It’s a perfect example of how the potato crisp sector has reinvented itself over the past decade. It now has layers of complexity which are astonishing to people like myself, who can remember when even smoky bacon seemed a little edgy. The once humble crisp is now at one with the zeitgeist; there’s provenance and naturalness, and vegetarian options, and for all I know there may even be a biodynamic brand out there.

And the potato crisp is not alone in reinventing itself. In fact it’s difficult to think of any food and beverage sector which has not moved in a similar direction over the past decade. Coffee, tea, soft drinks, yogurt, breakfast cereals … the list goes on.

So what is going on here? Well I don’t feel it’s that complicated. Adding complexity of this kind, in the form of premium range extensions, has added value and therefore profitability to these categories.

Now let’s look at wine. On the face of it you would have thought that we would be doing the equivalent of sitting very smugly on top of a mountain, watching everybody else struggling to reach the higher ground on which we’ve been ensconced for decades. After all, there is no category that comes remotely close to our level of complexity; no category that is so immersed in provenance; few categories that are considered so full of natural values, or where the product itself – rather than all the surrounding puff – is seen as the “hero”. Surely we should be regarded as a role model?

But those of us marketing and selling wine seem instead to have a love/hate relationship with all the complexity of our sector. At one end of the spectrum, there are those who appear to fail to understand that what goes on in vineyards and wineries, the nuances of terroir and vintage, leaves many consumers cold – particularly when such “wine speak” is the sole content of their message.

At the other end, there are those who give the impression that we should be doing the equivalent of charging down the hill if we are really to engage the consumer, all this complexity and this diversity being the very devil in our midst.

Why pay more?

In defence of the “modernists”, the complexity that adds value in other categories at least gives the appearance of having a rationale. The benefits (emotional as well as rational) of paying more are generally well marketed. In wine, not only is the complexity overwhelming, but the rationale for it is often lacking. The signposts that do exist to encourage consumers to trade up are extraordinarily indistinct and confusing.

But I think it’s a much more complicated picture than a simple traditionalist/modernist dichotomy. For a start, marketers across the producer and retail sectors (including myself) have actually made the situation worse over the years by taking all those cues that signify premium wine and deploying them at the mainstream end, while at the same time improving the quality of the product.

We have therefore achieved the complete opposite of marketers in other categories: we have actually encouraged trading down. And that’s even without taking into account our relatively recent over-emphasis on price promotion.

What I feel we’ve largely missed over the past two decades is the accelerating development of the wine market, very broadly, into two sectors: those consumers who treat wine largely as a beverage and those who buy in, at some level, to “real” wine values. A natural consequence, perhaps, of wine “growing up” as a category and losing some of its elitist status.

Each sector represents a profitable opportunity in its own right but by marketing mainstream wines to everybody (which, as a sweeping generalisation, is what we have done) we’ve probably compromised success in both sectors.

The search for the sweet spot

So what’s to be done in terms of handling all this complexity? Well for those who treat wine as a beverage, then potentially all “wine speak” is irrelevant. But for those consumers who are interested in wine values, we need to search for the sweet spot; that position somewhere between dumbed down and self indulgent.

The sweet spot will vary, of course, with the brand proposition. But as a thought process or attitude it implies treating the diversity of wine, and what one might call the “language of quality” in a positive way, and not as some baggage from the past that is largely irrelevant today.

The lesson from other categories is surely that, wisely handled and properly communicated to the right audience, the complexity of wine can be a powerful force for the good, particularly at a time when encouraging trading up is absolutely vital to our future prosperity.

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4 thoughts on “The diversity and complexity of the wine category: friend or foe?

  1. like the idea of “grizzled veterans” (i hesitate to use the phrase industry experts!) sharing thoughts on what we have done wrong and – possibly even a few things right – over the years.
    for instance, mike is quite right in his analysis of subtracting value rather than adding but two ingredients we cannot escape from, or leave out of the mix if you prefer, are that wine is an agricultural product with an unpredictable production cycle whereas crisps, beers and spirits can multisource and manage production to the nth degree. this issue is compounded by production being very largely in the hands of growers with poor understanding of long term marketing or price positioning and where the driving reaction is either to charge the maximum the market will pay in the short term or panic sell overstocks to generate cash, rather than taking the longer view. having served equal time in spirits and wine i am pretty well placed to understand the contrasts….anyone have any bright ideas on how to resolve the conundrum???? peter d

    • I’m not sure that it can be resolved but we should attempt at least to thouroughly understand it- particularly the impact of the prevalence of short term thinking.We do need to be careful however of stereotyping ; short term thinking is certainly not restricted to Coops ,many of whom in my experience have clear long term plans.In fact the absence of a pattern might well become very evident if one researched the philosophies and definitions of success of say 500 producers of varying shapes and sizes
      .
      What I’d really like to know ,as a good starting point to understanding all this better,is the split of production ,by volume and value,by category of producer,in each major region and how this has changed over say the last 10\20 years.Is this info all available ? I’m not convinced it is.

      If you were then to build on this some research into current producer attitudes it would surely be possible to come up a credible view of the likely scenario in 10 years time.Now that would be an interesting project for some budding MW!

    • Well,if I was given the proverbial three wishes ,then briefly and very very broadly they would be as follows :
      1.To match supply to demand.It’s happening but too slowly.One can’t build value with structural oversupply.
      2. To create a number of strong brands that are wine based but in which wine would not be core to their proposition..Marketed well within Portman Group guidelines of course..We need the mainstream sector to work harder.It’s not adding enough value to the category or margin to the producer.
      3.To build a programme to make premium wine more accessible,relevant and aspirational.A key plank would be to segment Brands Australia ,Chile,South Africa et al to give their premium ranges more structure.Not easy of course.This is actually the subject of my next post.
      As you often say ,it’s no good complaining about lack of margins if you don’t give consumers good enough reasons to trade into profitable areas.We need to work much harder at this.

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