Going regional: why the New World should bother

Read any interview with Michael Cox, Yvonne May or Jo Wehring – or an individual producer of premium wines in Australia, Chile or South Africa – and you’ll spot a common theme. They’re almost certain to vent their frustration that the quality of their premium offer is not being sufficiently recognised, either by the trade or the consumer.

I was recently invited to speak at a conference in Australia, to offer my own ideas on the way forward for that country’s wine industry. One of my main conclusions was that Brand Australia needs to be segmented.

I am really impressed by the generic work of Yvonne May and her UK-based team, and the diversity of style and quality of premium Australian wine has clearly never been greater.

But the reality is that, partly due to years of heavy discounting at the lower end, the target consumer in the UK does not regard Australia as a source of premium wines – at least, not to the extent that the Australians would like them to. There is, therefore, a very large gap between perception and reality.

This is not altogether surprising. In any category where a single brand proposition covers mainstream and premium territory, the lower end risks overpowering and dragging down what is happening above. This is exactly what happened to German wine in the 1980s.

A related problem applies to wine brands which attempt to “ladder up” from very strong mainstream propositions into premium segments and I would suggest Brand Chile and Brand South Africa are wrestling with this conundrum.

All three countries are currently playing around at the edges of regionality like swimmers dipping their toes in the water, but never quite plucking up the courage to jump in.

I’m not surprised: the water is bloody freezing. Segmenting a generic brand throws up immense practical difficulties. But first of all one needs to be convinced such a move is essential, and I’m not sure enough people are yet at that point.

Divide and Conquer                                                                                                                                                               

Personally, I think there are three reasons why producing countries should develop regional propositions which are stronger than their umbrella country brand.

Firstly, as noted above, it ensures that the premium sector is unencumbered by any mainstream baggage. France can offer a useful case study in this respect: did the image of Burgundy suffer, along with that of Beaujolais, as a result of the over-promotion of Beaujolais Nouveau? Undoubtedly not. While both are segments of Brand France, they are in reality brands in their own right.

Secondly, creating premium entities gives marketers greater room for manoeuvre.

I see three strands to premium wine marketing. Individuality, which is about building brands with real points of difference. Personality, which is about involving people (usually winemakers) in one’s promotion. And finally Regionality, which is about generating a strong sense of place.

Premium brands, whether they’re generic or individual, which realise the potential of all three of these strands, generally have the greatest chance of being successful. As things stand, in most of the New World and many parts of Europe, marketers are over-reliant on the first two strands as there is little or no added value in talking about their area of origin.

But in an increasingly crowded marketplace, one needs to be firing on all cylinders. While there is hardly a shortage of personality in the New World, and brand marketing is certainly improving, I feel that being part of a “one size fits all” generic brand puts all concerned at a serious disadvantage.

Thirdly and lastly I believe there is a highly profitable opportunity in creating brands which are wine-based, but have no real wine values.

From a marketing and production point of view the New World is probably best placed to build such brands yet, to exaggerate the point, if you were an individual producer, it would not even cross your mind to present say a lightly sparkling low-alcohol Moscato under the same umbrella as a premium range. You would rightly worry it would undermine your premium imagery. But non-segmented generic brands in effect don’t have any option.

The least flawed option

So my conclusion is that, conceptually, generic brands which have image issues need to consider segmentation more seriously than currently appears to be the case. Winston Churchill once said that democracy is a highly imperfect form of government, but less flawed than any of the alternatives. I feel the same way about regionality as a platform for marketing wine.

To say that developing a regional framework, effectively from scratch, is fraught with problems would be an understatement. While individual regions in France, Spain or Italy may provide inspiration in terms of how value can be added in an overall sense, these countries are hardly role models in terms of establishing a system which works for all, is appropriate to what might be called the New World ethos, and is understood to the required level by the trade let alone the consumer.

However the alternative options,which are either to carry on with the current approach (however dynamic) or invest large sums in matching perception to reality through some overarching consumer campaign, I do not see as ,respectively, game changing or viable.

Brands tend to get summed up by the trade and consumer in one ‘sentence’. If that sentence is not what one wants it to be, then to change perceptions significantly in a marketplace in which the intensity of competition is increasing, from an already high level, is extraordinarily difficult. I believe therefore that some dramatic restructuring is required, however difficult and however long term the project.

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8 thoughts on “Going regional: why the New World should bother

  1. Agree the imperative of segmentation and the role of regions.
    However a formidable challenge for many Australian wine regions that are quite diverse in their wine offering, is to focus on a proposition that is relevant, memorable and valuable to consumers. The internal regional politics of creating and maintaining such a proposition focus has been one of the barriers, but the stakes are high enough to warrant the investment necessary to gain a convergence of interests.

  2. whether the “least flawed option” is the answer i am not sure. however, an equally large part of the problem is executing whatever that answer may be. removing any rose tinted specs that bathe the past in a more attractive light than was the reality, one thing that made today’s great brands what they are (whether spirits, beers or wines) was a clear vision and execution driven by brand fanatics. i hesitate to dismiss today’s trade with a generilization but certainly i see fewer fanatics out there now building brands than in past years. this may because the mediums through which brands can be built are so much more diverse and therefore the complete picture is more difficult to see but all brand building has to include one key ingredient – passion! Nine to five and work/life balance doesn’t do it…..

    • I agree that passion is integral to building brands but am not convinced there are less fanatics around than in say the halcyon days of the 90’s- in fact I really can’t think of anyone I’m working with currently who is not fanatical or lacks entrepreneurial spirit.What’s changed I would suggest is that the ‘ economics’ of the wine business have got worse,exacerbated by the recession,and this has dampened down the passion.If companies give passion free rein then mistakes are inevitable and in the current climate it’s perhaps inevitable that people are looking to play safe..However I am an optimist and if necessity is indeed the mother of invention then perhaps we’ve reached our nadir …as it’s never been more necessary.

  3. I would advise some health warnings on regionality though – if the French experience is anything to go by. Perhaps what is missed all too often is that apparently united political entities such as France, Italy and Spain, are in fact relatively recent constructs of federated regions each with their own separate identity (I use the word ‘recent’ here in the context of European history at least!). This has quite naturally led to everyone wanting their own protective barriers around their appellations. Great for some, not so great for others. Why is it for example that Chablis, or Sancerre should be so successful, when other appellations struggle to gain notoriety? It certainly isn’t much to do with the overall quality of all the producers in that appellation – I could show you some great Gaillacs for example, as well as some pretty duff Chablis. And yet there is a price differential, with the duff Chablis selling all too often for way more than the decent Gaillac. Ultimately I believe this all comes down to how well the appellation has marketed itself, and here the usual rules apply – Mike has pretty much covered them off in this and his other posts. There are some great appellations/regions that remain to be discovered, and soil type, quality, climate etc. are only some of the factors that make a difference, but sometimes they are pretty useful to market and premiumise what you’ve got – even if you’re no good at making the wines. So yes, the New World should pursue regionality in my view, but bearing in mind that like all marketing campaigns, it takes time, persistence and continuity to convince the consumer – and even then it doesn’t always work.

    • You make some good points here.Certainly it is easy to forget that France is profoundly regional and the wine regions therefore reflect regionality more generally which gives them a certain substance and credibility.In addition as you argue it is hardly a level playing field; history,fortune and marketing have all to different degrees played a role in determining the regions we value more than others.Countries which have not embraced regionality need to tread carefully therefore when using France, or Italy or Spain, as role models. And crucially, as you also say, going regional requires a long term vision …..not to mention widespread consensus both within regions and more generally to avoid too many regions trying to do roughly the same thing at the same time.Not easy !

  4. Pingback: Wine Regional Marketing Research: An Internet Perspective | MyLocalWineStore

  5. Pingback: Our Blog - News - Rathfinny Wine Estate, Alfriston, Sussex

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