Segmenting generic wine initiatives is harder than it looks. Here are the key challenges

People may agree with me that in principle taking a regional approach to wine promotion makes a lot of sense for a number of producing countries. However, taking the plunge is far from straightforward.

This was obvious from the response I got to my recent post ‘Going regional: why the New World should bother’. There are, I would suggest, three key challenges.

Firstly, any regional entity must have a clear consumer proposition and not simply one that satisfies the producers or the trade. Secondly, in countries with a number of potential regions, each must have a clearly differentiated raison d’etre.

And thirdly, ideally not all regions should be launched at the same time. This implies countries need a grand plan, which in turn implies a long-term vision which has buy-in from the overwhelming majority of producers.

So taking these points in turn:

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The search for the true value of a bottle of wine

A couple of years ago, one of the presenters at the WSET BACK Course received a fair amount of sympathy from the audience when he described his embarrassment at being offered a glass of Ogio by friends. He’d found out that they had paid £8.99 for what he knew was a brand designed to be sold as a BOGOF at half the price. I would suggest that his view, that such wines represent a rip-off, is not uncommon within our industry.

I found this incident and the ensuing discussion (which I try to recreate in my Diploma Marketing classes) very interesting. I believe it gets to the essence of one of the problems we face as an industry, which is that we often get too close to the product.

Inevitably those of us who work in the category are much closer to being able to judge the true value of the liquid in any bottle than outsiders. This helps us all spot bargains as well as obvious overpricing, but it has two major drawbacks.

The first is that we can believe that we have a greater understanding than is actually the case. I would suggest that even the wine experts among us fall some way short, and that’s simply because we are all inevitably prisoners of our history and of our experience.

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Wine’s bad economics: What does the future hold?

If I had the talent of Hieronymus Bosch I would paint an apocalyptic scene, at the centre of which would be four horsemen pausing for a moment to survey the result of their labours. They would represent the devastating combination of structural oversupply; a highly fragmented producer base; an agricultural ethos; and a global recession.

If you compare the return on investment of wine with that of its direct competitors – beer, spirits and cider – it is critically low. If you then consider the relative amount of effort that goes in to producing a bottle of wine and the fact that wine, as a generalisation, has greater aspirational values and a relatively affluent consumer franchise, then this lack of return is all the more remarkable.

To believe, as some appear to, that the disparity is down to our relative lack of marketing skills and/or the activities of those “beastly” retailers around the globe is, I feel, to comprehensively miss the elephant in the room.

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A plea for more unconventional wine branding

In June 2011, Harpers published the results of a very interesting survey undertaken by Wine Intelligence and Amphora Design. They had presented regular wine consumers in the UK and the USA with eight different styles of label and asked their opinions on their attractiveness and how they stood up in terms of perceived price and quality. To reduce the level of subjectivity, all the labels were given the same fictional brand name, the same grape variety and the same bottle shape.

In summary, the UK consumers significantly preferred what one might describe as traditional or classic labels, depicting vineyards and/or a chateau. As a spokesman stated, the label with the vineyard image “was seen as classy, expensive and reinforcing the expectation of what a good wine was supposed to be”.

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