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:
1 Establishing a consumer proposition
At the risk of oversimplifying a rather complex issue, broadly speaking there are two models which can be followed. These I shall label the Exclusive and the Inclusive. Both have the same ultimate objective: to add long-term value to the efforts of individual producers by creating a framework that facilitates the marketing of premium wines.
The Exclusive model can be seen at work in Sancerre, Rioja, Chianti, Chablis, Champagne and Prosecco. These are examples of regions which are associated by target consumers with a particular style of wine. In the best cases, such regions not only have a strong consumer franchise, and command a premium price, but the style of wine is often perceived to be unique even if, as say in the case of Chablis, the varietal involved is actually quite commonplace
The consumer may well not understand, or indeed care, about the nuances of terroir or the regulatory framework. But both are important to some degree. They facilitate the exclusivity and provide the cues for establishing trade credibility.
This model ideally would include a classification based on quality differences to encourage trading up, and help develop the overall status of the region. (The caveat being that the quality differences should be detectable by the target consumer, not simply the opinion formers or the trade.)
Yet the Exclusive model is unlikely to be a viable option for many New World regions, given the diversity of their wine offering. The most realistic option in such cases would therefore be to celebrate this diversity. This is where the Inclusive approach is relevant.
This approach was exemplified, for me, in an inspirational presentation in Australia by Sam Holmes, CEO of the Barossa Grape & Wine Association (www.barossa.com). A major strength of the Barossa’s strategy is that the consumer proposition does not simply rely on wine – there’s food, music and even beer in the mix. Any product is acceptable which has links to the Barossa culture, as defined in the region’s thoughtfully constructed vision.
Within this broad remit the producer is encouraged to produce and promote wines of appropriate quality, which is critical to avoid potential devaluation of the brand. But there are no constraints on style, other than those naturally imposed by the terroir and microclimates.
The major obstacle, as I see it, with such Inclusive initiatives comes with the difficulty of communicating the complexity of the proposition to the trade and consumer. This is less difficult in the region’s home country, given it is quite possible for target consumers to visit the region and so get the full experience.
International marketing, however, provides more of a challenge and a good deal of thought will be required- backed up by appropriate resource- in terms of securing the appropriate level of understanding and cut through.
2 Each region must have its own identity
Unfortunately for any individual region, getting one’s own proposition right is just the start. Clearly account has to be taken of what competing regions are up to in one’s own country. And if the perception is that the propositions of too many of the regions are interchangeable, then the overall objective will be compromised.
3 Please form an orderly queue
This challenge will assuredly be all the greater if, say, in Australia a good proportion of the 60-70 defined regions decided to go full steam ahead at the same time. The result from a market perspective would be chaos. There needs to be a consensus that some regions must get priority for the ultimate benefit of all, while some of the smaller regions need perhaps to be encouraged to band together to create stronger and relevant propositions.
Back in the 70s, as a young marketer, I was invited to attend a brainstorm on how Italy should go forward generically. When I made the suggestion that a pecking order of regions be created, the look on people’s faces reminded me of one of those Bateman cartoons. It was, I realised very quickly, an astonishingly naive proposal given Italy is profoundly and essentially regional. But even in Australia, Chile and South Africa regional rivalry – as well as rivalry within regions – should not be underestimated.
Warning of blizzards
So what’s my conclusion? Well as a starting point there needs to be an overwhelming consensus that segmentation is necessary; there needs to be the equivalent of the “export or die” mentality of the late 80s in Australia.
Only then, in my view, is there a chance of establishing an overarching industry vision which facilitates clearly differentiated regional initiatives and which builds in an appropriate timescale.
The alternative is for individual regions in each country to push ahead in isolation – as many are currently. From the point of view of the domestic market this may not be an issue, and even internationally some of these may well achieve their goals, notably the early adopters.
The risk is, however, that, as others are encouraged to follow suit, the international markets will be inundated by a blizzard of regional initiatives which will serve only to bewilder the trade and the consumer with a further level of complexity.