Our future hangs in the balance

( Note: This piece originally appeared as my first column on the new Harpers.co.uk website last week )

I’ve just read “ Antifragile”, Nassim Taleb’s thought provoking sequel to “ Black Swans “. At one point, in a diatribe against large corporations, he writes ‘ have you noticed that whilst corporations sell you junk drinks, artisans sell you cheese and wine’. He goes on to argue that large corporations cannot produce wine and puts forward Wine as the ‘ best argument in favour of the artisanal economy.’

I would suggest that this view would resonate across much of our industry and, indeed, with many consumers. The irony, however, is that his book is essentially about  defining a more realistic economic and political doctrine. If he was to study the wine industry in more depth he might well be less convinced that our industry model is either ideal or sustainable.

To me it’s a question of balance. If we were to lose the artisanal flavour of our industry, if we fail to understand the difference between simplification and dumbing down and that the complexity and diversity of our category is not just excess baggage, then we might find that wine’s core appeal becomes significantly diminished.

On the other hand, we need to understand that Taleb is hardly the average consumer. A large number  of  consumers see wine simply as an alcoholic beverage. And with Beer, Cider, certain Spirits, and fusion drinks, in the ascendancy, the competition is intensifying. We need to understand the implications of being too highbrow and arcane to such consumers and the more general need to engage with different consumers in specific ways. Otherwise, while we may retain our soul, the prognosis for large swathes of our industry is arguably pretty dire.

In part linked to this overriding issue I believe there are a number of aspects of our industry where we are out of alignment.

  1. There is a fundamental need to balance the focus on production with a focus on marketing . It would help if more people saw them as complementary. This would lead to sounder business plans and less waste of resources.
  2. There needs to be a much better balance in our  education programmes between developing wine skills and commercial skills. We have moved in the right direction but we need to  accelerate the process.
  3. We need to listen to the consumer at least as much as we listen to the trade (and each other).
  4. However we also need to develop the confidence to occasionally ignore  consumer research. We need to balance the need to conform with the need to stand out. How many consumers does any producer  actually need to engage with? We need more ‘marmite’!
  5. We need more broadly to work out where regulation works, both in terms of production and marketing, and where it doesn’t. Where it does it should be tightened up and vice versa.
  6. Critically we need to balance supply and demand. Producing more than one can sell, as a producer or a region, is the most basic of errors and destroys value at every price level. 

In summary our industry is economically fragile even if Wine as a category to many may be a role model for our times. Our challenge, therefore, as I see it, is to become more commercially astute while protecting the essential qualities that, as Taleb implies, lie at the heart of wine’s appeal.  The implications of this challenge, and how we steer the correct course, will be a recurring theme in this column as it is on my blog.

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2 thoughts on “Our future hangs in the balance

  1. Hi Mike

    One issue you cover is volume vs. quality. If you are selling wine to Tesco and they want to buy 5 million bottles for the year of 1 or 2 products, then that is what is found/blended/bought etc. The key is to ensure consistency of style and quality across large blends/brands and to ensure that the wine the consumer gets within that wine is the same or close enough in style and quality to not damage the brand. I remember working for a big Aus producer years ago -one of the brands always on promo at half price had to change the blend to the other way around (as in the secondary grape at the time became the primary grape) and the consumer picked it up immediately in Waitrose and there were big complaints. The smaller producers often bottle what they have/make and the style is pretty much the same as is quality. I don’t think this is a consumer issue. Wine is an agricultural product whilst other products sold in huge volumes in grocery are man made and one can control the quality. The wine industry is a very complicated one with so many factors involved. Also with marketing, there are not that many brands (or any?!) that are suddenly sold out 100% due to marketing – there is very little spend available in the UK market for GOOD marketing… PR seems to be more effective – e.g. Tesco’s Champagne which was great value, beating all the other branded champagnes (I think it was in the Mail/Sun) which drive consumers straight into store… and they sold out and also obviously big half price deals/gondola end promos in store.

    • I think there are a number of important balancing acts within Production and Marketing and I agree with those you mention. I also feel that the general point you make is very important: wine is so far from being something you can turn on and off like a tap. However much we may beat ourselves up about being too production oriented the production of wine is, relative to most other categories one can think of, pretty complex and quite often the ideal marketing or selling plan is compromised of necessity.

      The variability of vintage and other related factors can of course be used as an excuse for an absence of market based planning but those of us on the marketing side need to be careful not to be too dismissive.

      As to your points on marketing it could be argued that working with small budgets is a good discipline. Having said that it is enormously frustrating to see great ideas or potentially great brands fail to come to fruition through lack of resource and\or we have to resort to discounting to protect distribution or supply contracts. And few brands get out of the ‘poverty trap’ and generate appropriate marketing budgets.

      One of my concerns is that there appears to be less marketing investment now then there was ten years ago ( which reflects the decline in margins ) so the danger is that we get into a downward spiral.

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