Climate change, health, social media and – that old chestnut – the nature of marketing
The three days I spent at the Wine Vision conference organised by William Reed in London recently were very rewarding. One can always find fault with such events and some of the panel sessions were disappointing in terms of lack of depth, but overall there was plenty of food for thought.
Here are six of the numerous thoughts I highlighted. They cover a fairly broad spectrum and are presented in no particular order. In some cases they served to reinforce views I already held – but usually that in itself can be invaluable.
Climate change is happening
For the benefit of anyone who still doubts this, that was the theme of Miguel Torres’ presentation, a message he backed up with plenty of substance.
The effects of climate change are inevitably going to be more obvious to anyone in a category with an agricultural ethos. Interestingly, Torres was not unduly pessimistic about the process: on one level it will simply require producers to think hard about the consequences, and then laterally about the solutions. However, there is no doubt that dealing with climate change will require significant investment and resource; resource that is much needed elsewhere in such a competitive market.
In terms of lateral thinking, Torres touched on a key issue. In regions where there are very strict regulations on what can or can’t be planted, there will need to be an openness to fundamental change, and in good time. That could well be an interesting challenge.
Sustainability is a buzzword for good reason
We need to pay more attention to our legacy. The presentation by Kim Slicklein of Enclave Rising made this point very powerfully. And what can be forgotten is that sustainability does not just apply to what one does or doesn’t do in the vineyard or winery; it also applies to one’s business as a whole. A business itself needs to be sustainable and successful enough to be able to focus on longer-term issues such as this.
Nigel Greening, the owner of Felton Road in New Zealand, was clearly committed to sustainability. His view was that pushing for continued growth made it harder for businesses to remain sustainable, and so he intended to keep Felton Road at around the 40,000 case level. There is no doubt in fact that being content with a relatively small level of production increases the chances of success in our category in all kinds of ways (as I’ve argued in other posts).
The nature of marketing
He also, however, reinforced my view that some people appear to have an unusual view of what constitutes marketing. Greening explained that he was rather mystified (and clearly genuinely so) as to how Felton Road had achieved cult status. He claimed that it had never consciously been marketed. Yet he then proceeded to say that three of his key focal points had been the quality of the wine, getting the positioning correct, and rolling out the right kind of distribution ahead of availability.
There are some of course that believe the word “marketing” simply applies to how one communicates or promotes. Clearly Greening falls into that camp. In his case, thinking this way clearly has not done any harm, far from it, but I still don’t feel comfortable with it. If one doesn’t see the marketing mix holistically then the chances of there being a disconnect between the various elements are surely increased. A brand, the saying goes, is only as good as its weakest element.
What about distribution?
Related to this I sat through a panel session entitled Mastering the Art of Building Powerful Brands. There were some very well qualified speakers but one element of the mix was, surprisingly, almost entirely absent. No one talked about their route to market; their distribution strategy. Do successful brand owners favour setting up subsidiaries or going through agents? What about the possibilities of cutting out middlemen altogether and going direct to the consumer?
Unfortunately (as too often in panel sessions) there was no time for questions because this would have been the subject matter for mine. The companies represented on the panel (Krug, Opus One, Errazuriz, LVMH and Accolade) obviously have very clear distribution strategies. But do they see their route to market as somehow a thing apart from brand building? And, if that is true of sophisticated companies like these, is it simply a coincidence that far too often smaller producers, in my experience, get around to thinking through their approach to distribution rather late in the day?
Whatever we might like to think, wine is a form of alcohol
In addition to talking about climate change, Miguel Torres presented equally passionately on why the wine industry should distance its product from other forms of alcohol, and even attempt to link it with a healthy lifestyle. I have to say I was uncomfortable with this as, apart from anything else, I feel that wine is increasingly consumed by many simply as an alcoholic beverage and that attempting to persuade governments that we should be treated differently will lead to a loss of credibility with all the negative consequences that implies for future discussions.
I would prefer that instead we throw ourselves wholeheartedly into the debate, and add weight to the arguments of those from other sectors of the alcoholic drinks industry who believe, for example, that regulating price is a blunt and it would appear largely ineffective instrument for cutting alcohol consumption, and therefore that we should be considering more sophisticated options.
Social media requires skills we probably don’t have
Perhaps around half the sessions involved the subject of social media in some shape or form, usually linked with criticism that wine producers are not communicating with the majority of consumers in the appropriate way. The point was well made early on by Stephen Woodford of Lexis that getting through to one’s target consumer is now both less difficult and less expensive than ever before in terms of the media available. This is unquestionably the case.
Of course the wine industry needs to understand there is a need to change our communication culture. But we also need to develop the skills to use new media to good effect. On one level, social media is no different than any other weapon in a producer’s armoury; you need to know how to use it to secure cut-through in an extraordinarily competitive market. Do we have the depth or breadth of skills required ? I’d be surprised if we do. And, if I’m right, given many wine producers and distributors are not in a position to invest in importing specialists, what are we doing to train up the people we already employ? Almost certainly not enough.
This topic, like many of the other issues above, is something I shall undoubtedly return to in a future post.
Hi Mike: interesting point on Distribution…
I was at the Exchange Marketing Conference in Napa 3 weeks ago with Robert. It was held by Nomacorc and had the directors of marketing etc. from all the leading companies and wineries there. On the one panel that Robert was running was an ex Pepsi guy who is now in charge of marketing at The Wine Group. He spoke about Cupcake… What was really noticeable to me was a somewhat haphazard view by them of social media. They have a FB page etc, yes, but I didn’t get the idea of a really strong marketing plan/vision/social media – they seemed to be learning as they go along – which is fine. So I said, what have you done from a social media perspective / marketing perspective and he mentioned driving around nationally handing out cupcakes. In my humble opinion, cupcakes are not what is making that “brand”. It is a good name, yes, but it is the DISTRIBUTION clout of this company, ensuring that Cupcake is available Nationally and visible everywhere so there is brand trial, recognition, awareness and repurchase. The point is that yes, distribution can maketh a brand that has a simple name (Cupcake/Blossom Hill) but for smaller wineries/companies, if they can’t get that kind of distribution then they really need to use social media to create and communicate interesting stories about their brand/winery and also create a loyal community around their brand/s. The strong big brands like Coca Cola have a great understanding of social media and analysis and distribution… People like Cloudy Bay succeeded due to their “scarcity” strategy… in the beginning….
Thanks Catherine, that’s interesting on cupcake. As you imply there are numerous options for any company\brand when it comes to their distribution approach. Some big brands want to build quickly and others slowly ( eg Jack Daniels or Southern Comfort in the early days ) and the same is true for small brands. Much depends on the company’s financial position. However in my experience too many producers don’t think clearly about this part of the mix soon enough. They have the wine, they perhaps understand the need for a relevant presentation, appropriate pricing and maybe even impactful promotion\communication but don’t really understand the pros and cons of different trade channels or invest enough time in choosing the right agent until everything else is in place. Which puts them under time pressure.
And I agree about playing the scarcity card….rolling out distribution just ahead of availability so you can’ short each customer. Very powerful and a perfect example of how a sophisticated approach to distribution building can add so much value
The key, surely lies in basic economics: supply and demand. The spirits industry has a good history of controlling the flow of both: create demand – often in the on trade – and then offer the supply – possibly initially through duty free rather than straight into mainstream retail.
The wine industry – with the exception of the top Champagne brands, the US cos like Gallo, Wine Group and some super premium producers – presumes that demand creates itself and then struggles to manage supply. Or in the case of Bordeaux, often takes pride in failing to manage it at all.
Well put Robert. I’m currently in SA with Charles Back who is now also in the premium beer business which is staggeringly simple relative to wine in terms of managing supply and demand. You still of course have to create demand and come up with and then implement the right distribution strategy but you don’t have to worry about an above or below average vintage, all the grapes coming in at once or, to the same degree, the supply position of other producers or regions etc etc
given the cost of running a “route to market” only the largest producers can afford to plow their own furrow and have the necessary sales, marketing (that word again..!). logistics and finacial structures and competencies. otherwise, better to work closely wioth a competent, existing route to market and focus effort on motivating that route to market rather than trying to police it. most companies now need to decide what they are – a producer, a route to market or a customer. then focus on being the best in your field rather than being mediocre in more than one….
Setting up a subsidiary is I agree a significant cost Peter, I agree. If one can afford it however the advantages are substantial in terms of the control one has on the ‘message’ not simply the through profit. But most producers can not, or can not to the extent that they would like..many often find they need sub distributors as they cant afford enough salesmen to implement the ideal channel strategy.
Your second point is very valid…I think too many companies expand beyond their core competency in order to secure growth and then find their core competency has been watered down. The key task for any company is to undertake an honest appraisal of their core competency..and, as part of this process,see if their customers agree.