Why we need a cultural revolution in the UK wine trade
The management guru Peter Drucker once wrote, “The aim of marketing is to make selling superfluous.” This was, I remember, translated at a company conference I once attended into “the aim of the marketing department is to make the sales force redundant”. I recall this was seen to be taking sales and marketing rivalry just a little too far.
Less open to misinterpretation, Drucker also wrote “the aim of marketing is to know and understand the customer so well that the product or service sells itself”. I’m not sure anyone would argue with that. Some might feel that this represents an unattainable ideal, but actually there are many examples of where it has been achieved – some right here in our own industry.
From personal experience I know that the Percy Fox sales team did not have to work very hard to sell Domaine de la Romanée-Conti or Dow’s Vintage Port in the late 80s, and the Southcorp sales team didn’t exactly struggle to sell Penfolds premium reds a decade later. As I write, in fact, producers of English sparkling wine are allocating rather than selling.
Some might argue that these wines sell easily not because they’ve been marketed but because of their “quality”. Ah, that wonderful word! Drucker had something to say about that too. “Quality in a product or service is not what the supplier puts in. It is what the customer gets out and is willing to pay for. A product is not quality because it is hard to make and costs a lot of money … customers pay only for what is of use to them and gives them value.”
In other words it is perceived quality that matters, not what we choose as wine producers to define as quality. The two may well go hand in hand, but there are plenty of examples in the wine world where, much to our astonishment, quality products, as we define them, somehow just do not sell … and wines that we do not value somehow fly off the shelves.
Others might argue that the process by which DRC or Vintage Port became easy to sell could hardly be called marketing. Well there I would also disagree. If the purpose of a business in general is, to quote Drucker again, “to create and keep a customer”, which is surely the case, then marketing is certainly central to the process, however unstructured, by which businesses go about creating and keeping customers. He went on to say that ” the business enterprise has two- and only two- basic functions: marketing and innovation ”. Super-premium wine producers may like to pretend they don’t indulge in marketing – some may even genuinely believe it. But at a fundamental level they are a business like any other.
The focus should be on creating a differentiated product or service
All the above came to mind as I read a piece by Tim Williams, an author and marketing consultant, whose Big Idea for 2014 constitutes the title above: Stop Selling (and Start Marketing).
“If your firm,” he writes, “would spend more time and energy developing and marketing a relevant, differentiated product, you could spend a lot less time and energy trying to sell it.”
The likelihood is, he argues, that one’s business is not as differentiated as one thinks it is. A survey by Bain & Company asked executives in the professional services sector (which was the target of his piece) if they agreed with the statement “our company is highly differentiated”, and 80% said yes. But only 8% of their customers agreed.
What, I wonder, would the results be of a survey of UK wine importers? Well on the positive side I doubt if there would be so much complacency: the last decade (let alone the recession) has been a real wake-up call across the UK wine trade and there have been some high profile casualties.
Investment options: Sales or Marketing?
However in terms of what action to take the results would be less clear. If I were to ask the question, “If you had some spare money, would you employ an extra salesperson or a marketing person?” I would wager that the majority would plump for sales. And there would be several reasons for his. Firstly, they might believe it was less risky as the person would pay for himself or herself more quickly. And secondly they might argue they could measure the results more easily.
However the third reason might be less well defined: the culture of the company is likely to be sales-driven, so a sales person would fit in more easily. The culture of any company is largely dictated by its leaders, and as a generalization the directors of UK-based wine importers tend to have backgrounds in sales, rather than marketing.
This is not intended as a criticism. Until fairly recently, in fact, many such companies performed very well for their owners without having to develop their own brands or indulge in any real marketing, outside sales support and trade marketing. They tended to focus on representing international brand owners and/or sourcing private labels for retailers. Many did so successfully and profitably.
However over the past decade, margins have declined steadily. Companies without their own brands, which implies less control over their own destiny and reduced ability to develop international markets, have come under increasing pressure. Some continue to perform well. Some – particularly those servicing the on-trade, which requires specialised logistics expertise – have a strong franchise.
Yet, as a whole, the importer sector gives the impression of being a pond in which the water level is gradually falling. Some of the fish are healthier than others and can remain so for some time by being better at foraging than others – but the medium-term outlook is not good.
We need radical change and that isn’t going to come from employing more sales people. I’m not in any way belittling selling skills: it’s no coincidence that the best companies I’ve been fortunate enough to run (Southcorp Europe and Western Wines) had exceptional sales teams.
However they were also companies that combined a corporate brand with a strong trade franchise with relatively strong consumer brands. In both cases they had a clearly thought-through trade proposition but also a clear element of consumer “pull”. And it’s the latter element that is broadly lacking across the sector.
The urgent need for change
Creating consumer “pull” is hardly easy; simply employing one or more marketing people is no guarantee of success. Technological advance, and in particular of online media, has made it possible to communicate with consumers in a far more targeted and therefore cost-effective way than ever before. But it’s still necessary to come up with an idea that is differentiated, a proposition that has real cut-through and a communication approach which has real creativity.
However if you have no real marketing resource, or a marketing resource that is restricted to sales support, or events and PR, then the odds are stacked against you. You can employ outside agencies but ultimately you need an internal resource that understands the options, can interpret the jargon, and which can be 100% focused on developing and implementing marketing plans
If we need a “cultural revolution” in the UK wine trade this, in my view, is where it needs to come. We need more marketing skills. Ideally we would get a fair amount of such expertise from outside to help develop our lateral thinking, but if this is seen as too risky or expensive then we need to develop our homegrown skills. This in turn will require, I believe, a step up in our commercial training programmes – and that is the subject of my latest opinion piece on Harpers, which will be posted as a follow up shortly.
It is quite reassuring to see that this is not strictly a French wine industry issue as the French have been vilified repeatedly about “not knowing how to market wine” for years… While it is, and will remain, difficult to build a brand in the wine business, as brand loyalty is incompatible with the wonderful voyage of discovery which the modern wine world offers, still too many wine makers in France, in particular, I have seen or worked with use this as an excuse to not even do the minimbasics of marketing – an attractive website, a functional and welcoming customer service, maintaining an up-to-date customer database or even having a process to collect customer information, etc.
Thanks Alon. One of the issues implied here is that different people define the word ‘marketing’ in different ways which doesn’t help and another is that some consumers find a lack of overt marketing appealing. Ive met winemakers who are actually brilliant marketers but they would be hugely offended if I said that to them…its all about the approach that’s relevant to the target market you are trying to impress. But in essence you are right as a generalisation- too many producers think a good wine wine will sell itself
Probably your best piece so far, Mike. Really great stuff and very good to see airing of Drucker quotes.
Thanks Robert. Drucker has a knack of summing up what one is trying to say in a much more long-winded way. And of course my refrain is similar to yours in several of your recent posts.
Inspired Mike. I have spent the best part of my career courting this proposition. Yours is the most clinical explanation/definition yet. You should license this to Winemaking101.
Thanks Mike and good to hear from you.
Agreed this is very good and Mike has lived by it for years , we did Reckitts/Company conference in the late seventies which featured Peter Drucker quite a bit.my colleague was Stephen couche… No one can tell me that couche and Paul didn’t learn and put into action those thoughts..Marketing role for me has always been to make is easier for sale to be created ..they both need each other..Product Position Promotion ..price equals Profit…not price alone. thanks Robert and Michael for digging up this chestnut.
Thanks Bob and good to hear from you too. You are absolutely right…in the best companies sales and marketing co exist in harmony, they are co dependent.But generally one has the paramount position and this is generally counter productive.
Bob, you left out a couple of the MOST important P’s – People & Passion.
Because without great People in all aspects of business (including the customers) then putting the other P’s in place is almost ImPossible…
It’s the Passion P that gets you through the rough early stages LOL
Are you ex St Hallets Bob?
As I know you are definitely a people person !!!
Cheers Wino Wayne
Great piece Mike! As a marketer trying to break into the wine industry it is music to my ears! Seriously, the points you raise are very relevant although I would say that working hand-in-hand with the sales teams is vital.
Thanks Paul…and I’m delighted you are trying to break into the wine industry; we need more marketers! If you email me on firstname.lastname@example.org I have a thought for you
Mike, great food for thought. After thinking about what you said I decided it would be good to buy a book or two on marketing (I have worked in sales and merchandising previously). Is there one you would recommend that might relate well to the wine trade?
Thank you Kevin. I have to confess that I own no marketing text books but I do from time to time read either marketing oriented wine blogs ( eg Robert Joseph’s The Joseph Report …if you go on to his blog there are links to others too) and when researching posts look up a few well known gurus. If for example you read my Black Tower Riesling and Bananas piece you will see a couple of quotes in there. Google those gurus and there are a lot of insights some of which relate to our industry. There are also lots of links you can follow. Look also at my post, Great Wines from Grumpy Old Men…that’s based on a book called something like the Anti Laws of Marketing : The Marketing of Luxury Brands…now that is very thought provoking as it relates directly to selling fine wines Good luck..
Thank you Mike for the plug. I don’t know of a wine-specific book, and am actually working on one (and am naturally going to ask for some input from Mike).
Two books I recommend to a lot of people are “inside her pretty little head” and “Priceless”.
I also recommend reading anything by Seth Godin.
That sounds an interesting project Robert!
Paul, I agree entirely with you, I have a marketing background and I could not agree more with you, however, there are 2 more things worth mentioning here. first, scarcity. Scarcity helps to create demand and this is for example why the English sparkling wine, like many other good wines, are simply allocated. Secondly, more than in the UK wine market, we would need to the revolution at the lowest level, wine producers, it all starts there. Importer can only do a bit. I preach that approach to all my italian wineries and not, and I speak a complete different language for them. This also proves why only few wineries, the biggest and the richest, that can employ marketing people succeed in creating demand without sales people.
Hi Andrea. Im a huge fan of using scarcity ( preferably perceived as opposed to real! ) as a marketing tool….and advise English Wine producers and others to ‘allocate’ rather than ‘sell’ as a culture. Its not easy of course but very powerful when it works.
As to your second point I agree its easier for wealthier companies but marketing is to me a culture and not simply about employing formal marketing people. The issue in our category is that we tend to have a production culture linked with a sales culture and this comes from the owners and our history. As I pointed out, this can work but increasingly its not enough. Attitudes ( and therefore culture ) have to change. Employing marketing people is of course a sign that attitudes have changed ..otherwise the tendency is to add sales people when there is money to invest in future development.
Paul, yes marketing is culture and this is is where the problem is… employing marketing people does not make any difference is the owner dont believe in it, culture always starts from the top… selling will always work, however, the margins will be smaller and smaller and driven by forces outside the control of the producers, allocating allows the producer to be in control of everything, including margins…
I can only agree Andrea……….
Once you separate the transaction from the intent to buy, it all comes into focus.
In my world of buying wine at any of of 50 quality neighborhood wine shops in NYC, this distinction is gone. It is all about the brand of that shop servicing the needs of that neighborhood and clientele. It is all about connecting local experts, importers, and winemakers with the public mostly through tastings and dinners.
There are almost no marketers by title, there are only people serving clients face to face, face to phone.
Does it work–without a doubt. Do we have a unique and monstrous sized market bubble, no question.
Is it scalable and transferable through an online channel?
That’s the interesting question. This year already we have seen two shops launch what I think will be very successful wine clubs extending the brand of the shop across the country. Chambers Street with four clubs and Frankly Wines in partnership with Alice Feiring. Both I bet will be successful. Add to that an exploding series of dinners which are driving more and more shop loyalty.
Thanks Arnold…that’s very interesting. Particularly relevant I think is your comment that ‘there are almost no marketers by title’. Marketing, as you are implying, is fundamentally a way of thinking. Anyway what you are describing seems pretty vibrant….and very scalable.
What an excellent article and it applies in many markets other than the UK and it also concerns wine producers – in fact that’s the part that interests me most, since I consult for champagne producers.
I tell then that there are only 3 possible strategies tor a producer to choose from (I don’t know who first said this but I don’t think it was Peter Drucker :
Cost leader – but you need very large production capacity and very tight cost control
Niche product – find a consumer segment and make it your own
Differentiated Product – If people want this product they must come to you because it is not available elsewhere.
There are many variations and interpretations, but basically that’s it – 3 options
None is easy but in my view the differentiated product route provides the best long term potential.
Unfortunately far too many champagne producers have yet to understand this and have a lot of work to do ( I can only speak for Champagne because that’s where I work)
Thanks Jiles. Interesting stuff: those three strategies would be a good basis for a post in themselves. And I agree with you, I’m most comfortable with the ‘differentiated product’ option. There are good examples of companies taking a cost leader approach but I would always worry that someone would come along at lower prices and then one’s options are not great.
Mike I came across this post due to Mark Norman. It’s a must read piece indeed.
In all the value chain of wine industry, marketing efforts looks to be one of the less valued activities. Wine growers invest a lot in viticulture, then in all winemaking best practices (and people too), after, the ones who can do it, invest in sales force and very few in marketing activities. Generally speaking they see marketing as a cost not as an investment. that’s why they´ll hire more easily a sales guy then a marketing guy.
For instance if you came across Portuguese wine industry, it’s hard to find someone who invest in any sort of content strategy to educate end-consumers about the different native wine grapes, the different wine regions, the different terroirs, the story of the estates, the best pairings for their wines and son on…They have to use storytelling on their marketing efforts. There is a gap to be filled on the relation between the producer and the consumer, no one on the middle of the value chain seems to realize that the best way to attract end-customer attention for the wines they are selling, is to use the power of online media,
Thanks very much Antonio…and I agree with you. That’s a good point you make: marketing is seen too often as a cost not an investment.
And I find Portugal intriguing. The wine proposition there has clear points of difference, in terms of varietals. This is both a problem and an opportunity. The opportunity lies partly in the fact that you cant be lazy; you cant rely on varietals that everybody knows to help sell your brand. You have to tell stories, to excite consumers in different ways…these may have nothing to do with the grapes or the vineyards etc etc. Not easy of course. When people like me advise producers to invent stories it is terribly easy to say ..not so easy to do.
Every problem is an opportunity…to improve.
It’s not hard to write stories about a estate, a village, the traditions in village, local annual parties religious or not religious, local recipes (and in Portugal we have a rich and vast gastronomy), the landscapes, etc…it’s a matter of imagination.
We all know that Albert Einstein quote is true applied in any circumstance of business or life:
“Insanity: doing the same thing over and over again and expecting different results.”
If they want to increase sales, they have to reinvent their marketing or for the ones who haven´t it at all, to start to develop a marketing plan, structured and budgeted properly.