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.