Why Burgundy is in many ways a role model for wine marketers.
In the late 90s, Penfolds launched Yattarna, the “white Grange”, which was a Chardonnay positioned at over £30 a bottle. I was running Southcorp’s European operation at the time and decided to send samples to key buyers for their feedback.
One such buyer set up a comparative tasting and sent me the results. Yattarna had performed acceptably, but I was intrigued by his view of its competitive set, and asked him why it was composed only of New World Chardonnays. He said that consumers saw white Burgundies as a separate proposition, with many not realising they were Chardonnays at all.
I remembered this story as I read Matt Kramer’s recent piece in the Wine Spectator (March 5th), The Seven Habits of Ineffective Wine People. It is a very good read and I empathised with virtually all his criticisms, but I would take issue with his view that Burgundian producers should acknowledge somewhere on the label that a Bourgogne blanc is a Chardonnay.
I accept that there is a material difference between placing Chardonnay prominently on the front label and making an oblique reference on the back, but I can understand the reluctance of many Burgundians to acknowledge the varietal at all.
Why we need a cultural change in the UK Wine Trade.
Some years ago now, a group of Australian cattle farmers became increasingly concerned about declining sales of beef. After some discussion, they decided to employ a swanky advertising agency, and the “Sydney suits” duly arrived in the outback to receive the brief.
But it didn’t take long for the farmers to become frustrated by all the talk about long-term image building, the development of a clear brand positioning statement and all that related marketing “guff”, as they no doubt put it, though almost certainly less politely.
So the suits were sent back to Sydney without the contract, and the farmers decided to come up with a campaign themselves. Not long afterwards, the following strapline was seen on billboards, T-shirts and car stickers: “Eat More Beef You Bastards”.
The story may well be apocryphal, but either way I somehow doubt that the campaign would have paid off. It certainly gets full marks as a call to action, but zero out of ten for giving consumers any reason to increase consumption.
Should wine producers bypass trade customers and sell direct to consumers?
Whilst running Percy Fox, way back in the 1980s, one of our main agencies was Domaine de la Romanée-Conti. Suffice it to say it wasn’t exactly a hard sell. Our task consisted of liaising with the wine press, and allocating the wine to those customers who were likely to position it appropriately – and who were prepared to buy across the range. I can remember wondering at the time why DRC did not simply sell it all from Burgundy, direct to consumers, thereby cutting out two tiers of middlemen: the agents and the fine wine merchants.
This came to mind as I read about Diageo establishing Alexander & James. This is a direct-to-consumer operation for certain of their super premium spirits, which offers, as their spokesman put it, “a white glove end-to-end luxury brand experience”.
Why the pressure is on the leading distributors.
There’s a seminal moment in the film Manhattan when Woody Allen turns to his girlfriend and says: “Relationships are like sharks: they have to move forwards in order to survive. And what we have on our hands, my dear, is a dead shark.”
Well, I’ve always thought that businesses and sharks are pretty similar too in that respect and this came to mind as I read Chris Losh’s recent piece (Just Drinks, February 5 ): The UK: Land of … What’s the Opposite of Plenty. He concludes that a combination of government policy, “buyer parsimony” in the trade, and a consumer who has in effect been trained to buy wine on which there is no profit, means that the middlemen in the UK trade – our distributors and wholesalers – are under so much pressure that the sector could well be “about to enter a tailspin”.
As Chris admits, it’s a familiar refrain, and certainly the doom-merchants in our business have been saying that we have had dead shark syndrome since the turn of the century. He argues, however, that the unrelenting recession – and, more recently the shortage of wine, implying cost increases that many might not be able to pass on – could well represent the tipping point for many such companies. Linked with this, he believes that the trickle of producers reducing their focus on the UK will become a flood.
Let’s assume he his right, and I accept he may be. How do we turn things around? What are the options?
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:
The search for the true value of a bottle of wine
A couple of years ago, one of the presenters at the WSET BACK Course received a fair amount of sympathy from the audience when he described his embarrassment at being offered a glass of Ogio by friends. He’d found out that they had paid £8.99 for what he knew was a brand designed to be sold as a BOGOF at half the price. I would suggest that his view, that such wines represent a rip-off, is not uncommon within our industry.
I found this incident and the ensuing discussion (which I try to recreate in my Diploma Marketing classes) very interesting. I believe it gets to the essence of one of the problems we face as an industry, which is that we often get too close to the product.
Inevitably those of us who work in the category are much closer to being able to judge the true value of the liquid in any bottle than outsiders. This helps us all spot bargains as well as obvious overpricing, but it has two major drawbacks.
The first is that we can believe that we have a greater understanding than is actually the case. I would suggest that even the wine experts among us fall some way short, and that’s simply because we are all inevitably prisoners of our history and of our experience.
Wine’s bad economics: What does the future hold?
If I had the talent of Hieronymus Bosch I would paint an apocalyptic scene, at the centre of which would be four horsemen pausing for a moment to survey the result of their labours. They would represent the devastating combination of structural oversupply; a highly fragmented producer base; an agricultural ethos; and a global recession.
If you compare the return on investment of wine with that of its direct competitors – beer, spirits and cider – it is critically low. If you then consider the relative amount of effort that goes in to producing a bottle of wine and the fact that wine, as a generalisation, has greater aspirational values and a relatively affluent consumer franchise, then this lack of return is all the more remarkable.
To believe, as some appear to, that the disparity is down to our relative lack of marketing skills and/or the activities of those “beastly” retailers around the globe is, I feel, to comprehensively miss the elephant in the room.
A plea for more unconventional wine branding
In June 2011, Harpers published the results of a very interesting survey undertaken by Wine Intelligence and Amphora Design. They had presented regular wine consumers in the UK and the USA with eight different styles of label and asked their opinions on their attractiveness and how they stood up in terms of perceived price and quality. To reduce the level of subjectivity, all the labels were given the same fictional brand name, the same grape variety and the same bottle shape.
In summary, the UK consumers significantly preferred what one might describe as traditional or classic labels, depicting vineyards and/or a chateau. As a spokesman stated, the label with the vineyard image “was seen as classy, expensive and reinforcing the expectation of what a good wine was supposed to be”.
The marketing of super premium wines
In a recent edition of Off Licence News, Tim Atkin asked for a “re-evaluation of what constitutes fine wine”. This followed his plea that certain wines of the Languedoc should receive greater recognition. Other commentators might well echo his sentiments but champion the cause of other regions. For my own part, I am indirectly involved in the attempts of English sparkling wine producers to be perceived as on a par with the top Champagnes.
Whatever the region, any producer that seeks to break into the ranks of established fine, or super-premium, wine brands has a real task on their hands, given in many cases their strong trade and consumer franchise. As a first hurdle, the quality of the actual wine needs to reach a level where it achieves endorsement by opinion formers. Commensurate with that, an appropriate sales and marketing programme needs to be developed, and then consistently implemented over a number of years to optimise the chances of success.
The anti-laws of marketing
This came to mind as I belatedly read a critique by Louise Jack of The Luxury Strategy – published in 2009 – which argues that luxury brands should throw away conventional, tried-and-tested marketing principles .The authors in fact propose 18 “anti-laws of marketing” for such brands to follow.
Read any interview with Michael Cox, Yvonne May or Jo Wehring – or an individual producer of premium wines in Australia, Chile or South Africa – and you’ll spot a common theme. They’re almost certain to vent their frustration that the quality of their premium offer is not being sufficiently recognised, either by the trade or the consumer.
I was recently invited to speak at a conference in Australia, to offer my own ideas on the way forward for that country’s wine industry. One of my main conclusions was that Brand Australia needs to be segmented.
I am really impressed by the generic work of Yvonne May and her UK-based team, and the diversity of style and quality of premium Australian wine has clearly never been greater.
But the reality is that, partly due to years of heavy discounting at the lower end, the target consumer in the UK does not regard Australia as a source of premium wines – at least, not to the extent that the Australians would like them to. There is, therefore, a very large gap between perception and reality.