Branding & The Future Of The Wine Industry

Wine Future 2009 Branding & the Future of the Wine Industry Robert Joseph Editor at large of Meininger’s Wine Business International & Director of DoILikeIt

What you see… A rare sight: a three-dimensional example of Escher’s famous impossible triangle…

Is not always what you get… Sometimes, things look very different if you look at them from a different angle…

Aren’t we lucky we’re not all in the motor industry?

We only have terrorists blowing up wine tankers - and millions of litres of wine that tax payers pay to get turned into industrial alcohol…

DOC DO AOC QmP DOCG QbA TBA

ROI

We all know plenty of wine industry initials. But not the one that counts: Return On Investment

A few thoughts on the future • There will be fewer wines and wineries (because of a lack of routes to market)

A few thoughts on the future • There will be fewer appellations/denominations. Wine regions - in the Old and now the New World – want to create their own appellations in much the same way that African states want their own airlines. Few of them are genuinely sufficientky good or different to warrant an existence. Outsiders have no reason to be remotely interested in them. And there’s no budget to change that. (Belgium no longer has an airline of its own)

A few thoughts on the future But cost and concern for the environment will revive the old ways…

A few thoughts on the future • There will be a clearer division between beverage wines and “fine wines” (partly thanks to packaging) Wine used to be divided between the basic beverage that was sold directly from the barrel (or in refundable litre-glass bottles or Tetrapaks in South America or Bag-in-Box in Australia) and the serious stuff that warranted bottles, labels and corks. Today, the most basic – 3-for-£10 wines come in the same packaging as Chateau Latour. It’s as though we’d all decided to use a knife and fork to eat our sandwiches…

A few thoughts on the future • Even “finer” wine will no longer be automatically thought of as coming in 75cl glass bottles with corks (or possibly even screwcaps. • Other materials (eg biodegradable PET) and sizes (eg 50cl) will have their day.

Wine on the right: my own 1 litre recyclable PET

• • • • •

Fewer, weaker critics More online chatter More online purchasing More informative labelling And…. A greater understanding of branding or maybe something beyond branding…

These are all Lovemarks

• Lovemarks: a marketing technique intended to replace the idea of brands - and the name of a book written by Kevin Roberts, Worldwide CEO of Saatchi & Saatchi. Roberts claims, "Brands are running out of juice". And asks, "What builds loyalty that goes beyond reason? • Mystery: Great stories: past, present and future; dreams, myths and icons. • Sensuality Sound, sight, smell, touch, and taste • Intimacy Commitment, empathy, and passion

Lovemarks, command both respect and love. In September 2006, Saatchi & Saatchi won a US $430m million contract with retailers JC Penney because of the idea of lovemarks

Brand identity

What is your brand really all about? And why should I be interested?

Features

Benefits

Features • My region is as big as Chile • Our chateau was built in 1653 • We won a medal at the Indian Wine Challenge • Our vines are very old

Benefits Our wine will excite your taste buds Serving our wine will make you look more sophisticated Our organic wine will make you feel healthier. Our lower alcohol wine will make you less drunk. Our Sustainable/Organic/Fairtrade wine will make you feel like a better person. • Our Shiraz will make your hamburger taste better • Drinking our Zinfandel will make your wife/husband seem more attractive. • • • • •

The Chinese menu When diners in a Chinese restaurant complain about not being able to understand the Chinese-language menu, the answer does NOT lie in expecting them to learn Chinese. (But that’s not the way the wine industry thinks. For many people “Education” is the answer to all of the industry’s problems.)

A Chinese-menu wine bottle Do you know what this white Italian wine is likely to taste like? Sweet? Dry? Rich? Steely?

Where was it produced?

What is it made from?

Is the New World really so much better?

What does Mudgee contribute to the flavour/quality of this wine?

Consumers are confused Between grape varieties, regions and brands…

There is a surprising amount of confusion As surveys carried out by firms like Wine Intelligence for clients like Constellation have revealed, many otherwise apparently sophisticated and highincome wine drinkers imagine Rioja and Macon to be grapes…

My own, newly-launched research company DoILikeIt carried out a survey of attendees at the London Wine Show – consumers who paid £15 to attend a wine exhibition revealed an interesting lack of knowledge.

Region

Brand

Grape

Don’t Know

Moulis

33%

17%

21%

29%

Malbec

18%

20%

26%

36%

Guigal

24%

19%

24%

33%

Torres

18%

57%

18%

6%

McLaren Vale

45%

55%

Clarendon 33% Hills

58%

9%

DoILikeIt Survey. London Wine Show. Oct 2009

But it’s NOT the consumers’ fault, We, the producers and distributors have done woefully little to build their knowledge.

If the wine industry sold computers, it would forget to provide instruction leaflets

From the New York Times

“People are deserting us for other, simpler appellations. We’re failing to attract newcomers to our wine because of confusion about likely sweetness levels” Jean-Louis Vézien, Director of the CIVA, the official promotional body for Alsace wines.

Or it would include instructions for a completely different model

Which tap would you expect to produce hot water?

Which bottle would you expect to contain the drier wine?

Why not the one misleadingly calling itself “Extra Dry”?

Book publishers get it right Book covers are far more informative about the style of their contents than wine labels….

Some wines are as informative as those books Successful wines like this…

(The vast majority of) consumers like simplicity and consistency

Most of us like restaurants we can rely on And a growing number of us take the same approach to coffee

In a flat coffee market, the market for Nespresso pods is growing by 70% annually…

Compare and contrast Easy to understand, colour-coded, consistent coffee pods… And a confusingly similarly-packaged range of quite different Shirazes from a producer in Australia. (If only the bottles had some of the imagery to be found on the same producer’s website)

Why the inconsistencies? • Vintages – Why do we need them? – Why inflict the effects of cold rainy weather onto consumers? No self-respecting restaurant would dream of excusing sub-standard steak by saying “well the butcher delivered us meat that wasn’t as good as usual” – Spain once cleverly offered non-vintage premium wines. Vega Sicilia still does. And so do the great names of Champagne

“People find vintages interesting”. Yes… and some people find the variation in stamps interesting. They’re called stamp collectors. Most of us think of stamps as a means of getting letters to their destinations. And most people think of wine as a drink.

Why the inconsistencies? • Regions – Should the same brands cover several regions? – In the New World it has been a recipe for success. But it IS confusing… To anyone without an understanding of those regions’ characteristics. – What if Rioja were right in forbidding producers from using the same brands in Rioja and elsewhere?

Why the inconsistencies? • Winemaking – But even Rioja varies confusingly. Between €2 Joven, traditional elegant Gran Reservas and rich dark, “modern” 14% examples. – How should any producer establish where they fit – in style or quality terms – within an appellation? – Maybe they should work together with like-minded neighbours. Following the model of Relais et Chateaux hotels… – These guys do it brilliantly in Portugal…

The Douro Boys

How to get away with being inconsistent • By producing small amounts of wine – under 5-7,000 cases – and either “hand-selling” it directly from the winery- or through specialist retailers and sommeliers. • (Waiters can explain the fact that “chef has decied to cook the lobster a little differently)

How is YOUR wine being sold? Is it being “hand-sold?”

Or fighting for attention among hundreds of other similar bottles?

Or by developing a relationship with the consumer • True “fans” – of musicians, actors and restaurants – tend to be forgiving of occasional lapses. • Casual customers tend to be a lot less tolerant.

Château Musar! Have such a devoted fan club that they’ll forgive you anything.

Which brings us back to “Love Marks” A description that applies to many wines…

Conclusions • • • • • • •

Does your brand have a coherent identity? Do you sell the features - or the benefits? Who are you selling to? How are you selling to them? When/where/how are they going to drink it? Do you have a relationship with them? Is your relationship good enough for them to forgive your inconsistencies?

Who are you? What do you do? And why should I care? [email protected]