A Wolf in new clothing

It’s been a hectic two years for John Philips, building up his brace of brands, Beringer and Wolf Blass. And, as he tells Chris Orr, the BB UK stops here

WE HAVE a great set of brands to work with," beams John Philips, with a smile that could only be manufactured in America. But then you’d expect the managing director Europe, Middle East, Africa for Beringer Blass Wine Estates to think that.  He wouldn’t be in the job if he didn’t.

And with 17 years of dealing with big brands and big names – his CV includes stints at Gallo, Diageo, UDV, Guinness and Grand Met – he probably means it too. 

However, when Philips first took the job two years ago his smile may not have been quite so wide – the two great brands he had on his hands were both relatively unknown in the UK and, what’s more, he had no business to drive it. Was it not something of a nightmare scenario? "Not at all. We were pretty lucky in 2000/2001 that everything lined up pretty neatly. Beringer acquired Mildara Blass, at the same time Seagram was up for sale.

We had a business over here that had grown fast, and we had established some decent positions for ourselves and we were thinking, how do we go it alone? Seagram as a distributor decided to get out of the market, which gave us the opportunity to take the plans we had for being more independent forward.

"Since then, we’ve basically put in our own sales structure in the UK, customer services, financial support, marketing team etc, installed a person in Ireland and recruited staff for the Benelux countries, Germany, Switzerland and Austria. So, in the space of a little over two years we’ve gone from nothing, essentially, to a fairly broad based European organisation."

At the same time as building the business he needed to drive the brands, so Philips also turned his attention to the fundamental problem that faced both Beringer and Wolf Blass in the UK – lack of recognition.

"We did need to do something," he says with determination. "We had a couple of great brands [Wolf and Beringer] which were relatively unknown. And Wolf Blass in particular was seen as being the biggest brand for us with the most potential to grow.  We did some research to try and understand what the awareness levels were, and what we found out was more or less what we had suspected initially – which was that overall they were very low.

"But interestingly, those that were aware of Wolf Blass saw it as being one of the best quality brands. They saw it as being a bit eclectic, a bit different, and part of that was down to the packaging.

However, we found that with many current consumers of Wolf Blass, they didn’t really like the old packaging, but they accepted it because they knew it was a quality wine, so they’d pick it up. But with new consumers, those that didn’t like the packaging wouldn’t go anywhere near it.

The yellow label in particular, they found very off-putting. In fact there were lots of comments about the packaging that were very negative. But when we showed them the new packaging concept and talked about what the brand stood for, the reaction was much more positive and purchasing intent went up from 20% to nearer 65%."

Having been in the brand game for quite a while, Philips is realistic as to what focus groups and consumer research, like the above, actually proves. "It’s all qualitative so you can’t always take it to the bank," he comments.  But he and his UK Beringer Blass team have high hopes for the new image – a cleaner, leaner style, which tones down the prominent eagle that gave the old Wolf Blass a distinct Hell’s-Angel-on-Acid feel.

"We’ve just rolled it out into the UK market and we hope it will not only make Wolf Blass a fresher more appealing brand, but also keep loyal, existing customers happy as well. It’s definitely a positive step for the brand."

The plan, claims Philips, is to put significantly more investmentbehind the brand, in terms of distribution and packaging, but also advertising. "The first stage of the process, has been to build up broader distribution of the brand. The next was to roll out the new packaging. Stage three, is to do some significant level of consumer advertising and promotion. So in essencewe’ve reached now reached that final stage, where we need to build brand awareness."

But advertising is surely a broad brush for what, despite its revamp, is quite a focused brand. Would it not be better to invest in promotional programmes through the major retailers? Philips’ answer to the broad brush conundrum is that he believes the jury is still out on advertising. "It works for some brands. I’ve done a lot of work on advertising effectiveness over my career.

And in the wine business, I can say it works tremendously for some brands and not so well for others.  There’s no model for success in advertising in the wine business; I wish there were. I do think, however, that you need to use a number of media, from trade and consumer education through to social diffusion.  So our campaign is going to be a combination of channels, not just pure media advertising.

"What’s important to remember is that wine is seen as something special by a lot of people. So mass advertising campaigns will attract a certain level of consumers, but then a lot of people can be turned off by it as well. We have to be careful, but advertising will have a role to play. We have done advertising previously, and it was probably less effective than we hoped but we did learn from it and I think that’s the key to using advertising.  You need to invest in it, use your best judgement, then test and understand and plot the learning. It sounds pretty simple but it’s amazing how few do it properly.

"Also if you turn back to 1960, with 65 television commercials in the US I may have been able to reach 85% of my target consumers 15 or 20 times a day – these figures aren’t accurate, but you get the point. If I wanted to do the same thing today, I’d have to spend 15 to 20 times as much and use much more diffuse media – I couldn’t just put my product on television and hope that would do it."

When it comes to price promotion as a method of pushing one’s product, Philips is much more reserved. Indeed he’s fairly critical of the effect that price promotion has on the current market, and on consumers.

"Let’s look at the market first. If you look at the UK it has been a fabulous market for wine, and has continuing opportunities for all of us. And the reason why it has been a fabulous market is that there are a lot of really smart retailers out there who know the business very well. 

So as a producer you’ve got business partners that are interested in growing the wine business for a number of reasons. Number one because it provides good margins for them, and because it helps create an image for their stores.

"If you walk into the wine section of a supermarket and it’s really good, you’re going to feel better about the store – it’s almost like the fruit and veg section in terms of what it says about you and your store. The UK wine market is one of the most interesting in the world, and as such has attracted a huge amount of talent.

Over the past 10 years it has seen double digit growth virtually every year. And consumers have been trading up too, which makes it a wonderful place to be. But then, what happens?" asks Philips.

"Well, there are economic agricultural cycles in the wine business.  And we’re in one of them where there seems to be a little bit more supply than demand at the moment.  And what does that do? Well, it makes the retailers more aggressive, it makes the suppliers more aggressive and you end up in a situation sometimes where it goes far beyond what is sensible.

"I mean," he continues, "I don’t know what is reasonable in margin terms for a retailer – everyone should be making healthy margins. Nor is that my position to question. I give what I can afford to give in promotional terms, and as long as it is good for my brand and I can do it I will. If it makes sense. But I do think there have been promotional campaigns that border on the reckless.

And it doesn’t seem to do anyone any good. If you look at Nielsen stats for example, it’s obvious that a lot of money has been spent on promotion but hasn’t necessarily got anybody any more business.

It hasn’t got the retailer any more business in many cases, or the supplier, and in my opinion all it has done is to confuse the consumer further. Wine is often overwhelming for the customer and I think it’s our and the retailers’ role to make it easier and simpler to trust.  And that’s something that, when prices are all over the place… well, you’re not helping anyone."

Does that mean Beringer Blass won’t be wading into cut-price promotions in the UK supermarket scene? Is it happy to risk losing the volume any major brand needs because it won’t participate in it? "I really think it’s a case of being disciplined," says Philips. "We know what is good for our brand, we know what our brands are worth, based on the quality they deliver and the value they deliver, so we’ll price our brands fairly.

Do we promote? Yes we promote. Does the current market impact us? Yes, of course it does. Does it impact us as much as some players that are more aggressive than us? No – because we’re disciplined.  No one can claim to be immune to it. But if you look at it statistically, we’ve had very few promotions but our brands are growing strong.  So what does that say?"

By strong, Philips is referring to AC Nielsen figures that show the company has achieved 40% increase in sales on a year-on-year basis.  It’s a growth that Philips is undeniably proud of and one that he gives the relatively new team at Beringer Blass UK all the credit for.

 "I think one of our initial challenges was to bring in a number of people in a short space of time; get quality people and integrate them very quickly into the job. You need a very special type of person for that and we’ve been very lucky in that we’ve found a really great team.  People have worked really hard and we’re consequently seeing the results."

So what’s the future for BB UK? "Well, like I say, we have great brands. I think world-wide recognition that they are great brands and top quality will get us in the door. We’ve got good people, and good people, with the right commerical arguments, will, in turn, get you the listings.

Those listings need to then turn into a success for your retail partners and that’s the difficult part.  If we can do that we’ll be successful. It’s tough, it’s really tough. I mean nobody ever said it was going to be easy but we’ve at least got the quality to back it up."