Jonathan Cahill
The views expressed in db Reader do not represent the views of the drinks business.

Wine’s Apparent Neglect of Marketing

The wine industry has stories in abundance and has probably the greatest emotional depth of any food or drink category. Sometimes great store is put by the French term “terroir”. But this refers to the physical aspects of a wine, the soil, location, weather, etc which appeals to the rational side. Of much greater potential is what might be called “emotional terroir”: its history, those who make it and any unique anecdotes. Being emotional, these stories have an even greater pull in terms of establishing a clear differentiation than just reciting product details and are far more durable as, stemming directly from the particular brand, they are unique. As Bill Bernbach, one of the greats of advertising said: “if they don’t feel it, nothing will happen.” But most in the wine industry seem to fail to recognise this.

This blind spot was illustrated by a newspaper wine critic in the UK who wrote how, when considering a wine, “it’s the one with the more straightforward package that gets my cash every time – the one that suggests the producer has spent their time and money on the contents rather than dreaming up an unnecessary ‘brand story’”. This rather short-sighted perspective demonstrated a failure to realise that a story needs only a little curiosity and dJack Daniel'soes not need ‘dreaming up’. If it comes from the wine itself, it’s already there – no dreaming required. Also it is difficult to understand why something which can provide such competitive leverage should be deemed “unnecessary”. Ironically, this disdain was immediately contradicted the next week when the same critic, on talking of another wine, commented on the fact that it was from a small producer who made it as a sideline and talked about it being an example of “little-guy revenge stories”.

Such scepticism in the face of anything which might smack of marketing indicates how much of the wine industry, through neglecting its full potential, has become prey to price promotions and fostered a tendency to commoditise. Shoppers aren’t naive, regular sales promotions encourage them to wait for the next sale rather than purchase a product at full price. Ask anyone in the wine department of a supermarket if a particular wine sells well and the frequent response is: “when it’s on promotion”. The consumer is educated to buy whatever is on offer rather than being drawn by a wine’s individual merits.

The power of stories was illustrated by LEGO in its Architecture line. This was originated by a Chicago architect who built skyscrapers made with LEGO. The first example was a model of the Sears (now Willis) Tower in Chicago. As well as instructions, a booklet came with the bricks which had a brief profile of the building’s architect, the origin of the design and the architectural features. The inventor explained that: “l wanted to tell a story, not just sell a box of bricks.[iii]

LEGO bricks were already twice the price of equivalent bricks although any manufacturer could make them, the last patent having expired in 1989. But LEGO Architecture increased this premium, thanks to the clear differentiation through the stories. A box of 70 normal LEGO bricks sold for $7.99, whereas an Architecture box, containing the same number of the same standard bricks, sold at $19.99. Since the line’s launch in 2008 the sales increased by 900 per cent in 2009, 350 per cent in 2010 and 200 per cent in 2011. A LEGO executive described the range as “very, very profitable.”

Wine too can be very, very profitable. In 2011 Cheval Blanc was reported to have made profits of €14 million on sales of €22 million and Chateau Lafite Rothschild made €70.2 million on a turnover of €80.8 million[iv]. Yet their ability to command the prices which produced such profits was not based on rational factors alone, but rather on the perceptions of the consumer. The power of what were, effectively, brands.

The role of perceptions was shown by Frederic Brochet. He served 57 French wine experts with two identical mid-range Bordeaux wines, one in an expensive Grand Cru bottle the other in a cheap Vin de Table bottle. The wine in the expensive bottle was preferred by a large majority. They used positive terms such as “excellent”, “complex”, “good” and “long” more than twice as often when describing this wine as opposed to when they talked about the wine in the cheap bottle. For this latter they used negative terms such as “unbalanced”, “short”, “flat” and “simple” more than twice as often. Yet it was exactly the same wine[v].

9 Responses to “Wine’s Apparent Neglect of Marketing”

  1. What an excellent article. I agree with everything that was written except for the last paragraph “The reason that this seldom seems to be recognised and fully exploited is no doubt understood by those within the industry” (unless of course if was tongue-in-cheek)”

  2. Regina M Lutz says:

    LOL — wine isn’t politics and it isn’t Legos, but marketers keep trying to make it so. It’s farming, for crying out loud….just farming.

  3. Jonathan Cahill says:

    Briliant! What a superb illustration of the blinkered attitude of the wine industry. Yes, it’s farming. But farming is not an end in itself, it needs to sell to customers as opposed to itself. The comment about marketers trying to “make it so” seems to indicate a complete lack of comprehension blinded by the sort of knee-jerk prejudice of which l wrote.

    It’s very helpful to have one’s views so clearly illustrated..

  4. Mareli says:

    Brilliant read!! Thank you!

  5. Jonathan,
    Great article. An obvious element of good marketing is simplicity. But many producers find it counter-intuitive to exclude attributes from their stated brand position; it’s more comforting to shoehorn everything in. That makes any brand differentiation difficult and consumer recall challenging.

  6. Taylor says:

    Nice article. You bring up an interesting note re:56 Sauvignon Blancs in one retailer. Pointing out all are pretty similar me too offerings with just a bit of text changed, and I would say to take it a step further, likely will have another landscape shot or boat on the label to differentiate. The other day I read a press release from a national retailer that had launched a new (me too) sauvignon blanc from a large company, and that consumers will go crazy for it because it can be “enjoyed at a variety of occasions”. Nothing else. Wow, such innovation and consumer insight!!
    The challenge for wine producers that are trying to tell a unique story with their brand with great anecdotes, packaging or a unique style of production is that those 56 Sauvignons are likely produced by less than 10 suppliers. If category buyers cant look beyond the same suppliers, or stop launching me too wines, it makes it tough for suppliers who are telling great stories but are not one of the multinationals. Look at the craft beer industry where buyers are proud to stock unique beers with interesting labels, or some crazy backstory to the producer.
    Its time for buyers to stand up in the wine industry and be a bit more brave when looking at your category offerings! p.s if you have brands with great back stories, consumers will pay for it, meaning less discounting/promos, or maybe wishful thinking 😉

  7. Jonathan Cahill says:

    Thank you for this. Nice point about the “new” Sauvignon Blanc. l don’t get the impression that producers think further than their noses when they make such vacuous statements. l hadn’t appreciated the point about the 56 Sauvignons being produced by 10 suppliers. The more variety offered, the more power is given to the retailers – it makes it easier to play one off against another.

  8. David says:

    I suspect that many wine producers don’t wish to see their wines as brands, as they consider the term demeans their precious, unique liquid created by mother nature in inimitable soils. So they don’t perhaps appreciate the importance of differentiation in successful marketing. In their eyes (and noses) their products are already highly individual, by nature.

  9. Jonathan Cahill says:

    l agree. But that’s the pity. As l mentioned, Chateau Lafite makes such enormous profits because it meets a lot of the criteria for a brand. l am sure they are jealous of their reputations but that is essentially what a brand is. It seems a case of biting off their nose to spite their face.

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