Wine Branding. A useful tool for sales, or not?

Below is my coursework assignment, for a very versatile topic concerning wine branding. It was submitted to WSET for my Diploma exams, and received a “pass with merit” grade. Will be glad to have your feedback!

  1. Introduction

Any trader, regardless of product and expertise, was (and still is) in need of the right practices and methodology, to build brand identity and promote his sales.Sales: the magic word indeed. It is fundamental to link wine branding with sales, and in extend to wine’s target: the various groups of consumers.

Wine branding is about individuality of each consumer and how he perceives brand’s values[1]. Separate research is needed in various segments of people engaged in consumption, and clear evaluation of trends and behaviors. What is the market, ages, gender, financial status, tradition, global trends, educational status, environmental and ethics issues, alcohol in moderation trend? Question marks can go on infinitely.

All of the above, must be taken into account to present benefits for the producer, retailer and consumer as well. Statements clearly delivered will increase success and make less mess into consumer’s mind, and his willingness to spend.

  1. What a wine brand is

A brand is “A name, term, design, symbol, or any other feature that identifies one seller’s good or service as distinct from those of other sellers.”[2] When wine comes in, we can adopt a more modern definition. From old times when branding was a synonym of an appellation (and still is in many cases) to present time’s: «It is a form of intellectual property that has significance to consumers and, to at least a certain degree, can be created through advertising alone»[3]. It is rather all that best practices to communicate wine in important ways to consumer’s ears. A useful way to do so, is through Maslow’s hierarchy of needs[4]: the bottle, its contents and storytelling, must follow the pyramid of needs: At the bottom, the physiological needs (to satisfy hunger and thirst), and as we climb up, safety (protection and security), social needs (a sense of love & belonging), esteem (recognition by others and status) and finally self-actualization. The last three stages are the most important for branding, as they make consumer feel and be seen in certain ways, that are important to themselves. Benefits intangible, irrational, but very human.[5]

A global wine brand policy (where global is usually a brand with international sales of over 10 million bottles and presence in at least 50 countries)[6] can benefit producer trough better logistics, access to larger markets, financial profitability, commercial synergies and the possibility of being able to focus on groups in homogenous markets.[7] As a result of economies of scale, and the ease with which technology and know-how can now be transferred, significant percentage of wine grape production, has been led from western Europe to the globe’s cheapest growing regions.[8]

According to Christian Seely[9]: a brand could aid value, where value is the highest price possible, at which a consumer will be enthusiastic to pay, for a bottle of wine.[10] On the other hand, Eduardo Chadwick[11] states: some markets are heavily marketing and branding oriented, causing problems to the rest of the chain, such as producers and retailers, a situation not promoting long term business sustainability.[12] It is obviously a matter of balance.

Retailers do also benefit from branding. From a small local player to big international ones, branding in terms of creating identity, reputation and customer service excellence, is fundamental. Loyalty is building profits, and consistency drive their sustainability, as long as, some basic rules are followed. A retailer must focus on his area of expertise and advantages. For example, a global brand, such as UK’s Berry Bros & Rudd, has a reputation of a pioneer fine wine merchant. Expanding in segments, outside fine wines, could be desirable, but probably will cause a loss of distinctiveness and focus. Branding team should consider alternative ways, such as creating a sub-brand to operate the new business segment.[13] The opposite path is easier to be achieved, as going upmarket cannot cause loss of identity and fame. The example of UK’s Majestic retailer is notable, as they managed to offer customers a full fine wine service[14], including bonded storage.[15]

Alternatively, launching of private labels for retailer’s customer base can be welcome. This could improve profit margins, as no added value from another (winery’s) brand is involved, and increase cross sales. A customer initially willing to buy your private label exclusively found there, can leave with a couple of bottles of fine wine, your trained stuff “inspired” him to try.

  1. Successful wine branding:

If we take into account truly global successful wine brands, we have many common policies and procedures, aiming to grater brand awareness, and thus sales.[16]

Such brands must have an easy to pronounce, and positively inspiring name. Consumers whose native language, is different than the one of brand’s country of origin, may find it hard to pronounce, and get emotionally attached to it.[17] Chuan Zhou[18] claims that the best route for naming your wine in vast eastern markets, is “the symbolic or brand connective route, where the local brand name sounds similar to the Western name and establishes positive feelings, ideas and symbols”. Actual examples of this approach are Moët & Chandon, which has managed to develop a Chinese brand translation that sounds similar, and means “happily drunk”, and Australia’s Penfolds, which has achieved the same result, with a Chinese equivalent that loosely translates as “run towards wealth”.[19]

Furthermore, we must consider the messages delivered from the labels and the whole packaging. Having a look at two of the best selling global wine brands of the world, Californian Gallo’s Barefoot and Australian Yellow Tail, we can spot certain similarities: they both deliver a fun, inclusive, friendly and approachable message, the former by its unusually and funny bare foot image, and the later by it’s simple, bright, black and yellow label, featuring a wallaby, highlighting the wine’s Australian identity. This regional identifier can be emphasized, by further packaging interventions, such as Torres’ plastic bull, hanging from his best selling red label “Sangre De Torro”. Clear, simple message, with a sense of origin, is the norm.

An aspect sometimes underestimated, is the price segment, that a brand is aiming to gain market share. Careful research must be made, to finalize price positioning. A recent research in WineBusiness.com[20], revealed that when American consumers are making a decision on which wine to purchase, the two most important factors, are price, selected first by 72%, followed by brand at 67%, and grape variety, oddly enough, about half as important (36%) as price. Most commonly, they are buying wine under 20$, and half of them in the area of 10$ to 15$. Undoubtedly, price is driving branding.

Then there’s a need of a serious customer service. As Barefoot’s co-founder Michael Houlihan analyzes in brief[21], his brand implemented call center, surveys and personal interviews, to learn what customers wanted, and what they liked and disliked. Same applies with Concha Y Toro’s (another top global successful brand) UK’s brand manager Michael Houlihan, who states that regular market studies enabled the company to become familiar with British consumers’ expectations and behavior. This helped to target customer groups efficiently, through rigorously measured advertising campaigns and promotional activities[22]. He continues, that general public customer experience was found to be dependent on the distribution and retail customer experience: a great one, is what brand loyalty is all about. Consumers will always blame the brand for any distribution or retail problems, so his aim was to give his partners what they needed to offer the ultimate experience to them.

What is the benefit of a satisfied customer? Loyalty of course! “We kept providing exactly what our customers wanted: a fun, approachable wine staple, that was always in stock, delivered high value and consistent taste profile”.

This last statement, highlights another crucial factor for wine brands: Consistency. Wine its self, is an agricultural product, prone to unpredicted situations that affecting volumes, vintage by vintage. Weather conditions, diseases, winery “accidents” are only some of those factors. As a study for rapid Yellow Tail’s development illustrates, insufficient consistency was brand’s most important early challenge, and was solved by a turn to bulk suppliers, although it had a negative impact to the gross margin, estimated to about 0,75$ per bottle.[23]

When referring to consistency, no other example highlights better its significance, as champagne. Creating a highly specialized non-vintage market, initially out of need (cold weather is causing grape ripeness problems), trained generations of consumers to expect identical product, whenever they purchase a bottle. By further emphasizing on luxury and status branding strategies, their brand is a case study of success, that also creates regional identity.

Speaking for this identity, over the last decade, there is a rise in global wine tourism. A powerful branding tool indeed. A way to inspire your culture and messages to your visitor, enhance loyalty, and regional identity. Dimitriou responds: There is over a decade now, that we’ve tried to infuse a sense of “wine adventure” to guests visiting Rapsani region in Greece[24], with simple and clear messages like “discover the soul of Rapsani”, aiming to exploit the stunning vineyards location, the topography of Mount Olympus, and the special traditional viticulture practices. Through a low budget campaign, and word of mouth, we are fully booked for the next 18 months[25]. Rapsani is now widely considered, an international brand.

Distributors are an important aspect, to ensure end point availability. They need care, attention and training, to absorb branding strategy of the wines, and then deliver it to retailers. Some producers give such importance to distributors, that actually decide to totally control them, as Torres did in Brazil, by acquiring his local distributor Pescarmona[26].

Websites, blogs, and perhaps above all, social media, are important channels to strengthen and maintain wine brands. With the appropriate consumer feedback, a successful communication strategy can be laid out, as a developing markets’ study, shows that only 6% of sample do not use any social media platforms, and of those who regularly do, 44% use it to discuss wine, 47% to look up wine price, 54% to get wine information, and 51% to ask friends for wine recommendations[27]. Furthermore, another study concludes, that 87% of wineries reported a perceived increase in sales due to social media practices[28].

Of course there is a need of an experienced social media team, who can deliver your message effectively. Ages when just “likes” where driving strategies are well behind us. Engagement is the key. Sharing and commenting the way to do so. Mondavi’s head says “We look to engage our most influential followers and create dialogues. This way, we enable their influence to amplify our message, and potentially give us a seal of approval”.[29] More or less, a very different producer (in terms of potential customer basis), the famous Bordeaux, Château Palmer, also find social media useful. They use Facebook, not to raise sales, but to increase publicity and “be connected with the maximum number of Palmer fans around the world”.[30]

Branding can be also a regional initiative. Common bottle implementation, with notable examples of Burgundy, Alsace and Bordeaux, is a way to do so, by promoting regional awareness, and making bottle shape a quality and diversity indicator. Needless to say, that bottle shape plays significant role in warehouses and restaurant cellars, so initial choice is fundamental to avoid problems, such as many sommelier’s complaints that Alsace’s ones are too tall to fit their shelves, or racks designed for standard bottles.[31] Additionally, further adoptions, like bottle necks and screw caps, can be rewarding. Austria has success in that field, as its flag attract your eyes immediately when you look at a bunch of laid bottles.

Recent researches, are showing an increasing, environmental ethics, sustainable viticulture, and land use significance, in modern wine branding.[32] This is often further associated with the gender of the consumer. A woman’s preference usually encourages paler colors, softer tannins, and sometimes a sweeter palate, and nowadays females are driving USA’s wine consumption, accounting for 57% of volume, according to the Wine Market Council. Furthermore, “highly involved” female wine drinkers are mostly older Millennials who tend to be “urban educated professionals” and are generally more “ethically diverse than the typical female wine drinker”. 38% of them, said that organic or sustainable-certified products were important factors when purchasing wine, compared to 32% of males.[33] Concluding, a brand should consider a turn into organic viticulture, environment sustainable practices, and part of their portfolio of wines, to be more femine oriented. The recent trend of Provence roses, with clear bottles that letting eyes freely admire their attractive color, is an example.

Additionally, an environmental friendly communication policy may benefit a global brand. European pioneer producer Torres, is driving this movement in his continent. “Torres and Earth” program, has invested more than 10 million euros for reducing CO₂ emissions by 30% per bottle, until 2020.[34] With the moto “Wine is the fruit of the earth” the brand is further attracting “green” consumers. (Their sales person do also drive hybrid cars. Quite a clear message here!) Same customers, “increasingly reject products that have been transported thousands of miles, just to be consumed in a few minutes”.[35] Bottling in the country of destination can reduce both costs and the carbon footprint.[36] Although such practices showed up last in the decision-making process at the USA customer study mentioned before,[37] this may be due to the fact that previous research shows that many Americans already consider wine to be a natural drink, whereas others are confused by the many environmental and organic certifications advertised.[38]

  1. Advantages and disadvantages of wine brands for consumers

Wine branding can positively affect consumer. It is commonly associated with general promotion strategies, such us discounts, free wine tastings, thematically organized dinners, and targeted advertisement. Producers do often provide marketing budget to retailers, and loyalty programs are not uncommon. Doing so, customers gain financially and have the opportunity to access wines, otherwise difficult either to afford, or find due to unfamiliarity.

A notable example, are those kind of labels, that penetrated supermarket segment through branding and targeted pricing, and got presented to a new audience, who otherwise wont has been interested to dive into wine culture.

Consumers find it easier to access new products and are often influenced – in terms of life styles, value systems, choices and behavior – by a growing (international) media. They feel that products coming ‘from far way places’ make them members of a new, international social class, one that increasingly distances itself from national contingencies.[39]

Branding do benefit ego and status after all. It creates positive feelings and bonding to the product. “It is there and it is rewarding”[40] either psychologically or even by ensuring consistency of supply. Status for example, is the area of LVMH, with mission “to be ambassadors of a distinctively refined art de vivre”.[41]

On the other hand, a highly branded approach giving less significance to bottle’s content, may have a negative impact to educated and trained consumers. They account for 25% of total consumption in USA,[42] and tend to interpret a very modern label or promotion, as a sign of lesser quality, especially in premium sector. Same applies when an aggressive price positioning is adopted. The opposite consumer group, those with minor education, also interpret such wines as having low quality.[43]

Such trained consumers, who mainly belong to “old world” regions, are seeking for diversity of taste, thus looking for terroir, place of origin, tradition, know-how, and points of difference in vintages. A wine brand, can hardly fulfil those points, and actually does the opposite! We can say that brand approach, is to recruit less educated consumers, in growing (unexperienced) markets in parts of USA, Eastern Europe and Asia.[44]

Speaking for appellation, regional, or even varietal wine branding, an accumulated historical reputation, can be many times misleading. Bordeaux supérieur labels are considered notable wines, when their majority are actually mediocre ones. Same applies with varieties: Chardonnay is the number one in USA customers’ favor, and expectations are always high, when truth in the glass seems to be often different.

In contrast, some feel safe with well-known and highly communicated wine brands, and do not broaden their palate horizons. There are many excellent and underrated wines out there, that remain unknown due to this reason, and lack of brand funding.

  1. Conclusion and personal commentary

It turns out that wine branding is an efficient way for growth, giving a competitive advantage, but with a heavy local market dependency. “Brand performance is strongly influenced by geographical and market contexts and above all by culture. Technical criteria tend to be of lesser importance”.[45]

Price do drive branding. Studies confirm the need of careful price placement, dependent again, on local trends.

A successful brand strategy should analyze target market and act accordingly. Do you aim in a traditional one, like France? When 75% of sales are domestic, appellation is synonym of quality, and chateau reputation is unquestioned, a highly branded approach won’t have much success. Wine is about people and passion. Irrespective of ownership, those that are true to terroir, are the custodians of a precious asset with a duty to produce the best wine each vintage, which reflects the sense of place and time.[46]

Aiming at a new (developing) world market? The more untrained and less educated consumers, will encourage a branded wine, that will “link” them to a value, a social status, relaxation, and actually, a way of life.

Talk to such customers in a simple and direct way, like Barefoot’s Facebook welcome message: “Based in California, we’re all about getting Barefoot & Having a Great Time!”. Some turns out willing to buy wine, but avoid to do so, because they are afraid to talk about it (too technical and “geeky” for them). Only one possible exception: a premium priced wine, might benefit from an obscure, less clear message, giving a mysterious “feeling”[47]

How? By utilizing modern technology and social media, to increase brand’s awareness and build identity. Adding value through identity is key.

Consumer is the king of our market after all.

 

Footnotes
[1] Westlin Brandon, Building Brand Equity In The Wine Industry

[2] American Marketing Association Dictionary, “brand” entry

[3] Christensen et al, Regional Identity And Value Creation In The Wine Industry, p. 8

[4] Wikipedia, “Maslow’s Hierarchy Of Needs” entry

[5] Mc Gechan Bruce, Creating Describing And Defining Your Premium Wine Brand

[6] Mora Pierre, Is Branding An Efficient Tool For Wine Industry?, p. 134

[7] Mora Pierre, Is Branding An Efficient Tool For Wine Industry?, p. 128

[8] Robinson Jancis et al, The Oxford Companion To Wine (4th edition), “globalization” entry

[9] President of AXA’s Bordeaux négociant business, France

[10] Bordeaux 2010 MW Symposium. Who Serves The Wine Consumer Best?

[11] President of Viña Errázuriz, Chile

[12] Bordeaux 2010 MW Symposium. Who Serves The Wine Consumer Best?

[13] Goode Jamie, Managing A Wine Retail Brand: Comparing Majestic, And Berry Bros & Rudd

[14] With acquisition of the specialized retailer Lay & Wheeler in 2009

[15] Goode Jamie, Managing A Wine Retail Brand: Comparing Majestic, And Berry Bros & Rudd

[16] For this analysis we consider wine branding as a global process rather than a domestic one

[17] Dimitriou Lily, Personal Interview, 2016

[18] Head of “Wine Intelligence” projects in China

[19] Schmitt Patrick, Too Many Wine Brands Not China-Ready

[20] Thach Liz Dr. MW et al, 2015 Survey Of American Wine Consumer Preferences

[21] Reiss Robert, The Incredible Story Of Starting The World’s Largest Wine Brand: Barefoot Wines, Interview with Michael Houlihan

[22] Mora Pierre, Is Branding An Efficient Tool For Wine Industry?, p. 134

[23] Mora Pierre, Is Branding An Efficient Tool For Wine Industry?, p. 132

[24] Tsantali’s winery in Rapsani does not yet accept visitors

[25] Dimitriou Lily, Personal Interview, 2016

[26] The Drinks Business, The World’s Most Admired Wine Brands 2015, p7

[27] Dr. Thach Liz et al, 2015 Survey Of American Wine Consumer Preferences

[28] Dr. Thach Liz MW, Exploring The Impact Of Social Media Practices On Wine Sales In U.S. Wineries

[29] How The Mondavi Team Uses Social Measurement For PR & Marketing?

[30] Kakaviatos Panos, Growing A Wine Business With Facebook

[31] Robinson Jancis et al, The Oxford Companion To Wine, “Bottles” entry

[32] Robinson Jancis et al, The Oxford Companion To Wine, “politics and wine” entry

[33] The Drinks Business, The World’s Most Admired Wine Brands 2015, p7

[34] Torres’ Mission, Torres and Earth website

[35] Mora Pierre, Is Branding An Efficient Tool For Wine Industry?, p. 132

[36] Robinson Jancis et al, The Oxford Companion To Wine, “globalization” entry

[37] Thach Liz Dr. MW et al, 2015 Survey Of American Wine Consumer Preferences

[38] Sullivan Meg, For California Vintners, It’s Not Easy Being Green

[39] Mora Pierre, Is Branding An Efficient Tool For Wine Industry?, p. 129

[40] Dimitriou Lily, Personal Interview, 2016

[41] LVMH spirit [https://www.lvmh.com/group/about-lvmh/the-lvmh-spirit/]

[42] Thach Liz Dr. MW et al, 2015 Survey Of American Wine Consumer Preferences

[43] Mora Pierre, Is Branding An Efficient Tool For Wine Industry?, p129

[44] Mora Pierre, Is Branding An Efficient Tool For Wine Industry?, p. 137

[45] Mora Pierre, Is Branding An Efficient Tool For Wine Industry?, p. 137

[46] Bordeaux 2010 MW Symposium. Who Serves The Wine Consumer Best?

[47] “The Prisoner” best seller label in US, is an example [http://www.theprisonerwinecompany.com/the-prisoner/#section-the-wine]

Bibliography and References (All web links, in footnotes and bibliography, where accessed and verified on April 10th, 2016)

American Marketing Association Dictionary; “brand” entry [https://www.ama.org/resources/Pages/Dictionary.aspx?dLetter=B#brand]

Chadwick Eduardo, Seely Christian, et al; Who serves the wine consumer best?; Bordeaux 2010 MW Symposium [http://www.mastersofwine.org/en/events/symposium-2018/previous-symposia/bordeaux-2010/forging-links-videos/who-serves-the-wine-consumer-best.cfm]

Christensen C. Bradley et al; Regional Identity and Value Creation in the Wine Industry [Community and Regional Development Unit of University of California Davis, 2012]

Dimitriou Lily; Corporate Communications Director of Tsantali vineyards and wineries (a leading Greek wine brand in exports); personal Interview on April 5th 2016; email: dimitriou.l@tsantali.gr ; Telephone: + 30 22950 22941-4 [http://www.tsantali.com/about-us/]

Goode Jamie; Managing a wine retail brand: comparing Majestic and Berry Bros & Rudd, 2012 [http://www.wineanorak.com/wineblog/business-of-wine/managing-a-wine-retail-brand-comparing-majestic-and-berry-bros-rudd]

Hunt Alex MW; How peculiar is wine?; Jancis Robinson web 2014 [http://www.jancisrobinson.com/articles/how-peculiar-is-wine]

Kakaviatos Panos; Growing a wine business with Facebook; Meininger’s Wine Business International 2016 [https://www.meininger.de/en/wine-business-international/growing-wine-business-facebook]

Lay Steven; Branding a Winery and Its Wine Is Expensive, Necessary and Benefits the Consumer No Matter the Size, 2015 [http://ezinearticles.com/?Branding-a-Winery-and-Its-Wine-Is-Expensive,-Necessary-and-Benefits-the-Consumer-No-Matter-the-Size&id=9225932]

Ma Amy; Why the Chinese Love Lafite, The Wall Street Journal 2010 [http://blogs.wsj.com/chinarealtime/2010/09/17/why-the-chinese-love-lafite/]

Maslow’s hierarchy of needs; Wikipedia entry; [https://en.wikipedia.org/wiki/Maslow%27s_hierarchy_of_needs]

Mc Gechan Bruce; Creating Describing and Defining your Premium Wine Brand, 2011 [http://www.winemarketingpros.com/winery-marketing/creating-your-brand/]

Mora Pierre; Is Branding An Efficient Tool For Wine Industry?; International Journal of Case Method Research & Application [The World Association for Case Method Research & Application 2009] [http://www.wacra.org/PublicDomain/IJCRA%20xxi_ii_pg128-139%20Mora.pdf]

Reiss Robert; The Incredible Story Of Starting The World’s Largest Wine Brand: Barefoot Wines; interview with Michael Houlihan, 2014 [http://www.forbes.com/sites/robertreiss/2014/12/09/the-incredible-story-of-starting-the-worlds-largest-wine-brand-barefoot-wines/#3dab3a206482]

Robinson Jancis et al; The Oxford Companion To Wine (4th edition, web version) [Oxford University Press 2015] [http://www.jancisrobinson.com/ocw]

Schmitt Patrick; Too many wine brands not China-ready; The drinks business 2016 [http://www.thedrinksbusiness.com/2016/01/too-many-wine-brands-not-china-ready/]

Shaw Lucy; Successful wine brands tell a story; The drinks business 2015, Interview with Sebastian Aguirre [http://www.thedrinksbusiness.com/2015/01/successful-wine-brands-tell-a-story/]

Sullivan Meg; For California vintners, it’s not easy being green; 2010 [http://newsroom.ucla.edu/releases/for-california-vintners-it-isn-154669]

Thach Liz Dr. MW; Exploring the Impact of Social Media Practices on Wine Sales in U.S. Wineries, 2014 [http://academyofwinebusiness.com/wp-content/uploads/2014/07/SMon06_Tach_Liz.pdf]

Thach Liz Dr. MW & Dr. Chang Kathryn; 2015 Survey of American Wine Consumer Preferences [http://www.winebusiness.com/news/?go=getArticle&dataid=160722]

The World’s Most Admired Wine Brands 2015; The Drinks Business [http://www.headley.co.uk/headturner/AdmiredWines2015]

Torres and Earth website [http://www.torresearth.com/en/mission]

Westlin Brandon; Building Brand Equity In The Wine Industry; Tincknell & Tincknell 2001 [http://www.tincknell.com/pdfs/brandequity.pdf]

Wright Ian James; How the Mondavi Team Uses Social Measurement for PR & Marketing; Interview with Paul Englert, 2016 [http://www.prnewsonline.com/topics/measurement/2016/03/17/how-the-mondavi-team-uses-social-measurement-for-pr-marketing/]

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