Wine Branding

Wine Branding Luciano Paolo Nesi The practice we know as "branding" today, where the consumers buy "the brand" or the brand quality promise is a product of the Industrial Revolution. Up to the mid 1900’s branding was quite literal, burning, carving or painting, to differentiate it from others, physically marked i.e. a product. As markets expanded and became more competitive, players needed to do more than just differentiate their products but also needed to create desire and preference for the product, and promote repeat purchase. In the context of the wine industry, we can say that the earliest attempts to create product differentiation began, not just with the appellation systems of the Old World, but even earlier on…efforts that antedate the structured approach to branding as we see today. Marketing managers today universally agree that a “brand” would typically comprise various elements, such as: name, logo, shapes, colors, sounds, scents, tastes etc. (Merriam Associates, Inc., 2016) Through history, we can see samples of these elements: from the shape of bottles (Chianti, Alsace, Port), the use of images of castles and family crests, and most notably, the indication of appellation or region. In today’s marketplace, periodic releases of sales and consumption figures confirm what we already know, that large wine companies dominate the consumer market, and it’s the large-volume New World brands that sell the most (volume). However, at the other end of the spectrum, the most highly regarded wines still come from Old World merchants, co-operatives and estates. What then is the implication of Brand or Branding for the winemaker, distributor or the consumer? At first glance, the usefulness of and the necessity in wine branding seems to be unanimously supported “One way to define a brand is to think of it as something that gives a consumer some guarantee of quality and/or style,” it enables the consumer to “…select a particular wine they may not have tried, with an idea of what to expect.” (Wine & Spirit Education Trust, 2012). Researching brand and behavioral loyalty, Carrol and Ahuvia noted “…consumers satisfied and in love with a brand are more willing to repurchase and to recommend it to others (Carroll & Ahuvia, 2006). In a study conducted in Australia, it was revealed that that brand was the most important factor for consumers’ wine choice, closely followed by price and medals. (Lockshina, Muellera, Louviereb, & Osidacz, 2009) Every year new wines are made and put for sale. Let say the wine is of a good quality at a fair price but the customer does not recognize the label nor have heard of the name, result? Another obscure product put on the shelf or price lists or wine lists that would, most likely, be heavily discounted in order to get rid of the stock and never ordered again. This wine is NOT a brand. On the other end a wine that is the most recognized and bought off the shelf, a wine that importer and distributors fight to carry as a proud addition to their portfolio, a wine that is in all the wine list of their markets related restaurants around the world a wine that is always talked about by the wine critics and blogger as a standard setter for its category a wine that retailers are willing to order months or even years ahead a wine that often transcend its place of origin, its grapes contents or its owners. This wine is a BRAND. Successful wine branding Successful wine brands at the high end and inexpensive price segment of the market have similarities but also different strategies and approach if they want to be successful for the long term in their respective segment therefore we will look at two successful stories from both segment and specifically Yellow Tail at the inexpensive segment and Chateau L’Angelus at the top end. It was the year 2000 and the Deutsch Family was looking for a low price Australian wine that would fill in the below $10.00 market segment in the U.S. where Australian wines, were starting to take more share with their fruit forward easier to drink products. The Casella family wanted to enter that segment by producing wines (rather than sells grapes) suitable for the same market segment. They both shared more or less the vision so they went into a 50/50 partnership and set out the business plan. The strategy was simple but maniacally implemented: The price category was set at less than $10 retail. The flavor has to be approachable mainly to new wine drinker and casual wine drinker therefore the wine need to have very low acidity, low tannins and a bit of residual sugar, basically resembling more of a grape juice with alcohol than wine. The name and the label should be easy to remember therefore they forgone those jargons about provenance, appellations and winemaking practices from the label and instead place a shiny red or yellow Kangaroo with the name of the grape variety as the main and only piece of information. All of this simplicity, complemented by very colorful boxes that transform into displays in wine stores, increased the visibility and ensured a privileged positioning in the retail shops. Produced by the Casella family in Australia, Yellow Tail story started in 2001 and only in 10 years became the U.S. market leader of the below $10.00 segment. In 2007 Yellowtail made it into the top 50 wine and spirit brands in the world as reported by Intangible Business. It was the biggest new entrant that year at 43, and was hailed as the wine brand phenomenon of the decade. (Intangible Business, 2007). Seven years later, in 2014, Drinks International placed Yellow Tails at No. 33 in its list of “Most Admired Wine Brands”, a list that also includes in its lineup, first-growth Bordeaux heavyweights Château Lafite Rothschild, Château Haut-Brion, Château Mouton Rothschild, Château Latour and Château Margaux. (Drinks International, 2014). In the same article, Yellow Tail is credited with having the most successful launch in history. Yellow Tail is the most powerful Australian wine brand in the world, according to Intangible Business, and is set for further expansion. (http://www.intangiblebusiness.com/press-coverage/marketing/2011/01/moreyellow-tail-hopping-our-way-) Yellow Tail sold 200,000 cases in the US in 2001 its first year, is now selling around 8 millions cases. Chateau Angelus Chateau Angelus is a wine company that produces its wine in Pomerol, a district of Bordeaux in France. While it have a long history of a couple of hundred years in wine making, in the 1960s the quality was considered average until Hubert de Bouard a member of the family, owner of the wine company, took the helm of it from his father and made it into one of the most prestigious wines in Bordeaux. When De Bouard took control, the Chateau L’Angelus (this was the name at that time), changed a lot in the winery and in vineyard in order to increase the quality, but a lot of decisions were carefully thought out for creating a successful brand. First thing he dropped the “L” from the name so it became Angelus and this catapulted the wine at the head of every list in alphabetical order then he hired the famous French architect Jean-Pierre Errath to renovate the old Chateau from the cellars to the offices and the iconic bell tower at the same time building visitor’s centers, and visitor’s parking, all those renovations brought in extra points to achieve the top status of premier gran cru classe A (a recognition that until 2012 was bestowed upon only two wineries, Ausone and Petrus). It also made the wine as the choice of James Bond in Casino Royal and finally in 2012 the recognition of Premier Gran Cru Classe’ A was awarded and to celebrate he bottled the 2012 vintage in a black bottle with 21 carats gold inscription. He must have known that the brand was hot, because while most Chateaus decreased the price for the average vintage of 2012 he actually increased by 30% and the market swallow it. This is another successful brand. But what successful brands have in common? They understand the market and they concentrate their marketing efforts on issues that are focused at the consumers in their respective segments. Yellow Tail was very fast to respond to the exponential growth in the first few years, creating and consolidating a market that otherwise could have been filled up by a competitor. In the same way Angelus understood the value of putting a glass of its wine in the end of a man who only quality is the best, James Bond. By all means these actions are not the only reason for their successful branding, but it shows how different the two approaches are. Yellow tail would have not benefited greatly from James Bond endorsement since it does not aim to be the best choice for a wine connoisseur, on the other hand Chateau Angelus would not be able to expand its sales exponentially as it has only limited vineyard area. So while not discounting the intrinsic quality of the product at its price point, creating a successful brand requires creating a perceived value by the consumers and this can be achieved through marketing campaign, endorsements from celebrities, or any influential personality for that particular segment of the market where the wine is supposed to be sold, store placements and critic’s scores. In short you have to make noise at the right segment constantly. Everybody out there want to have a bigger share of the segment, the competition is tough and new products and brands enter the market so if a company wants maintain its market position, innovation and constant investment in the brand is much needed. Advantage and disadvantages of wine brands for consumers Recognition and familiarity, we have already stated that one of the advantages of wine brands for consumer is the fact that you can select a wine by knowing exactly its quality and value level by just looking at the package. Convenience, you enter a wine shop and you know little or nothing about wines “what wine you like, red or white?” “Red please”, “any budget?” “Yes, ten Dollars” “Ok, we have 12 wines from California, 15 from Australia, 10 from Italy, 5 from Argentina…” Thank God for the Brand! Same apply if you have to buy a gift for that important occasion or for your most important person and your budget is 100$! Taste and price, this is arguable, but if the wine is a brand it means that many people like it, buy it and drink it, reducing the risk to bring home a wine that is an undrinkable plonk or pay too much for a wine that nobody likes. The recognition of the Brand is not necessarily for the right reason, think of the Chianti Flask, the most recognized wine container in the world but unfortunately “abused” by many Chianti producers by filling it with diluted, thin, low quality wines as they relied on the package alone to push their wines to the consumers. The fact that the bottle was regularly used as a candleholder did not help the image either. Today there are very few Chianti wines that still use the flask although Ruffino have come up with a new one-liter version that is slimmer in shape and the straw is actually made of plastic material. Brand trust can also extend to new products under the umbrella of a brand and can trigger an initial purchase. On regional branding, ultimately, it provides the consumer with a more concrete or tangible understanding of the ubiquitous “terroir” concept and makes the task of purchasing wine intimidating. Partially because of the success of Yellow Tail and other brands that follow, it is easy to see why the wine companies are attracted in invest in building a wine brand…rather on the wine itself. Wines that are recognized at any style or category are considered “brands”; they are recognized by the labels and, perceived to offer good quality at their respective price point from inexpensive to super premium. According to Revue du Vin de France, banks and insurance companies have acquired 2,400 Hectares of vineyards estimated at Euro 1.4 Billions mostly in Bordeaux and Chinese investors now own about 100 Chateau. (Saporta, 2014) It is only normal that wineries are run more as profit making business model than traditional, farmer-owned viticultural estates. So building something as intangible as a brand identity might be more familiar and attractive that investing in, say, a micro oxygenation or a drip irrigation system. Labels are modified to concentrate on the recognition of its particular object, painting, or Chateau. Chateau L’Angelus cut its name to Angelus which is easier for non-French speaking consumers to recognize and since the winemaker does not have the pre-requisite grand Chateau to feature in the label they focus on the large gleaming bells from their building which not only appear prominently on all the wines produced but also on their website as a time glass, and on top of every corks. The bells are also capable to play many different national anthems adding an additional drama for visitors. All of the above, while does not improve the quality of the wine, is creating the brand and the recognition that go with it, you see bells you think of Angelus, you see a white horse, Cheval Blanc (Chateau Cheval Blanc)…a Kangaroo = Yellow Tails. Summary We have all been at one point, challenged and intimidated by wine. Lack of knowledge in making wine choices is surely one reason why consumers buy less wine and are not inclined to experiment. The remains question is whether a wine brand approach is mostly successful in areas which have little wine education If so, branding will be less efficient in the future, in more mature markets, than in a market at its launch phase. It is tempting to assume that, with wine education, and palate development there will come an immediate change in one’s subjective assessment on wine quality. The implication for industry is that an effect of wine education is that a customer might “outgrow” a brand. One study, however, indicates that wine marketers should be cautious as treating the entire wine consuming world as a single homogenous marketplace. One study noted that with mass consumption items, notably food products, and including wine, French and ‘Old World’ wine consumers seek diversity, which is embodied in land, wine knowledge and vintages. “Brands do not satisfy this expectation and must, therefore, stay in their place, which mainly involves improving product visibility and offering inexperienced consumers a benchmark enabling them to evolve towards the demands of the world of appellations. In this sense, one could say that wine brands are primarily a tool for recruiting new consumers in growth markets like the United States, Asia and Eastern Europe.” (Mora, Is Branding an Efficient Tool for the Wine Industry?, 2009) So…should we conclude that wine brands are only for non-wine experts? Not so fast. There are studies that suggest differences in the way the average consumers from the Old World and New World react to brands so sometimes the information of the brands may be useful for a certain market and misleading or useless for the other. In 2016, Mora broadly looks not just at Old World and New World wines but Old World and New World markets (Mora, Wine Positioning: A Handbook with 30 Case Studies of Wine Brands and Wine Regions in the World, 2016) . Figure 1 Contrasting impressions of terroirs and brands In other markets however, particularly English-speaking markets and increasingly China, other values such as traceability, food safety, authenticity (genuine), and quality are important and are product elements that are less tied to where a product was made than by who made it. Product trust and integrity therefore is closely tied to brand promise which gives brands in those markets a different power. This might partially explain the Chinese obsession with Bordeaux and Burgundy as for all intents and purposes…the most famous appellations function as brands. Building and constantly investing in the brand in order to stand out in the crowded wine market is vital for successful wine companies if they want to secure sales, growth and less dependence of the volatility of the markets or bad vintages. A wine that has a brand recognition is further more desired by retailers as it will ensure sales and fast moving, furthermore the more brands a retailer has the less the competition. But the important step of understanding the target market cannot be skipped. BIBLIOGRAPHY Brostrom, G. G., & Brostrom, J. (2008). The Business of Wine: An Encyclopedia. Westport, Connecticut, U.S.A.: Greenwood. Carroll, B. A., & Ahuvia, A. C. (2006). Some antecedents and outcomes of brand love. Marketing Letters. Marketing Letters, 17(2), 78-79. doi:doi:10.1007/s11002– 006-4219-2 Drinks International. (2014). 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