wine branding magic ingredients
TRANSCRIPT
Wine Branding’s Magic Ingredients
Nick UrsiniAmerican Marketing Association
July 21, 2016
Why is Wine Branding ImportantProduction
• 68 nations have 18 million acres of wine grapes – close to the size of South Carolina
• Top 10 nations by acreage account for 68%• Spain, China, France, Italy, Turkey, USA, Argentina, Chile, Iran, Portugal
• 7.4 billion gallons of wine world wide – 294 million (750 ml) bottles
• Top 10 nations by gallons account for 81%• France, Italy, Spain, USA, Argentina, Australia, South Africa, China, Chile,
Germany
• California Produces 85% of USA wine -- # 4 in world• 10,417 USA wineries – 4,285 (41%) in California
Wine is a competitive industry
2014 acreage data from TDA and United Nations Food & Agriculture Organization2014 production data from Trade Data and Analysis (TDA)California data from U.S. Tax and Trade Bureau and the Wine Institute, July 20 2015
Why is Wine Branding Important Consumption
• 186 nations consume wine• Top 10 nations by consumption account for 67%
• USA, France, Italy, Germany, China, UK, Spain, Argentina, Russia, Australia
• 4.4 billion gallons – 172 million (750 ml) bottles
• Consumption is growing fastest in 4 of the top 10• Australia -- 19% (displacing beer)• UK -- 13% (Italian Prosecco & Spanish Cava)• Spain –10% (shift to lower price points)• USA – 3% (Millennials)
• Consumption dropped 1% to 10% in other top 10 nations
Top nations have strong consumer markets making brand
management a success factor
2014 consumption data from Trade Data and Analysis (TDA)
Why is Wine Branding ImportantCalifornia Dreaming
1980 1985 1995 2005 20150
2000
4000
6000
8000
10000
12000
California USATotal
Source: U.S. Tax and Trade Bureau and the Wine Institute, July 20 2015
Why is Wine Branding ImportantWine Fundamentals
Success in the Wine Industry requires competencies in four distinct occupations1. Land selection – elevation, soil, rain, sun exposure,
temperature, appellation
2. Viticulture -- the science, production, and study of grapes -- events that occur in the vineyard
3. Chemical processing -- harvesting, crushing & pressing, alcoholic and malolactic fermentation, clarification, cooperage, aging, and bottling.
4. Consumer marketing skills – Think like P&G
Quality is a function of the winemaker’sskills in all areas -- specialists are often hired. Production volume, quality, and price points are the critical outcomes
Why is Wine Branding Important18 Noble red and white grapes define the complete range of wine flavors
deep, dark red wine to clear, zesty white wine.
Grenache PinotNoir Merlot
MalbecSangiovese Tempranillo Syrah
Cabernet Sauvignon
Semillon Viognier
Riesling
SauvignonBlanc
Chenin Blanc
Moscato
Chardonnay
Gewurztraminer
Noble grapes are also called International Varieties -- grape varieties that are widely planted in most major wine regions and have widespread market appeal.
Why is Wine Branding Important
The 100 most valuable brands in the world are worth $3.3 trillion
Wine starts as a creation, a piece of art, and a gift that can become a brand
A Brief History of Branding Ancient Egyptian brick makers used symbols to mark their products
Medieval European trade guilds created “trademarks” for legal protection and to signify quality
18th Century producers used pictures to strengthen associations with a name
19th Century whiskey producers used perceived associations to create a sense of value – Old Smuggler Scotch in 1835 took advantage of the smuggler’s reputation for being better
Why is Wine Branding Important Brands capture what we want the consumer to remember Brands help manage customer perceptions Innovative products and designs create relationships with consumers and market channels People do not “buy” products they buy “trust”
Smell & flavor excite the taste buds Label design is unique and attractive Bottle is thick and a unique shape for the wine varietal
Cork is firm, clean, and meets perceptions of quality The name conveys a sense of ownership and uniqueness The brand is a reflection of individual self worth
People buy Dom Perignon to show off – they could buy another Champagne that is just as good
or even better for a lower price – Source: Tim Atkin MW, U.K. Wine Critic
This is Brand Power!
Why is Wine Branding Important A brand is a collection of ideas that the consumer consistently
associates with your product
The consumer recognizes the brand through sensory signals
Winery and winemaker’s name
Logo design
Label design and consistency
Packaging – bottles and cartons
Product quality and reputation – publicized points count
Advertising and promotions
Services such as websites, direct shipping, wine clubs, social media and more
Why is Wine Branding ImportantCritical Brand Equity Elements P. 1 Perceptions of Quality
Reason to buy
Helps differentiate and position
Superior value
Price premium expectations
Awareness
Familiarity and liking
Anchors for associations
Driven by purchase and use
Signals substance and commitment
Why is Wine Branding ImportantCritical Brand Equity Elements P. 2 Associations
Helps retrieve information (recall)
Creates positive feelings and attitudes
A reason to buy
Supports differentiation and positioning
Brand Loyalty
Lowers marketing cost
Provides leverage with the trade
Supports new customer acquisition
Increases customer’s perceived switching cost
Why is Wine Branding ImportantCreate a mental image
to connect with consumers on an emotional level
Why is Wine Branding ImportantRich Parducci owns McNab Ridge WineryIn Mendocino, California, north of Sonoma Mendocino land prices Operating expenses Proximity to Pacific Ocean
Nichelini is one of the oldest Napa Wineries started in 1890 Made wine for local miners No distributor relationships Special etched large format bottle no longer produced (collectors)
Build Relationships
Why is Wine Branding Important Movie Bottle Shock dramatized the May 24, 1976
French wine tasting that changed the IndustryRank Wine Vintage Origin
1 Chateau Montelena 1973 USA
2 Meursault Charmes Roulot
1973 France
3 Chalone Vineyard 1974 USA
4 Spring Mountain Vineyard
1973 USA
5 Beaune Cos des Mouches Joseph Drouhin
1973 France
6 Freemark Abbey Winery
1972 USA
7 Batard-Montrachet Ramonet-Prudhon
1973 France
8 Puligny-Montrachet Les Pucelles Domain Leflaive
1972 France
9 Veedercrest Vineyards
1972 USA
10 David Bruce Winery 1973 USA
California Chardonnay vs. French Burgundy Chardonnay
Owner of Chateau Montelena sent skids of the wine to a landfill Brown color from reductionist techniques (low oxygen) Retrieved & color changed Won French Blind Wine tasting
Why is Wine Branding Important Movie Bottle Shock dramatized the May 24, 1976
French wine tasting that changed the IndustryRank Wine Vintage Origin
1 Stag's Leap Wine Cellars
1973 USA
2 Chateau Mouton-Rothschild
1970 France
3 Chateau Montrose 1970 France
4 Chateau Haut-Brion 1970 France
5 Ridge Vineyards Monte Bello
1971 USA
6 Chateau Leoville Las Cases
1971 France
7 Heitz Wine Cellars Martha’s Vineyard
1970 USA
8 Clos Du Val Winery 1972 USA
9 Mayacamas Vineyards
1971 USA
10 Freemark Abbey Winery
1969 USA
California Cabernet Sauvignon vs. French Bordeaux (called Claret in Britain)
French had decades of experience California producers had a few years 1972 was Clos Du Val's first vintageyet performed better than the French
Why is Wine Branding Important Results from the 30th Anniversary in 2006
Rank Wine Vintage Origin
1 Ridge Vineyards Monte Bello
1971 USA
2 Stags Leap Wine Cellars
1973 USA
3 Tie Mayacamas Vineyards 1971 USA
4 Tie Heitz Wine Cellars Martha’s Vineyard
1970 USA
5 Clos du Val Winery 1972 USA
6 Chateau Mouton-Rothschild
1970 France
7 Chateau Montrose 1970 France
8 Chateau Haut-Brion 1970 France
9 Chateau Leoville Las Cases
1971 France
10 Freemark Abbey Winery
1969 USA
California Cabernet Sauvignon vs. French Bordeaux (called Claret in Britain)
Rankings & Ratings drive market perceptions
Why is Wine Branding Important Creating Brand Magic in the Wine Industry
Create a unique attribute of the winery Features such as winery history, size, varietal, vineyard
geography, special harvest (e.g., ice wines) Benefits such as low tannins, alcohol %, avoiding
headaches, fortified dessert wines Application such as food pairings, seasonal treat Target market segments such as baby boomers, millennials, alternative live styles, corporate or special events Category Leadership such as grape varietal,
environmentalist, organic farming, special processing Winemaker’s unique varietal blending Focus on wine tasting awards, but not quality comparisons
Focus on Brand marks such as label design, unique bottle shapes, glass thickness,
cork size–material-logo
Why is Wine Branding Important Creating Brand Magic in the Wine Industry
Create an intimate knowledge of the target market Restaurant patrons retail consumers Relations with trade members’ strategy aligned with the
winery Reach over distributors and retailers shoulders to create
relationship with targeted consumers Tasting room design and management Participate in local wine events Hold private wine tastings and wine pairing dinners Create wine clubs offering special selections, special
pricing, travel programs, winery entertainment