So many brands espouse ‘trends’ such as local, regional and authentic but few naturally inhibit all these characteristics. One brand that does is Icons South Australia (SA), a gourmet food and wine store that promotes and sources local produce, and is located in Adelaide Airport’s Terminal 1.
Most wines are like any other commodity that competes on price. But it doesn’t have to be. Branding is not rocket science.
“A brand is not an icon, a slogan, or a mission statement. It is a promise — a promise your company can keep. First you find out, using research, what promises your customers want companies like yours to make and keep, using the products, processes and people in your company. Then you look at your competition and decide which promise would give you the best competitive advantage. This is the promise you make and keep in every marketing activity, every action, every corporate decision, and every customer interaction. You promote it internally and externally. The promise drives budgets and stops arguments. If everyone in the company knows what the promise is, and knows that they will be rewarded or punished depending on the personal commitment to the promise, politics and personal turf issues start to disappear.”
The tragic news is that 2008 has not started well at Stormhoek. The Wine Conversation reported on Monday that Orbital Wines, the company behind the Stormhoek brands has gone into administration. Even worse, all ten staff, including MD Mike Paul, have lost their jobs.
According to one report a major retailer delisted Stormhoek recently because of “a lower retail price available to a competitor.” Well if this is correct it shows the power that these big supermarket groups really have, and how badly they can treat their suppliers if they don’t play the game according to their rules. It also highlights the danger of having all your eggs in one basket.
Josh at Pinotblogger rightly asks “Does Social Media Work For Wine”? “Marketing experts” will be debating this very point for a long time to come but in my opinion social media and blogs are just one part of your overall marketing strategy. Building brands takes time and plenty of money but Stormhoek’s selling price point probably didn’t leave much fat for the latter.
In the recent past wine brand owners have put a great deal of emphasis on sales volume improvements. Marketing campaigns were specifically designed to increase short term sales volumes. This over emphasis on sales volume increases has caused some wine marketers to lose their focus on strategic branding aspects. These marketers must be cautious not to kill the goose (brand) that lays the golden egg.
South African wine producers in some cases diluted their brand value by focusing on short term sales improvements. These sales improvement strategies usually include price reductions and even brand sacrifice. Prof. Frikkie Herbst of the USB (University of Stellenbosch Business School) indicated that the total cost (price) is only one of the five main factors influencing the consumer’s choice of bottled wine.
These “ other” factors are firstly push and pull consumer’s choice factors. Pull factors include psychological motives like celebrations or value perceptions while pull factors are factors like grower’s reputation and wine variety. Other factors that influence the consumer’s decision are place of purchase and shopping time frame factors.
This implies that wine marketers can focus on different aspects to improve sales without damaging their brand. Although sales growth and market expansions are deemed to be important aspects of wine marketing, the sustainability of the business depends mainly on the brand. Some authors suggest that brands are the atomic core of the consumer-driven economy and companies are dependent on the success of their brands to be able to establish a sustainable business future.
David Higgens, president of Brown-Forman Beverages Worldwide Wine Group, indicated that “in general people in the wine business don’t understand the need to build brands”. He further states that this will become more and more of a problem in mid-sized wineries.
Studies conducted in Australia by the Fosters Wine group found that consumers look at “ brand” and label design more than any other feature when selecting wine. The study found that “brand” is consistently the strongest influence across all consumer segments, when browsing for wine. This implies that medium to long term brand strategies must be formulated to maintain a sustainable business.
South African wine exporters and brand owners have the advantage of organizations like WOZA to promote Brand South Africa. These organizations build a holistic industry brand and open international markets for local wine brands. It must be stated that wine brand owners must still focus on building their own brand and/or their region’s brand. Although the dynamics of local and international wine branding may differ, the basics still stay the same.
Sue Birch, CEO of WOZA, recently indicated that South African producers were heartened that the rate of value growth in the UK wine market was outpacing volume growth . ACNielsen data reflected a 7,2% rise in value, compared with a 2,1% increase in volumes for the year to June. Birch added that the higher value growth suggests that margins will be under less pressure than in the past, offering sustainable trading opportunities.
In the local market, wine producers must realise the importance of value growth. Perceived value growth by the market can be managed by effective brand and communication strategies. In effective sustainable business management it is impeccable, and non negotiable, to maintain the quality of the product (wine). In some cases brand building involves the influencing of consumer perceptions about the different aspects of the product. This implies that brand building and consumer communication goes hand in hand. Marketers must thus find new ways and angles to communicate their brand messages to the consumer.
Examples of new brand message communication platform include, but are not limited to the following:
Coopetition: This can simply be defined as collaboration among competitors. Many examples exits of cooptetion in the international and local wine markets. The consortium of Alluvia, Tokara, Sagila, Knorhoek and Yonderhill serves as a classical coopetition example.
Extended service offerings. Wine producers are expanding their brand by introducing new aspects of the brand. These new aspects serves as new communication platforms and brand awareness are taken to a far wider audience. Examples of this include function venues, theatres and conference facilities on wine estates. Spier, Lourensfort. Paul Cluver and Stellenrust are a few examples of brands that have found new angles to expand their brand audiences.
Wine Tourism: Dr. Bouwer from UCT Graduate School of Business indicated that cellar door marketing is a very important brand image tool, especially for the smaller producers. This gives producers the opportunity to sell and communicate much more than just the physical product. This enables wine producers to develop broader communication platforms and thus improving their brand image.
E-marketing: Marketers have not realised the wide array of brand building opportunities of e-marketing. Stormhoek has recently achieved tremendous brand building success with effective blog marketing campaigns. Facebook and other interactive web based platforms will create new opportunities for the expansion of brand communication platforms.
Although the improvement of short term sales are a very important consideration, wine marketers and wine brand owners must also focus on developing their brand. By nurturing and developing their brands, wine marketers can create a sustainable business future and the “goose” will keep on laying golden eggs.
Harvard MBAs Selena and Khary Cuffe wanted to give black Wine producers a better chance to thrive. The result – Heritage Link Brands. Not many people know that South Africa has a $3 billion Wine industry. Even fewer know that only 1.5 percent of that industry is owned by blacks.
Heritage Link Brands showcases indigenous Wine producers who represent a variety of cultivars from across the continent, with a focus on Africa’s most developed Winelands in South Africa . South African Wine is now the U.S. ‘s ninth largest Wine import. Heritage Link hopes to improve these statistics by “linking” U.S. Wine consumers to Africa through fair business practices and empowering marketing strategies.
Michael Machat admits he didnâ€™t follow the traditional route into the wine businessâ€”that is, developing a nose for grape varieties and building a plant, followed by coming up with different blends and brands.
Instead, the president and founder of Beverly Hills-based TI Beverage Group, parent company to Vampire Vineyards, got his start when a blood-colored light bulb went off in his head. â€œI had this idea that it would be cool if somebody had a wine called â€˜Vampireâ€™ and they made it in Transylvania. It was so obvious, I thought surely somebody had done it,â€ he says. Others may have thought of it but nobody followed through, so Machat was able to sink his teeth into the concept.
He wanted a name that would attract young people who wanted to drink wine but were put off with the shelves full of monikers they couldnâ€™t pronounce. â€œA lot of people in the wine business donâ€™t understand why people drink wine at all. Theyâ€™re so wrapped up in what theyâ€™re making they forget the purpose is to have fun. People want a buzz, they want to change their state of consciousness,â€ he says. â€œWhen young people want to buy wine, they just want to get something to drink. Theyâ€™re looking around the store and Vampire brings up lots of pleasurable connotations in their minds. They donâ€™t know what else to drink so they buy Vampire. Itâ€™s cool, we get the new drinkers.â€
Vampire is indeed succeeding with that demographic, according to Machatâ€™s market research. He says 40 per cent of customers buying Vampire, which typically sells for less than $10 a bottle, are under 30. Thatâ€™s unusual in a business where most consumers are 40 and older. Machat started the company while living in England in the mid-â€™90s and though he began buying his grapes elsewhere, he eventually sourced them from Transylvania, a real live region in Romania with a population of more than seven million people.
Once he moved to California and the company started growing, he was confronted by a major decisionâ€”relocate to Romania himself or start sourcing his grapes from a West Coast vineyard. He chose the latter option earlier this year. â€œBeing nearby, I can check on the quality control. To take it big we have to be reliable and have good, consistent quality in the bottle,â€ he says, adding the company broke through the $3-million mark in revenue last year.
Today, Vampire Vineyards is a â€œvirtual wineryâ€ as the production of its merlot, cabernet sauvignon, pinot noir, chardonnay, and white zinfandel blends is outsourced to a winery in nearby Paso Robles. He says the company has been careful not to use any vampire images in promoting its â€œblood of the vineâ€ because everybody has a different idea of what a vampire looks like. â€œIf we commit ourselves to one version, we turn off those who have a different conception. Weâ€™re talking a thin line. Itâ€™s easy to market it in a silly way and make it cheap looking and totally uncool,â€ he says.
Machat says when you buy a bottle of Vampire, youâ€™re not just getting â€œjuice in a bottle.â€ â€œYouâ€™re getting all the unconscious associations that go along with the vampire theme. If somebody just wants a bottle of wine, they can buy a bottle of two-buck chuck. We blend our drinks with romance, intrigue, and adventure,â€ he says.
Vampireâ€™s brand is reinforced through its websiteâ€”vampire.com, naturallyâ€”which includes a quasi-fictional history of the vineyard and a virtual store selling Vampire wine glasses and DVDs of classic blood-sucking movies such as Dracula, Blade, and Buffy the Vampire Slayer. Machat didnâ€™t stop there with his colored beverages. He subsequently launched a pair of vodkas called Vampyre, one white, the other red, and a sports energy drink called â€œVamp NRG.â€ He says the red vodka is particularly impressive because when itâ€™s swirled around a glass, the â€œlegsâ€ that come down look like little drops of blood dripping into the bottom. â€œSome bartenders didnâ€™t like it because it turned their hands red (when it spilled) but some customers really got off on it. You get red lips, itâ€™s like drinking blood,â€ he says.
Vamp NRG (short for energy), meanwhile, is a black cherry-flavored beverage competing in the same category as Red Bull. Bernie Hadley-Beauregard, principal at Vancouver-based Brandever Strategy Inc., says Vampire will certainly be â€œthe kingâ€ of all wines consumed on Halloween. His concern, however, is its theme implies strict seasonality, leaving it prone to a boom and bust sales cycle. â€œThatâ€™s difficult in the wine business,â€ he says. â€œVampire distinguishes itself readily from everyone else in the pack. It really pops off the shelf in late October but itâ€™s hard to think youâ€™ll find it as alluring on November 1st as you did on October 31st.â€
He says the challenge for Vampireâ€™s marketing team is to get creative and expand the ppropriateness of their sales the rest of the year. He even suggests a starting point. â€œIf it was my brand, Iâ€™d probably try to do a lot of promotions around full moons,â€ he says. Hadley-Beauregard is a bigger fan of the red vodka, calling the addition of a color to a neutral spirit â€œinnovative.â€ “Itâ€™s pretty brave. I think it will bring them some good results, it could do very well on the retail shelf,â€ he says.
There has been much conversation over the last couple of years related to a consumer phenomenon known as â€œtrading up.â€
Trading up is simply the practice of consumer buying where you selectively â€œtrade-upâ€ to purchase better products and trade down to pay for other purchases.
The best example of this in application is the person that drives a BMW to shop at Wal-Mart (and if youâ€™ve been to the new Wal-Mart on 29 in American Canyon, you know what I mean). A premium vehicle is important (trading-up), while, perhaps, buying household cleaning products at the lowest possible price provider is â€œtrading down.â€
The notion behind this is that as consumers, we selectively isolate luxury items for ourselves, even if our income isnâ€™t always in the affluent category.
Wine is very much a part of this â€œnew luxuryâ€ consumer buying activity and you need look no further then the fact that Costco, the largest retailer of wine in the country, is also a retail discounter whose business model is predicated on premium luxury coupled with discounted staples. Think of a $35 bottle of wine and jumbo packs of canned green beans.
Tina Caputo has a nice summary article on this cultural aspect in a recent Wines & Vines article here. Highlighting a panel discussion called â€œTrading Up: The Sustainability of Luxury Brandsâ€ presented at the Wine Industry Financial Symposium on September 17th, Caputo notes one of the tenets of luxury wine marketing: authenticity.
This excerpt from the article explains:
Rather than choosing products for status reasons, â€œnew luxury consumersâ€ focus on pampering themselves with high-end experiences. â€œThere has to be an intangible element of your brandâ€ to connect with this consumer, Bryant said. It must make an emotional connection to the consumer, and have rational support to back it up.
This category of consumers doesnâ€™t shop according to price, and is more likely to spread the world about a brand or experience via the Internetâ€“a characteristic that makes them particularly influential. Consumers in the â€œnew luxuryâ€ category are also enthusiastic wine drinkersâ€“a recent survey showed that 24% of participants consumed 4-9 glasses within the previous week.
â€œNew luxury consumers do a lot of homework before buying,â€ Bryant said. Therefore, your website should enhance the image of your wine.
For obvious reasons, your web site is important as the door to your brand, but a couple of other insights into branding might be valuable as well.
An incredibly insightful book called Brand Hijack offers the following 6 tenets for a â€œshareable brand,â€ one that fits into a â€œnew luxuryâ€ model and one that incents people to make an emotional connection with your wine brand: 1) It appears to be evolving 2) It appears to be honest 3) It appears to be innovative and creative 4) It appears to have a strong moral character 5) It appears to have a strong proactive orientation 6) It appears to be altruistic in nature
I would add a 7th tenet, as well:
7) It appears to be socially and environmentally responsible.
A good example of this in action is the wine brand Cameron Hughes, sold not so coincidentally at Costco.
1) Cameron Hughes Wine number their wine in lotsâ€”each lot grows numerically, so that I can easily follow that I last bought â€œLot 18, and â€œmy gosh they are up to Lot 37 already.â€ The brand definitely evolves.
2) Cameron Hughes Wine is completely transparent about his negociant business model. The brand is definitely honest.
3) Cameron Hughes Wine has built their business off an entirely new business model, starting with a single customer. The brand is definitely innovative and creative.
4) Cameron Hughes Wine doesnâ€™t bottle just anything they run across, they are building a reputation for quality at price point and their repeat customers are bearing out a strong moral character.
5) Cameron Hughes Wine is championing direct sales, good old fashioned hucksterism at Costcoâ€™s, aggressive sampling in the online wine community and aggressive PR. They definitely have a proactive orientation.
6) Cameron Hughes Wineâ€™ position to market is consumer advocacyâ€”helping a customer get a quality, trusted bargain on wine. I would say this is definitely altruistic in nature
7) Cameron Hughes Wine now has an â€œEvergreenâ€ line of wine that has lead them into carbon offsets. They are the first American wine negociant company to be 100 percent carbon neutral. They definitely are socially and environmentally responsible.
So, there you have it. â€œNew luxuryâ€ marketing, â€œshareable brandingâ€ and an example of it in action â€¦ itâ€™s a lot to chew on right at harvest, but the Inertia challenge to you is to use the time you have to brainstorm how you can make your brand a â€œnew luxuryâ€ item while incorporating seven simple steps to a shareable brand. Weâ€™ll be happy to help you implement your ideas, or brainstorm other ideas, after harvest!
“I think, in general in the wine business, people don’t understand the need to build brands. That will become more and more of a problem among mid-sized wineries.” – David Higgens, Brown-Forman Beverages Worldwide Wine Group President.
According to brand valuation consultancy Intangible Business, brands are playing an increasing role in a number of categories. In wine, the importance of country or origin and grape variety is diminishing in favour of brand. Laroche, for example is a classic old world French Chablis which is building a brand around its heritage.
Yellowtail is another good example. Yellowtail is a relatively basic wine but at a good price point and with a good brand image. Whether Yellowtail’s growth is sustainable will be the challenge for the Casella family. Maintaining its relevancy as people’s wine tastes develop will be instrumental in ensuring Yellowtail’s longevity.
You will know that your brand is winning in the marketplace whenâ€¦
The brand is mentioned to customers and potential customers, and they brim with enthusiasm in their response.
Your brandâ€™s external messages â€œring trueâ€ with all employees.
Employees are enthusiastic and consistent in recounting what makes their brand special.
The brandâ€™s market share is increasing.
Competitors always mention your brand as a point of reference.
The press canâ€™t seem to write enough about your brand.
Your CEO has a strong vision for the organization and its brand. He or she talks more about the vision than financial targets.
Your organizationâ€™s leaders always seem to â€œtalk the brandâ€ and â€œwalk the brand talk.â€
Considering re-vamping your wine brand? Then start by reading this article from Fast Company, July 2007. This will convince even the skeptics that packaging is Very Important. Extracts below:
Branding consists of a range of different but strongly interconnected activities that are all geared towards creating a lasting, positive impression in the minds of consumers that will ultimately be good for business. Branding experts like Richard Bates, Senior Partner and Executive Creative Director of the Brand Integration Group (BIG) at Ogilvy & Mather, stress that the branding process is like telling a story, and absolutely everything contributes to the narrative.
Product packaging, though just one part of the process, is considered the most important by many. “Packaging is the number one medium to communicate the brand,” states Laurent Hainaut, founder of design agency, Raison Pure. “You need to pay attention to this area in your branding strategy because it is the first thing someone sees, touches, and essentially buys. Packaging is often more than a medium — it can be part of the product.”
The branding experts who talked to Fast Company seem to unanimously agree that companies that want people to pay a premium for their products need to package them accordingly. But repackaging does not necessarily imply addition or enhancement: “Sometimes it’s about stripping away the layers to discover why a product was successful in the first place, about finding the core element and unleashing it from the burdens of some of its marketing initiatives,” explains Bates.
“Good packaging is the result of good collaboration between marketing, advertising, design, the supply chain and other teams. It is a very complex process that involves several teams and levels of people,” states Hainaut.
“There are several questions that have to be asked,” he adds. “Is the packaging telling the story we need it to tell? Is it telling the right story for the particular category it falls into? Are we using the right language for that category? How can we expect to differentiate our product but also stay true to our brand? How can we differentiate between different products within our own brand? There are various levels of communication, multiple analyses of the kind of messages we want to deliver and the point at which we want to deliver them. These are derived from research, ethnography, qualitative studies, and industry experts.”