Taking the grape global
In the second look at the issues thrown up by last month's Wine evolution conference in London, Chris Brook-Carter discusses the industry's chances of creating a truly global wine brand. Should attempts be abandoned for a more localised approach?
Wine is the perfect market for the promiscuous, for the average drinker always has a new bottle to discover. It is alone in the world's drinks market for this kind of breadth. While consumers and wine buffs will no doubt herald this characteristic as a strength, it is also a reflection of the complete failure of the industry to create any brands of global scale.
At the Wine evolution 2002 conference in London last month, a collection of industry representatives from around the world were asked to name what they believed to be the biggest brand names in both the Old and New World wine industries.
The vox pop threw up some interesting results. In the New World category, the names of Gallo, Lindemans and Kendall-Jackson made regular appearances among a number of others. Old World names such as Rothschild and Le Piat d'Or, meanwhile, were interspersed with regional names such as Bordeaux and Champagne, throwing up the whole debate of what defines a brand.
But would anyone have similar problems naming the world's biggest international vodka or Scotch, rum or Bourbon? Despite the aspirations of the likes of Kendall-Jackson (who have stated in the past a desire to create the world's first global brand) and Southcorp, the industry is not even close to that elusive brand with say 20% of the world's red or white market.
In fact, in the UK market, often referred to as the shop window of the world, no brand has more than a 3% share, which is an exceptionally low amount in the retail market. And the whole dilemma facing those intent on building wine brands is put into even starker perspective when the list of the country's top 15 brands in 2001 is compared to the same list in 1985.
The top 15 brands in both lists, interestingly, hold a 15% share of the market between them, once again reinforcing the failure of the leaders to take a grip on sales, but the 2001 list is unrecognisable from its predecessor in any other way. Indeed, of the 1985 list, only Paul Masson and Le Piat d'Or survive the cull. And unsurprisingly, Old World names have been swept aside by New World wines.
The results are indicative of just how promiscuous wine consumers are and how limited brand loyalty is in this area of the drinks sector. As industry analysts AC Nielsen, the compilers of the list, say: "Le Piat d'Or once stood proud amongst fellow Europeans but within the life span of an average Volvo 740 Estate […] the market expanded willingly and the world changed."
The dilemma that faces those on the current list is what's to say that they will be any different to their predecessors and stay the course over the next 15 years?
In their favour, the environment for branded wines is far better than it was 15 years ago. Consolidation has made sure that the industry has companies of sufficient size to have credible aspirations of being truly global. And along with sheer scale, these companies have brought modern business and marketing techniques to the table.
But there are still sufficient hurdles to make the creation of a global brand an unlikely occurrence in the near future.
In its Wine 2002 Market Report Plus, industry analyst Keynote lays down three reasons why it believes conventional branding for most wines is ruled out in the UK.
It says; "Firstly, the production of wine in most European countries is very strictly regulated according to denominated regions. Traditionally, consumers in France, Italy or Spain choose their wines according to the origin given in the labelling.
"The second reason is the fact that sophisticated British consumers are wary of branded wines. In the past, advertised brands have been used to label many inferior products.
"The third factor working against branding is the power of own-label. Supermarkets played the major role in developing the UK market and naturally their main thrust has been with their own labels. For most consumers, a label such as 'Sainsbury's Organic Chardonnay, vin de pays D'Oc' provides enough information to identify the origin, producer and quality of the wine without resorting to branding."
These three hurdles can be applied to a number of markets outside the UK to varying degrees as well. And unfortunately they can also be added to. Indeed perhaps the two biggest problems are not mentioned above, namely finance and taste.
The first is a simple matter of economics. Are the likes of Southcorp, Hardy's or K-J really big enough yet to build a global brand? In a word, no. Each year Smirnoff, Johnnie Walker and Bacardi devour the sorts of marketing budgets wine companies can only dream of.
And, even if Southcorp, for example, gets swallowed by Diageo tomorrow and thrusts £100m behind Penfold's, would the world's consumers accept an omnipresent brand? Again, at the moment, probably not.
Part of the wine industry's appeal to millions of its consumers is its variety and this strength makes it very difficult to pinpoint a style or brand that will appeal to markets around the world. How do you create a wine that will appeal to the UK and US and France?
This argument does not mean that the wine industry cannot be a global business, just that its products will not be global. In an ironic twist, the wine industry may end up as living embodiment of the latest business mantra of the world's largest drinks brand, Coke - Think global, act local.
The UK market is developing in terms of sales and sophistication. Drawing on up-to-the-minute consumer research, Alex McPhee, Neville Calvert and David Matthews of management consultants, KPMG, examin...
Dairy, functional and premium juices were the winners, water continued to grow, whilst carbonates and squashes lagged behind in the 2004 UK soft drinks race, according to the recently published Britvi...
Recently published research indicates that while consumers have taken to the clear and modern marketing techniques employed by New World producers, they still cherish the romance and mystique of wine,...
Seven French wine co-operatives have joined forces to create a brand to compete with its New World rivals....
US wine and spirits distributor New World Brands has appointed David Rudden as CEO....
French wine producers and traders are for once showing a united front in urging the Government to back a project creating a new appellation of wine: "Vin de Pays de France."...
Gallo has finally reached an agreement with the union United Farm Workers, after around two years of talks....
Thresher has selected E&J Gallo to produce its own-label California wine range....
- Interview - Beam Suntory's EMEA president
- Beckham, Diageo and the Allure of the VIP Pop-Up
- Interview - William Grant & Sons
- What do A-B InBev results mean for SABMiller deal?
- Interview - Beam Suntory's EMEA head - part II
- Diageo, Beckham launch VIP pop-up for Haig Club
- Diageo reveals US$400m Tequila investment
- Pinnacle Vodka, Skinnygirl roll out on ice
- Diageo completes Don Julio, Bushmills swap deal
- Beam Suntory strikes new Baltics tie-up
- Global non-Scotch whiskies insights - market forecasts, product innovation and consumer trends research
- Wine, 2014 and the future
- Beam Suntory Inc. - Strategy and SWOT Report
- Global RTD/RTS insights - market forecasts, product innovation and consumer trends research
- Spirits and RTDs, 2014 and the future