To coincide with the London International Wine Fair, this month's management briefing is for all you wine companies out there, particularly those with Australian leanings. Richard Woodard offers an in-depth look at Australia's wine industry in this four-part briefing for May 2011. In part two, Woodard looks at the industry’s use of marketing as times have turned tough.

During the 1980s and 1990s, Australia provided the rest of the winemaking world with a masterclass on marketing, successfully balancing the demands of generic and brand-led promotions. Like all rising tides, this collective upswell allowed all boats to float, with rival companies putting aside competitive urges to help each other reach their goals. It’s a lesson many in the Old World have yet to learn.

Of course, it’s easy to stay friends as long as the market keeps growing and sales are on a relentless upswing. When the good times appear to be over, however, the cracks begin to appear and dissenting voices start to be heard.

So, faced with declining exports and shrinking margins, Wine Australia embarked on a strategic shift designed to build value for everyone in the supply chain linking the country’s vineyards with its end consumers.

'A+ Australian Wine' is a generic campaign with a focus on regionality and smaller producers, designed to showcase Australia’s versatility in producing distinctive wines with a sense of place. It would be fair to say that some of the big brand owners have been less than impressed.

In the UK market in particular, Wine Australia has, to some extent, gone back to the drawing board, following pressure from the likes of Treasury Wine Estates and Australian Vintage. Both of these companies have withdrawn funding from the generic body there, partly in protest at what they see as a campaign that doesn’t offer enough support to big-volume brands.

The challenge for Wine Australia, and in particular for Yvonne May, its newly-installed director for UK, Ireland and Europe, is to balance the broad generic strategy with the demands of the big brands who help fund it.

“Our investment through programme membership is long-term, strategic, consistent investment and seeks to establish fertile ground for brand owners to develop,” says May. “However, we can also play a role facilitating and providing seed funding to tactical activities that support volume brands.”

Getting that balance right is the tricky bit. Matthew Roberts, Lion Nathan Wine regional manager for the UK and EU, acknowledges the difficulty. “The most important aspect in terms of generic marketing is that it should be broad enough to be inclusive, so as to build the scale and impact – this is its specific purpose,” he points out.

Mark Wilson at De Bortoli adds: “Generic marketing should work closely with the market – retailers, buyers, press and trade in general – and, where possible, alongside brand owners in achieving these aims.

“It is up to brand owners to build and support their own brands, and any generic campaign should focus on delivering what is best to the market (best quality, best value, best wines) to convince opinion-makers.”

At its most basic level, this is a debate about market aims. While Wine Australia’s new strategy seeks to build long-term value and a quality positioning for the country’s wines, the sector’s biggest operators are facing manifold pressures to maintain market share and turnover. A new image for Australia in ten years’ time isn’t much use if you’ve got shareholders to appease in the next quarter.

As the boss of the new Accolade Wines – the old Constellation/BRL Hardy business – Troy Christensen is a key personality in this debate. He offers a neutral assessment of Wine Australia’s current tactics, noting the “significant change” within the organisation’s management team and saying: “We look forward to continue engaging with them.”

But, on the broader philosophical question of big brands versus a generic campaign championing the boutique, Christensen’s views are somewhat more explicit. “Historically, the bigger Australian wine companies have led the export charge for Australia, and many of the smaller brands have followed in their wake as markets have opened up and recognised the quality and value proposition that Australian wine has to offer,” he argues.

“We believe there will continue to be a symbiotic relationship between larger Australian wine businesses and smaller boutique brands. These smaller brands can enhance the cachet of a wine-producing nation, particularly among wine aficionados who prefer to find and drink lesser-known brands and unusual blends and varietals.”

One company offering unequivocal support to Wine Australia is Pernod Ricard’s Orlando Wines, which sees A+ and its regional, value-led message as chiming perfectly with its strategy for Jacob’s Creek.

The launch of the brand’s Regional Reserve range is A+ made flesh, championing Coonawarra Cabernet and Barossa Shiraz with the reassurance to consumers of a recognisable brand franchise. A lesson which others in the industry would do well to learn?

“There has been and will always be debate about the balance between the small and the large,” admits an Orlando spokesperson. “There is no right or wrong: each company needs to work at supporting the initiatives to maximise the benefits for the Australian industry’s long-term future.”

In the end, the philosophical argument about balancing large and small, short-term and long-term, generic and brand is almost irrelevant; in the realpolitik of today’s wine industry, simply finding consensus and unity is arguably more important.

“It is important that the industry is unified and that the larger companies support the efforts of Wine Australia, and that the smaller companies understand the role the big brands play,” sums up the Orlando spokesperson.

“For many years it was the large brands that opened up new markets and provided the awareness of Australian wine that has enabled smaller producers to access these markets… It is important that there is consistency of messaging between [generic and brand marketing initiatives]. That said, each brand should maintain its own, distinct personality.”