Comment - Wine - Going Regional: Why the New World Should Bother

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In any communication with the likes of Wines of Chile, Wine Australia or Wines of South Africa - or an individual producer of premium wines in any of these three New World wine nations - you’ll spot a common theme. They’re almost certain to vent their frustration that the quality of their premium offer is not being sufficiently recognised, either by the trade or the consumer.

I was recently invited to speak at a conference in Australia, to offer my own ideas on the way forward for the nation’s wine industry. One of my main conclusions was that ‘Brand Australia’ needs to be segmented. I am really impressed by the generic work of the country’s trade association in the UK, and the diversity of style and quality of premium Australian wine has clearly never been greater.

The reality, however, is that - partly due to years of heavy discounting at the lower end - the target consumer in the UK does not regard Australia as a source of premium wines – at least, not to the extent that the Australians would like them to.

There is, therefore, a very large gap between perception and reality.

This is not altogether surprising. In any category where a single brand proposition covers mainstream and premium territory, the lower end risks overpowering and dragging down what is happening above. After all, this is exactly what happened to German wine in the 1980s.

A related problem applies to wine brands which attempt to ‘ladder up’ from strong mainstream propositions into premium segments. I would suggest that Brand Chile and Brand South Africa are wrestling with this conundrum.

All three countries are currently playing around at the edges of regionality like swimmers dipping their toes in the water, but never quite plucking up the courage to jump in.

I’m not surprised: the water is bloody freezing. Segmenting a generic brand throws up immense practical difficulties. But, first of all, one needs to be convinced that such a move is essential. I’m not sure enough people are yet at that point.

Divide and Conquer

I think there are three reasons why producing countries should develop regional propositions that are stronger than their umbrella country brand.

Firstly, as duly noted, it ensures that the premium sector is unencumbered by any mainstream baggage. France can offer a useful case study in this respect: Did the image of Burgundy suffer, along with that of Beaujolais, as a result of the over-promotion of Beaujolais Nouveau? Undoubtedly not. While both are segments of Brand France, they are in reality brands in their own right.

Secondly, creating premium entities gives marketers greater room for manoeuvre. I see three strands to premium wine marketing: Individuality, which is about building brands with real points of difference; Personality, which is about involving people (usually winemakers) in one’s promotion, and Regionality, which is about generating a strong sense of place.

Premium brands that realise the potential of all three of these strands - be they generic or individual - have the greatest chance of being successful. As things stand, in most of the New World and many parts of Europe, marketers are over-reliant on the first two strands, as there is little or no added value in talking about one’s area of origin.

But, in an increasingly crowded marketplace, one needs to be firing on all cylinders. While there is hardly a shortage of personalities in the New World, and brand marketing is certainly improving, I feel that being part of a “one size fits all” generic brand puts all concerned at a serious disadvantage.

Thirdly, and lastly, I believe there is a highly profitable opportunity in creating brands which are wine-based, but have no real wine values. From a marketing and production point of view, the New World is probably best placed to build such brands. Yet, to exaggerate the point, if you were an individual producer, it wouldn’t even cross your mind to present, say, a lightly sparkling low-alcohol Moscato under the same umbrella as a premium range. You would (rightly) worry that it would undermine your premium imagery. But, non-segmented generic brands in effect don’t have any option.

The least flawed option

So, my conclusion is that, conceptually, generic brands that have image issues need to consider segmentation more seriously than currently appears to be the case. Winston Churchill once said that democracy is a highly imperfect form of government, but less flawed than any of the alternatives. I feel the same way about regionality as a platform for marketing wine.

To say that developing a regional framework - effectively from scratch - is fraught with problems would be an understatement. While individual regions in France, Spain or Italy may provide inspiration in terms of how value can be added in an overall sense, these countries are hardly role models in terms of establishing a system that works for all, is appropriate to what might be called the New World ethos, and is understood to the required level by the trade, let alone the consumer.

However, the alternatives,which are either to carry on with the current approach (however dynamic) or invest large sums in matching perception to reality through some overarching consumer campaign, I do not see as, respectively, game-changing or viable.

Brands tend to get summed up by the trade and consumer in one ‘sentence’. If that sentence is not what one wants it to be, then to change perceptions significantly - in a marketplace where the intensity of competition is increasing from an already high level - is extraordinarily difficult. Some dramatic restructuring is required, I feel, however difficult that may be and however long that may take.

This comment piece originally appeared on Mike Paul's blog, which can be found here.

Sectors: Wine

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