Yesterday I attended an experimental Harpers forum placing many of the great and the good from the UK wine industry in a room to discuss a topic. The proposition of this particular event was “At the root of the wine industry’s problems is the failure to engage with the consumer”.
In addition to the quality audience – from which you could have quite happily formed a couple of speakers panels – we heard from six diverse experts
- Dr James Bellini, futurologist
- Andrew Marsden, marketer
- Richard Halstead, statistician
- Helen McGinn, consultant
- Kevin Shaw, designer
- Tony Dann, innovator
There was a lot of talk about how the wine trade is out of touch, doesn’t know who its customers are, what they want or how to talk their language – and that this was why the industry is experiencing problems. I must admit I felt a lot of this missed the mark, and will try to explain why here.
The UK wine trade is very good at talking itself down and blaming the wrong things for the fact that the outlook is far from rosy. And we all have to admit that things really aren’t looking great – consumers trained to buy on promotion, over-supply, margins being squeezed, excise and duty increases, more attractive markets elsewhere. I’ve previously written that the UK wine trade is sick – I still stand by that view and challenge anyone to disagree.
However, I think it is wrong to blame a failure to engage with the customer. Lots of great companies staffed by passionate, intelligent people – from small independents to online specialists and multiple retailers – know exactly who their customers are, what they want and how to talk their language. Indeed, I think retailers are doing a pretty good job given the constraints placed upon them (e.g. space, dwell time etc.). During yesterday’s discussions retailers very much came across as the villains of the piece, but I feel this is simplistic – it is the macro retail environment that is to blame, not the retailers themselves.
It is this macro environment that has taken 500,000 consumers out of the UK wine market in the past year, tightened pockets and forced prices down. True, the fact that multiple retailers compete fiercely on price in this category doesn’t help matters – especially since margins on wine fail to match those of most (all?) other grocery categories – but here it is not prices per se that is causing a disconnect and deep-seated problem, it is the unchecked, virtually unregulated use of promotions (see my previous blog http://bit.ly/v8FUWm).
I suggest the two main problems that face the wine industry are RELEVANCE and DIFFERENTIATION.
Wine drinkers are a broad church. Some consider wine as little more than alcohol that happens to be made from grapes, while others buy en primeur and build huge cellars of worship. Most lie somewhere in between, with the majority nearer the former view than the latter.
It is the responsibility of the wine brand owners to make their wines stand out to their target consumers, whoever they are – and this means making them relevant to their lives, selling the benefits and creating lasting brand loyalty and affiliation.
So, how does one achieve this? Targeted marketing – learn everything there is to know about your potential customers and use this knowledge to put your wines in front of them at every opportunity. And sell the benefits, not the features (Marketing 101, right?).
Another successful tactic is to link the brand with another product or lifestyle choice that resonates with your customers – food, fashion and even music. In fact, it was a musical link that inspired our award-winning work for Montes that achieved global coverage (see http://bit.ly/bLalmG). Without exception, all the brands we work with understand this and hence we are putting their wines and spirits in front of their target customers through different routes and channels to the conventional.
A brave new initiative worth note, incidentally, is The Big Wine Festival which was presented with inspiring zeal by its creator Olivia Ocana. This ambitious project is certainly seeking to make wine relevant and is worth a close look and careful consideration by all those involved in the UK wine business. Good luck to it!
Sadly, price has become the primary differentiator of wine on the retailers shelves, and it should be the last resort mechanism. It’s all very well customers having a warm fuzzy glow that they’ve got a bargain (as Richard at Wine Intelligence explained), but whatever happened to the notion that they should be excited about the wine they’ve bought, and can’t wait get home to open it?
Most wine brand owners are failing to differentiate their products from those of their competitors. Sure, wine is a unique category and this makes it a challenge – where else do you find up to 800 broadly similar products fighting for the same customers alongside each other – but brand equity is valuable and most are failing to build it.
As an industry, we need to be radical and challenge conventional thinking – let’s petition legislation to restrict promotions, make wine value vs quality a lot more transparent for consumers, offer different formats, different styles, different strengths.
Richard Siddle, editor of Harpers, stated that the recession had “given birth to the professional shopper”. We need to make wine more relevant in this changing consumer landscape – temporarily poorer, busier, better informed, more connected – and find a way to make potential customers value the story, the ethos and the benefits of wine more than the price.