Wine Branding: Why It’s Important for the Industry’s Growth

I have been in the wine industry for 13 years, which is not a lot of time, relatively speaking, but enough to notice the lack of marketing and branding in this sector. Coming from multinational marketing and communications departments where I worked on developing fast-moving consumer goods brands that most of us consume every day, I find it in bizarre contrast that in the wine industry, the main business focus is not on building brands, but building walls so that consumers feel intimidated and discouraged to approach the product category. Maybe one day creating this fantasy world around wine will be a good idea; today it is not.

Hence, when the Digital Wine Communications Conference organizers asked me to conduct a session, I thought it was a good idea to focus on branding. Yes, branding! That thing that does not exist unless there is a strategy in place. That thing that can bring new consumers into the market. That thing that fuels business development. That thing that drives mergers and acquisitions and moves millions of euros and dollars…and finally, that alien that for some unexplainable reason, most in the industry tend to avoid.

Mike Tyson once said that “everyone has a strategy until they get punched in the face,” and I think we all can relate. It is life’s way of letting us know that we need to change our perspective, our way of doing things. I strongly believe that the wine industry needs that punch in the face to break away from bad habits—habits that have been keeping it from moving forward with the times. One of these bad habits is the lack of branding. There are few well-known wine brands out there in the wine-jungle, but if you ask any normal consumer, a wine brand will not be top-of-mind.

For the session, I asked Robert Joseph, wine writer and commentator, to talk about the importance of branding in general; Damien Wilson, Hamel Chair in Wine Business at Sonoma State University, to show us what the real wine market is, who the consumers are, and what they want; and Bela Szabo, Strategy and Innovations Planning Director at DDB advertising agency, to share how he builds brand communication strategies for top brands.

It is time wine businesses let go of old habits and start to think new ones, because new is irresistible. It is extraordinary. It is exciting. It is surprising. It is thrilling and refreshing.

11-24_what-is-brandingSo why is branding such a big deal? Because according to a study called BrandZ™ Top 100 Most Valuable Global Brands 2015 Reports by Millward Brown, the top 100 most valuable brands in the world are worth $3.3 trillion. Just think about that number for a second: Not one wine brand is swimming in this pool of money, while a beer brand made it to the top 40 most valued brands. If we want the wine industry to be part of this big money party, it needs to wake up and acknowledge the importance of branding, because brand value drives business.

As Robert Joseph puts it, a brand is the most valuable piece of real estate in the world, a small part of someone’s brain. In contrast to this, I look at how the wine sector has been “branding” its products, and the only conclusion I have is that instead of investing in this piece of real estate in consumers’ brains, it has only built great walls between its brands and consumers. Coca Cola, Nike, Uber and Facebook are all examples of brands that have that valuable part of consumers’ brains. No wine brand has this powerful privilege yet.

Damien Wilson clearly points to one of the basic and most tangible problems of the industry: it has not adapted to changing times and changing markets. As consumers have matured, new consumers’ interests are not taken into consideration and the industry is just shutting its eyes when confronted with the evidence. Data clearly shows who is consuming what and where. It also clearly shows why wine businesses are struggling more than ever in maintaining their businesses as economically sustainable. While product qualities are far better now than before, the perceived product value failed to follow that trend. Increase in product quality also means higher production costs; however, that increase in costs is not reflected on the final price/bottle. It is simply not enough to make better wines and build a business on the hope that it will sell more. A concrete brand strategy could bridge this gap between wine quality and sales.

11-24_CommunicationAnother important point addressed by Wilson is the difference between how the wine industry and wine consumers communicate. They live on different planets, they communicate in different languages, and they seem to belong to different species. While the wine trade’s communication is mainly based on self-propaganda, the wine consumer is communicating how fun wine is. Said a different way – the wine sector is talking to itself, and consumers are freely sharing their wine moments and stories. Neither is listening to the other.

If wine businesses are not listening to consumers’ conversations, that lacking revenue will never come from increased value proposition. However, before increased value propositions, businesses need to get back to the basics and revise their brand strategies.

Bela Szabo, with whom I worked together on some Procter & Gamble brands before getting into the wine industry, shared how to build a strong purposeful brand strategy. Bela shared how communication agencies like DDB build brand value. A brand’s value starts with its purpose, with its “why,” as Simon Sinek’s model illustrates this in a very easy to understand format. A brand built on its “why” is about having a reason for being, which should not be making money. It is about improving the life of the consumer, it is about standing for values that ease or make life better. Key fundamental human values should be the basis for strong brand purpose development.

In an industry where most products, like wine, are similar and don’t have a main differentiating point from a consumer point of view, except for regionality or grape variety, a strong brand purpose differentiation can be the only way forward.

From a purely marketing point of view, also backed by Millward Brown’s BrandZ™ Report, a strong brand purpose fast-tracks brand equity growth, which is what influences a consumer to purchase a specific brand and even to pay more for it. This is a crucial point for the wine industry to understand. A strong purposeful brand is a prerequisite for value growth!

So how can you fix your lack of branding in the industry? I’ve listed a few pointers below, and you can check out my presentation with Robert, Damien and Bela for additional insight.

  • Being a brand is not simply about being known, it’s about creating brand loyalty. Successful brands offer confidence—both emotionally and functionally.
  • Talk like consumers in order to get their attention.
  • Distinguish your strategy through an actionable customer segment.
  • Identify your brand’s:
    • Purpose: What does the brand believe in? This is the “why,” or your brand’s motivation.
    • Process: Take specific actions to make the “why” behind your brand come to life.
    • Result: This is the result of the “why,” or what the brand does to execute the process.
  • Strive for perfection, in your products and your advertising. Make your brand relevant!

 

Relevance is what makes the difference in this branding game. Robert Joseph put it perfectly in his recent Meininger’s column, “why are we all here?” Why are we all in this business if not to make it grow and move forward? Branding—this unwanted alien—can be the solution to many problems in the wine industry.

Photos courtesy of: Earl Boyd, Honey Blue Tea blog, and Techsy Talk.

About the Author

Reka Haros is a seasoned marketer and wine business developer with a solid background in brand management and communications thanks to her prior career in FMCG and Advertising industries. She is managing partner at Sfriso Winery in Italy and a marketing and business development consultant for both in and outside the wine industry. Follow Reka on twitter @RekaHaros

Comments

  1. Reka:
    Your points are spot on.
    I too saw this great opportunity to provide innovative branding to the Ca. Wine Industry, focusing on brands that have been fragmented in-half. To introduce them to the emotional-mind, to how consumers really make purchasing decisions. They tell me “that’s not how consumer’s buy wine”, OOOOO really now.
    I have 20 years in the wine industry working at both the supplier & wholesale level. I realized many years ago,1989 Newton Vineyards something was wrong with the methods we were implementing in brand differentiation. We were all conveying the same message, what & where about the product, never why. Now at the time we were still building trust in the category but at some point in time you must build your brand.
    Earlier this year I completed a 2 year study of American Wineries, Brand Message, Voice & visual communication. There are no brands, simply products being sold, a massive wine mutual fund resulting in high degrees of product substitution. You mention “building walls”, their brand voices certainly accomplishes that, educational, complex, scientific and authoritative. Now how does that voice create consumer engagement?
    Wineries have all relied on selling a lifestyle brand of luxury, more recently “green” or discounting to satisfy the emotional brain. These tactic’s were certainly successful during the ’90’s and ’00’s but consumer’s needs continue to evolve, but they stood still. The luxury & green messages have become generic and cliche like. As winery after winery voices chime together to create an echo-chamber effect throughout the valleys, without differentiation. Who is speaking? Consumer’s are unable to identify who is speaking without trademarks being revealed. Which has lead to brand substitution and discounting. Now the discounting did accomplish satisfying the emotional brain in the short run. But they failed to realized the long term effect, creating a negative feedback loop causing price sensitivities. DISCOUNTING IS AN INDEFENSIBLE TACTIC. Many of them create an “easy to sell’ business model versus ” easy to buy”. Which would have cause them to create, OMG, a paradigm shift to a consumer-centric model. They all fail to realize their product message is not being encoded into memory, because our brains are too busy with more meaningful issues, that personally matter. One must strategize inside the consumers brain not the bottle.

    They all believe SM was their brand solution, great tool if you have the right message or you can kill your brand even faster. They think “Somm’s” are the solution to sales declines; one somm selling to another somm, that’s the answer. They love to follow.

    Values-branding methodology is the future. Steve Jobs state ” all brands must life and breath through their personal values”. Like you I too agree with Steve. Great brands are built on (values+purpose+vision+actions) / price= brand value. For these are not throwaway words but uncompromised foundations that ultimately shape human behaviors. Successful brands are very personal. Just like a religion they are deeply felt, touching us in every sensory means. They are symbolic resources for CONSUMER’S to use to self-express who they are or want to be. Wineries need to create an emotional connection between brand and consumer by aligning their values. Consumers will never care about a physical product until you care about their emotional needs.
    Their brands will never escape the Sea-of-Sameness marketplace until the realize consumer’s are not rational minded. Until then they will continue to ineffectively and inefficiently communicate with the consumer, wasting BILLIONS of dollars each year.

    All my best in your efforts,
    Ed

  2. To all; as we know, wineries are agricultural businesses by nature, and invest in production capability. With few and rare exceptions, they have no vision towards investing in a brand’s market strategy. Their entire strategy consists of “we are going to sell wine to an importer who will take all of the risk, and make all the investment to build our brand”. How disconnected is that? What other CPG category does that?? It is a new world which they don;t yet grasp and even leading (by production capability), successful, family owned wineries have unbelievable limitations in understanding what actually needs to happen as they intend to grow in the global market place. They are at best, traders, but this century of the wine world demands first class marketing to achieve results. To read further, see my recent post on LinkedIn: https://www.linkedin.com/pulse/wine-spirits-us-marketing-challenge-monika-elling?trk=prof-post

  3. Thank you Monika and Ed for your comments here.

    Given the current global market situation, we are witnessing the sad game of the survival of the fittest. Those businesses that think long-term and want to survive will have no alternatives but to create a solid business plan including forward looking marketing strategies.

    Cheers,
    Reka

  4. Monika & Reka:
    I believe the dark economic clouds now circling the world will cause not only wineries but all producers to rethink their overall branding & marketing strategies. As a result of this “free money” policy, for the last 8 years (really 30) we have lost touch with the real-price discovery of stocks and goods. This hyper-inflated economy has allowed many zombie brands to exist, thus masking true brand equity value and markets (funny how they do not refer to it as product-equity). Once that pin poops this massive bubble we will painfully return us to market realities. How long will we have to wait? No long at all because we already have commodities and currencies collapsing, next will be countries and then financial markets.

    Companies / consultants providing consumer-centric branding & marketing solutions will be highly sought after, once the clutter has been discounted out of the marketplace. Consumers, especially millennials are not interested in stuff, nor females. They are seek brands of meaning. Build a meaningful-differentiate brand in 2016. NO MORE PRODUCTS.
    Happy New Year from the West Coast.
    Ed

  5. All well and good from 10k feet. What are the “meat and potatoes” work that a very, very small winery would need to do to make any of this happen? I mean I barely have the resources to grow grapes and make wine. I recognize that selling more opens funds up to do some efforts in this area but it is a catch 22. Any practical advice for the less than 1000 case winery?

  6. Thank you Jim for your question. I strongly believe that small wineries have a huge potential in working locally and straight with consumers. That is how you add value. Try to deeply connect with your consumers and add value to your work. They will know the difference and will engage. Very often, in the case of small wineries, the people behind the wine are the wine’s brand.

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