Why is Wine Marketing so Stale? An Open Letter to the Industry at Large

The other day, I had an interview with an Italian wine magazine where I shared some of my experiences as both a wine marketer and a winery owner. The journalist’s questions got me thinking about the deep confusion around the term “marketing.”

Too often, I see the term marketing being confused with sales and I see marketing tactics confused with marketing strategy. It begs the question, what is “marketing,” and how can it be employed successfully?

The Evolution of Marketing

First, let’s look at the basics and how marketing has evolved. Marketing has progressed based on global, political, social, and cultural events. Philip Kotler’s book, Marketing 3.0, perfectly simplifies this evolution:

Marketing 1.0: Back in the ’50s and ’60s marketing was tactical. It was focused on product management because it had to support industrial growth. In this phase, the concepts of “marketing mix” and the “4 Ps” were born. Marketing served to support production functions. Marketing meant developing a product, with a proper price, with an adequate promotion, and distributed in the right places.

Marketing 2.0: Fast-forward to the next 20 years and marketing evolved from a product-focused discipline to a client-centered management procedure. The oil crisis redefined global market powers and the slower product demand during uncertain times led to the need for something more than the 4Ps. To stimulate demand, marketing had to shift from being a purely tactical function to a strategic discipline. Marketing activities focused on creating consumer needs with specific product positioning to the targeted consumer.

Marketing 3.0: The next developmental stage came with the internet. Consumers became connected and the decision-making power shifted to their fingertips as they started to make up their own minds about products, services, and companies. This connectedness characterizes the new era of marketing. To create demand, it is no longer enough to access the minds of consumers; there is a need to access their hearts too.

Concepts like emotional marketing, experiential marketing, and brand equity were created to adapt marketing to this new connected consumer. This adjustment meant moving from client-centered marketing to brand-centered marketing. In a current era characterized by recession and loss of trust, the objective of brand management is to establish a trusted bond with consumers through identity, integrity, and authentic image.

This graph accurately shows the evolution of marketing:

Kotler Marketing

Source: Marketing 3.0: From Products to Customers to the Human Spirit by P. Kotler, H. Kartajaya, and I. Setiawan

According to Kotler, author of over 50 marketing books, consultant, and distinguished professor, “Marketing is the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit. Marketing identifies unfulfilled needs and desires. It defines, measures, and quantifies the size of the identified market and the profit potential. It pinpoints which segments the company is capable of serving best and it designs and promotes the appropriate products and services.”

From my experience in marketing fast-moving consumer goods (FMCG) companies, I can attest that without strategic marketing, companies cannot succeed. In organizations that understand the value of marketing, no product or service is ever made without an evidence-based marketing plan in place.

On the contrary, many in the wine industry consider marketing unnecessary. In most cases, marketing is a misused term, and in the wine industry, as in many others, this misuse has created a confused idea about what it truly entails.

In response, I want to offer a few points to clarify these distorted beliefs, which I hope will help shed light on the importance of true marketing within our industry:

Tactics are NOT Strategy

A strategy is a plan to reach specific business objectives and tactics are the means used to reach these goals. Strategy is planning, is the “why,” is hard to copy, and is long-term. Tactic, on the other hand, is doing, is the “how,” is easy to copy, and is short-term.

Social media, trade shows, and events are all tactics. What you communicate on your labels or website is a tactic. These are all things brands use to reach their objectives. A strategy includes planning with quantitative and qualitative research data, with quantifiable sales and profit projections, and with a plan to follow up and maintain market demand.

Tactics are part of the strategy. If a brand uses only tactics without strategy, it will end-up acting on short-term plans without real sight of the long-term future.

Marketing is NOT Sales

Walk into most large companies and you will see that marketing and sales departments are separate. When I was a brand manager at Danone, I experienced what that relationship between marketing and sales departments is like. One of my most challenging experiences was presenting a three-year marketing plan of the main yogurt brand to the national sales team composed of 300 hard-to-convince men and women. Standing alone as a marketing manager in front a merciless sales team is difficult because these are the people who execute what marketing people plan. They have to go out in the market every day and experience first-hand market resistance or success.

However, before the sale of any product, the long and extensive marketing work often goes unseen. Marketing involves thoroughly investigating the market itself, researching consumers, and identifying unmet needs and desires before developing and selling a product.

Marketing is there before a product is made and is there long after it is sold. Marketing also decides when a product should be withdrawn from the market based on its performance.

Opinions vs. Evidence-based Decisions

Strategic marketing starts with the search for evidence of a market opportunity for a product or service. The wine industry tends to make most of its strategic decisions based on opinions and the past. In the Old World, the mentality that “it’s always been like this” is deeply rooted in business decisions. Anything that is different from the well-established and well-known route is marginalized, even if it is based on clear evidence. Somehow, opinions, experiences, and authoritative influences have more weight in decision making than data and market evidence.

While there are many research results out there (and are either free or affordable), very few wine companies actually know how to interpret insights and integrate them into the decision-making process. There is an abundance of information for a non-receptive audience who very often finds it easier to rely on opinions than evidence. Which brings me to my next point…

Professional Qualifications

There is no sugarcoated way of saying this, but the wine industry lacks a diversity of high professional standards. In other industries, to be considered a thought leader or authority, one needs to obtain certain credentials or accomplish certain milestones. In the wine industry it seems that the louder the voice you have, the more influence you have.

There is so much pressure from the wine trade to pursue the WSET diploma for vocational training and knowledge, but the industry does not require the same standards for marketing wine. Why is it acceptable to have self-proclaimed, opinionated marketing individuals influence decision-making?

I do not ask this question to offend, but rather, to encourage the industry to truly think about the marketing strategies we employ. While everyone is entitled to have an opinion about how wine should be marketed, or about what consumers want and need, very few are really skilled to understand and apply evidence-based strategic marketing. I believe that there should be higher professional standards to be a marketer of value.

Final Thoughts

Looking back at the evolution of marketing as a discipline, it is clear that wine marketing is still in its first stage of evolution. In many cases, it only defines the 4Ps and supports production.

Different markets behave differently; some are business-oriented and marketing serves to generate profit, while others are stuck at the notion that it is solely a cost and there is no need for it. Between these two extremes, there is a gap, and it’s called the consumer.

The entire marketing 2.0 and 3.0 phases, as defined by Kotler, are yet to become mainstream. Generally, marketing in the wine industry is still not consumer-focused, and as a result, it finds itself in a fast-moving, short-termed tactical world without well-defined objectives and strategies.

The real threat is not only the stagnant evolution of wine marketing, but also the competitive landscape in which wine exists. As expressed in an earlier piece, wine marketers need to understand that they are battling for a limited consumer stomach-share. Brands are not competing only within their own categories, but across all alcoholic beverage categories. Understanding consumption moments, occasions, and moods are essential for successfully marketing brands. Simply developing a product, with a proper price, with an adequate promotion to be distributed in the right places is not enough to secure an economically sustainable growth.

I believe it’s time the industry embraced marketing in a professional manner and understood the importance of a long-term vision. Wine needs to grow up fast; otherwise it will find itself even less prepared for the next evolution.

Photo credit: Unsplash.

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. Having lead marketing for the third largest bottled water company, one of the largest New Age soft drink companies as well as the third largest winery during my career it is fairly obvious that the Wine industry is “Sales/trade” driven and does not have the inclination, skill set, understanding of or belief in the marketing matrix employed by other CPG categories. I find it helpful when ask what is marketing to give the person a copy of “Managing Brand Equity” by David Aaker. It is the primary marketing textbook used for many MBA programs. It explains what marketing is in a manner even a CFO will understand. I do not expect the non marketing focus to change anytime soon other than a bit towards social media. The investment in the status quo is too large. It is one reason the retail sector doubles the margin for wine over spirits and triples it over beer. Wine as a brand has a great deal of risk in terms of sell thru. Beer and spirits brands turn faster because they are far better marketers in the traditional sense.

    1. Thank you John, for taking your time to read and comment here.
      Regarding your comment about beer and spirits, I find it especially telling, for example, that according to Nielsen’s Wine Audit Report from Dec 2015, wine stands for only 4.6% of the total Alcoholic Drinks media expenditures in the US. When cross-analyzing this data with AdAge’s 2016 Marketing Fact Pack, it turns out that in 2014 the entire Alcoholic Drinks category (wine, beer, and spirits) represented only 1.4% of total US Ad spending. To make it even more tragic, wine’s media spend proudly represented 0.06% of total US ad spend. It’s a hard reality.
      Now, wine competes for the same stomach-share of the same consumer that today finds it easier to choose beer or spirit. The difference, as you also state it, is that beer and spirits put more emphasis on marketing to consumers instead of focusing solely on trade.
      Cheers!
      Reka

  2. Many winemakers consider themselves “artists” and therefore have no need to get involved in the “dirty” aspects of selling. “If I don’t sell my wine, I’ll drink it all myself” is frequently heard. This makes about as much sense as someone who thinks being able to cook well is all you need to run a successful restaurant. Even artists such as painters, musicians, and actors realize the need to market. It’s not enough to create a great work and tell other people it’s their job to come and find it.

  3. Larry, thank you for your comment.
    The most common belief in the Old World is that if the wine is good, it sells itself. All a winemaker needs to do is produce a good quality product and the rest goes by itself. Between this and your “artists” the global wine market shows declining and disturbing trends. Global consumption shifts, stagnant volumes, consumers migrating to other alcoholic drinks, new consumers not entering the wine category are all signs that are worrying for the future of the global industry.
    Cheers!
    Reka Haros

  4. I get what you mean, here in the Northern Rhone, it’s not always easy. Most winemakers here are the grapegrowers, winemakers, salesmen/women, and accountants for their winery, which leaves little time, not to mention money, to pour into marketing.

    1. Noemi, hi!
      I totally get your point. That is the same exact situation I live in with my winery. But, that doesn’t mean that marketing should be left out. Marketing can also simply be, stopping your daily routine to analyze your costs, your profit model, identify what works well and what doesn’t. Marketing isn’t always about spending money. Sometimes it can also be just about analyzing your company from a business point of view.
      Cheers,
      Reka

  5. Reka, well done; The Old World” comment is so very Hungarian, and indeed, typical of many European wineries. However, it also applies to regions in North and South America, Australia, South Africa and much more. We work with wineries around the world, and see this problem on a daily basis. Last fall I had written on this topic as well, focused on the “US Wine Market Challenge” http://tinyurl.com/hmm3u9s . In order to execute on the marketing front, wineries do have to have a clear understanding of the meaning of the word, and stop associating sales programming with the same. We are not even remotely close to seeing the type of CPG market effort that is required from the sector at this time. It is still purely production focused and often backwards looking; yet it is high time to accelerate forward. No choice, actually. For the U.S., in light of the most recent rounds of consolidation, a new, market centric approach will be necessary. As most wineries will be resistant, many of them will simply fade away.

    1. Thank you Monika for commenting here. Yes, the theory of the survival of the fittest is always ready to become reality. Learn from the Old World.
      Cheers!
      Reka

  6. Hey, it is easier to give samples than to actually plan and execute real marketing. The first 2 comments cover the rest pretty well. I personally think it is criminal how badly the industry misuses the room on the label to do some decent marketing. Two or three simple sentences about the vintage or harvest or the blend would do wonders to keep buyers interested in a brand. Ordinary English would help too, not the hi-falutin stuff nobody absorbs.

    1. Yes Donn, I agree with the language use and packaging comments. Many things could be done on the packaging front! Unfortunately the easy way out will always be more attractive than the hard way.
      Reka

  7. Here in California, most wine is made by small scale family farmers who have no training in sales and marketing.

    Their mindset is one of producers working the land, striving to made a superior product.

    Winery owners “hitting the road” to sell their product is a begrudging obligation — seen as taking valuable time away from their first devotion to the vineyard. Should they have adult age children who work in the family business, then those sales trips are delegated to them . . . ’cause dad’s back at the home property, working the soil.

    Let me cite a recent article from Wine Spectator (US) magazine:

    “West Coast Wineries Are Up for Sale — Quietly”

    (Summary: A wave of recent deals show investors see opportunities in wine, while owners see an exit strategy.)

    Link: http://www.winespectator.com/webfeature/show/id/49221#.UoI_yAMMzG8

    EXCERPT:

    “… While small wineries can succeed by selling most of their inventory direct to consumers and large producers have muscle with wholesalers, those in the middle — annual production of 5,000 to 15,000 cases, for example — can’t get much attention from distributors unless the brand is hot.”

    AND:

    “… ‘I’ve never seen more wineries for sale in California than there are today,’ [said Charles Banks, who through investment groups such as Terroir Selections purchased Santa Barbara County Syrah specialist Qupé and Napa Valley veteran Mayacamas Vineyards] … Banks … estimates that between 30 to 50 percent of California wineries are either in financial difficulty or aren’t as profitable as they could be.”

    Global beverage giant Coca-Cola exited US wine production in the 1980s when they saw their consumer marketing strategies and tactics were a poor fit for an agricultural production-oriented industry.

    There is a longstanding Q & A quip in the US wine industry:

    “Question: How do you make a small fortune in the wine industry?”

    “Answer: Start with a big fortune.”

    Just sign me,

    A fellow FMCG and ad agency veteran who currently markets wine. (And struggles with the same behind-the-times wine marketing issues you do.)

    1. Bob,
      Not only Coca-Cola, but Nestle, Philip Morris, and Nabisco all have entered and exited the wine market in the 80s. And what I really think is telling is that a Diageo manager back in the times said “Two millennia ago a miracle changes water into wine. We are still waiting for the second miracle: turning wine into profits.” (Company case 20: The Global wine SCAM; Principles of Marketing by Kotler, Armstrong, Wong, Saunders)
      Today, we know how Diageo ended their US wine business.
      I believe we have many things in common Bob!
      Cheers,
      Reka

      1. An excerpt from a Salon magazine article that underscores the sentiment about farmers not being good marketers.

        “Fundamentally, to make great wine you must be a great farmer,” [California technology start-up guru and Vineyard 29 winery owner Chuck] McMinn told Salon. “Fifty percent of what great wine is, is where vines are planted, the terroir — right place, right varietal, right root stock. Twenty-five percent is weather, in any particular year. Twenty-five percent is the skill of the winemaker, turning grape juice into wine. That and technology aren’t tightly coupled. People here aren’t anti-technology. They’re a ‘show me’ group. Getting distracted could compromise the quality of the product. They don’t want that.”

        Source: http://www.salon.com/2016/08/14/this-is-how-your-favorite-wine-gets-made-forget-uber-tech-pioneers-are-chasing-the-perfect-cab/

  8. This is so important and not many people get it. Tactics without strategy is like a headless chook, it will run very fast in all different directions making heaps of noise and mess, but eventually die. It is so important to start with strategy and brand. That will dictate “how” you communicate.

    “There is no sugarcoated way of saying this, but the wine industry lacks a diversity of high professional standards. In other industries, to be considered a thought leader or authority, one needs to obtain certain credentials or accomplish certain milestones. In the wine industry it seems that the louder the voice you have, the more influence you have.”

    This…

    In Australia this is the same. There is a lack of qualifications in wine marketing. The wine marketing degree got shut down at Uni of SA due to lack of students (read lack of interest in wine marketing). I took to studying the Masters of Wine Business as it was the closest to wine marketing, a passion of mine. There are thirty students in the class, half from China, another five from Asia, five from other countries, five from Australia and only one with industry experiences, me. It seems that marketing is very undervalued in Australia.

    As a final note, I see brands, both big and small, that have excellent branding and strategy succeeding.

    And I see brands that have gone to market without thinking about this wallowing…

    Keep up the good fight Reka,

    Cheers
    Vineyard Paul

    1. Thanks Paul!
      As discussed on social media, I am very sad that UniSa ended its program (I got my post-grad certification there). Sad to see this happen. But you keep studying and stay interested to widen your perspective and knowledge.
      Cheers!

  9. Great article and discussion. I’m a small producer specialising in high-end sparkling wines in Tasmania. I’m on the steep learning curve of getting ready to release. Recognise and agree with all the points made. Like the other small family businesses mentioned in the posts I’m the vigneron, winemaker and everything else. I’ll hunt out the David Aaker book but can you suggest any resources including on-line courses that would help me grow my skill-set?
    Cheers,
    Frieda

    1. Hi Frieda,
      Thank you for commenting here.
      David Aacker and Philip Kotler are two masterminds of marketing in general. For online courses, to be fair I prefer not to mention one or the other, so if you search for it on google you get a list of Universities offering courses. You might want to research them a bit.
      Good luck with your release!
      Reka

  10. Reka great to see you stir the pot and great insight btw as the wine industry in general is so far behind many other industries it is scary. They are from a technology adoption point of view regarded as one of the lowest and slowest users of social media and e marketing across the board. The issue is that wine makers feel ( not all ) that social media and e marketing, blogging etc is a waste of time and for the young, the world is changing so fast around them, their customer base is shifting but they remain rooted to the traditions and practices of the past. When marketing is widely used all it does it to treat wine as a commodity and again we loose our way as we try to market a product of passion and connection like a box of Corn Flakes. The industry has so much to learn and gain if it is prepared to.Off the wine barrel for now. Cheers Leigh

  11. I have an educational background in marketing, have worked in sales for many other industries, and trained under both the Cicerone Program for beer and the Court of Master Sommeliers for wine. I currently work in wine and spirit sales, marketing, events, etc. in NYC. I find this article well articulated from a marketers perspective, I have a problem with some of the comments and ideas about the industry itself. What people who are not actively educated about wine culture and history do not understand is that the winemakers who say things like “I will drink all my wine that does not sell” cannot blow up at the rate national brands of beer and spirits do because a desire for education lacks in society. Just like craft beer, or craft spirits, you have to be educated to appreciate and find value in it. The majority of the consumer market is just starting to transition from the mentality of wine being your grandparents drink to wine being a complex and fun world. I see it every day, in urban NYC people are eager to learn and ask questions, try new things. With some business that we do in Connecticut, suburban standard America, no one cares to know any more, they see wine as they like to and when they consume, it’s a national brand. I read yesterday about production of wine in Spain, and how people at a successful large volume winery see themselves as robots, they find no joy left in what they do or their product. Winemakers with a genuine passion for product, how can you expect them to pour their money into a society that can’t tell the difference or care between Vosne Romanee and Barefoot?

    1. Hi Laura!
      Thank you for taking your time to read and comment here.

      I think I disagree with you on a few points. When I started my journey in this sector, I had zero knowledge about wine and I didn’t feel the need to actively get educated about it to find value in it. What I did find important, as a winery owner, was to understand the industry’s structure and the different markets. It was crucial for my business success for me to stay at consumers’ level of wine knowledge, so I can relate to them and understand their perspective, talk to them as one of them, and stay away from all the wine education kind of talk. Fourteen years down the road, and this strategy has proved to be the right one for my business.

      I also believe that consumers know what they want, and if they don’t they definitely don’t need the wine industry telling them they need wine education to be able to make their product choices. The wine industry is very good at thinking that consumers need education. I strongly believe that consumers need to be able to choose freely between brands and across categories. There is a segment of consumers that will want to learn more because they are fascinated by the world of wine; still, it should be their free choice for choosing the right way for them to learn.

      Then there is a segment of consumers who simply don’t care, and rely on well known brands or on friends’ recommendations. I really don’t see why that is a problem. Barefoot has become one of the most successful brands in the US for a reason. They definitely don’t expect their consumers to acquire wine knowledge before buying their products. Instead, they certainly know how to communicate with consumers that are curious and want to try new products. That is something the industry in general is struggling to do.

      I like to believe that there is space for all brands as there is space for all winemakers and for all types of consumers, once these differences are understood, respected, and embraced by the industry without pointing fingers; then we will see some positive changes.

      And let me tell you a little secret; when I am in the US I specifically buy Barefoot and some other big brands because I want to drink what the vast majority of consumers are drinking. You know, my pursuit to keep close to them continues.

      Cheers!

  12. Hi all,
    Leigh is onto it – get current and get connected with your customers.You can’t run a dinner for a focussed audience with corn flakes or Coke but you can with wine.
    38 years in Perth both wholesale and retail – 14 years with a Margaret River brand that has been running world class concerts for 30 years, countless tastings, dinners and functions and still loving it. Get someone who can stay sober and represent your brand with integrity – this is the best Industry in the world!
    Time for a glass of Yarra Valley Pinot.
    Ian J.
    PS I recall a dinner when Philip Morris owned Lindemans and they offered complimentary cigarettes on the table at a 5 star Lindemans function – very classy!

  13. Hello Reka, I really enjoyed your article. I was recently appointed Director of Marketing at Joseph Phelps Vineyards and would love to have a conversation with you about this, if you’re willing. Hopefully you have my email address now, since I submitted it to make this comment. Please let me know if you don’t see it. Thanks! – Will Phelps

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