Brand first, appellation second

Russia's President Putin recently demonstrated to the wine world once again how quickly a supposedly secure sales market can become a sales trap.

Robert Joseph draws two lessons from this.

Robert Joseph thinks about origins vs. brands
Robert Joseph thinks about origins vs. brands

Sandwiched between Satisfaction and What’s Going On, John Lennon’s Imagine is ranked at number three on the Rolling Stone list of Greatest Songs of All Time. Countless people across generations have happily mouthed the lyrics ‘Imagine there's no countries. It isn't hard to do’ before sitting down to cheer their national team’s efforts in a sporting arena, or vote for a politician who promises to make their nation great again.

We’re a very, very long way from having no countries, but last week, thanks to Vladimir Putin, the wine industry woke up to find itself a step closer to its own equivalent: imagine there’s no appellations. The Russian president’s unilateral move to force Champagne producers to sell their wares as ‘sparkling wine’ came as an unexpected bombshell. The word 'Champagne' may still be used- for the moment, but only in ways the Russian authorities find acceptable. 

Suddenly, wine produced under strict rules in Epernay, Reims and Ay will sit on Moscow wine shop shelves alongside more cheaply-made efforts from Russia and elsewhere. Moët & Chandon has rapidly announced that its wines will comply with the new rules. Other Champagne houses will follow. They have no choice.

 

Strong leaders with harmful decisions

This is, of course, not the first example of a powerful leader using parts of the wine industry as a punchbag. Europeans and Australians have learned what presidents like Trump and Xi can do with brutal sanctions, almost on a whim, when it suits them. A change in the US administration may recently have brought relief, but the electoral systems of China and Russia make a rapid reversal a lot less likely in those countries. 

Introducing rules on wine labelling is different to imposing tariffs, of course, and intelligent members of the wine industry should now be seriously considering what other unexpected measures might be taken against them with little or no warning. Donald Trump’s tariffs took account of alcohol levels and packaging, advantaging higher-strength wines and bulk shipping. Might other administrations bring in legislation to disadvantage wines with ABVs of over 13.5%? Might new import rules penalise users of more than minimal amounts of SO2? Or producers whose bottles weigh more than 350g? Some unilateral moves like these might actually be welcomed by industry observers who will overlook the short-term impact they would have on producers who would need to change their way of working almost overnight.

For Moët & Chandon, Veuve Clicquot and Krug, the removal of ‘Champagne’ from their labels will be inconvenient but is unlikely to do much commercial damage. The same will probably apply to Salon, Larmandier-Bernier and Jacques Selosse. These are all brands with loyal followers and fans. But what of all those other growers, smaller Champagne houses and private labels that have relied on having the C-word on their label? How are they to fare?

And what if Vladimir Putin, or Xi Jinping or - God forbid - President Donald Trump Junior, were to introduce legislation that had a similar effect on other appellations? At the beginning of last week, that notion might have seemed vanishingly unlikely, but at the beginning of 2020, the prospect of a pandemic closing down the world wasn’t on most people’s horizon either.

 

What can be learned from it

The two lessons to be learned are really quite simple. First, there’s the obvious one of not relying too heavily on any one market. Australian producers who placed all their eggs in the Chinese basket have learned their lesson, but so too may some smaller Champagne houses that have been selling too large a proportion of their wine in Russia without really building a name and a following there. And that brings me to the much bigger and more fundamental lesson that the wine industry urgently needed to learn in any case: brand first; appellation second.

Chateaux Lafite and Angelus have no more need of ‘Pauillac’, ‘St Emilion’ or ‘Bordeaux’ than DRC needs ‘Burgundy; or Gaja ‘Barbaresco’. But what’s true of the aristocracy can also apply to smaller producers. Gravner transcends Friuli just as Grange des Pères transcends ‘IGP de l’Herault’.

This is absolutely not to say that appellations are unimportant, or that terroir doesn’t matter. Without their very specific regional soils, aspects, climates and cultural traditions, none of these producers would ever have created the uniquely distinctive wines to which they owe their reputations. But the strength of those reputations not only protects them from the - hitherto improbable - threat of not being able to print the name of their region on a label. Far more importantly and more relevantly on a day-to-day basis, being stronger than the name of that region also protects them from neighbours who use or abuse it to help them to sell cheaper, lower-quality wines. Stated bluntly, if the most important word on your label is Prosecco or Rioja or Bordeaux, you’re competing with the most keenly priced example of that appellation Aldi or Lidl or Carrefour can find on the bulk market.

In other words, if Vladimir Putin has got a few more wine producers at least briefly imagining how they’d fare in a world with no appellations, he might unintentionally have done them a big favour.

 

Robert Joseph
 

Comments

Are we not seeing some " levelling up" in in these moves. Marketing created margin will be put under pressure when like for like quality becomes more considered . Perhaps the realisation that more than one emperor is wearing no clothes will re adjust some false hierarchies .

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