In Hollywood, they know the importance of letting people know about the stuff they produce. If it costs $100m to make a movie, then it will cost another $50m in marketing. The smaller the production budget, the larger the proportion; so, while the team behind Moonlight managed to make their Oscar winner for under $5m, a lot more than that will have gone towards promotional material like trailers and posters. After all, they had to compete with the heftier sums that were being splashed around to persuade people to see La La Land.
Motor manufacturers spend a much smaller proportion of their income on marketing: under 3.5%. But when a company like Renault banks annual revenues of €45bn ($48.9bn), that still adds up to a sizeable sum. Walmart’s marketing spend of $1.92bn in 2015 looks pretty hefty, but it only represents 0.4% of the chain’s total income for the year.
In the world of spirits and Grande Marque Champagne, around 10% to 15% is the figure that most professionals acknowledge devoting to hospitality, media advertising, sponsorship, and so on – a percentage that would be familiar to most serious wine producers in the New World. Ask the average European winery owner to describe their marketing budget, however, and the response might well be a look of incomprehension. For many, ‘marketing’ is a dirty word.
A recent straw poll of owners of smaller French wineries revealed that, while most set aside the cost of taking space at Vinexpo and/or a local wine fair, the occasional modest advertisement, and the cost of looking after a wine writer or two, few ever think about budgeting a specific portion of their income on this kind of expenditure. And, even if they were to do the calculations, it would be very rare for these costs to exceed 5%.
Five percent of the €250,000.00 average annual revenue of the 3,000 or so Languedoc Roussillon producers who bottle and sell their own wine would not go far. For the huge number of European estates that struggle to make even €100,000.00, it represents the proverbial drop in the bucket.
Many of these same Europeans explain that they don’t need to do much marketing, because their local appellation, DO, or DOC does it all for them All the producer has to do is stick to the rules of the Côtes d’Ordure or Costa della Basura or wherever, print its regional name on their label in large print, take a corner of a generic stand at a trade show, and wait for the orders to roll in.
But it’s not just the wineries located in designated regions that behave in this way. Plenty of producers of varietal wines are just as unprofessional. They hope that their Pinot Grigio, Merlot, or Sauvignon Blanc will find its way onto the shelf just because it tastes okay and is attractively priced.
Of course, this approach is ill fitted to the laws of the capitalist jungle. Unless your wine has something that sets it apart from its peers, it will always be at the mercy of a Pinot Grigio that’s cheaper, available in larger quantities, with a prettier label, or on offer from someone with whom the buyer would prefer to do business.
In 2014, the average French retail price of a bottle was just €3.14, and the average landholding was 8 ha. These figures do not make economic sense. Just over a decade ago, France had 200,000 vignerons. The most recent figure I’ve seen is 85,000, of whom some 27,000 apparently sell their own wine. These numbers are sure to have shrunk further since then.
Cheap wine, like breakfast cereal, should be the province of large companies that, like those Hollywood studios, know how to make, promote, and distribute it. Bigger businesses that prefer not to invest in marketing can tailor their modus operandi to the bulk market. Or, of course, they can do both. If they are to survive, smaller wine producers, like the makers of art house movies, can’t hide their lights behind a bushel. And that means breaking the vicious circle in which far too many are currently imprisoned. They have to sell at prices that are high enough to cover the marketing needed to justify the increased income that will enable them to survive.
