In the final weeks of 2016, around 200 prominent members of the wine industry made their way to Santa Rosa in California for the fifth edition of Wine Vision, the conference launched in London in 2013 by the UK-based event organiser William Reed. An impressive list of speakers included Stephanie Gallo, Marc Soccio of Rabobank, Rob McMillan of Silicon Valley Bank, and two of the biggest retailers in the US, Terry Creaturo of Kroger and Annette Alvarez-Peters of Costco.
What’s the story?
The scene was set by the event moderator, Ray Isle, of Food & Wine Magazine, who challenged the industry to answer the essential question behind the marketing of any wine or region: “What’s the story?” Catching Isle’s ball, Lulie Halstead of Wine Intelligence began by talking about her teenage son’s delight in ordering a modern version of the Sovietera Vostok Amphibia watch, and her initial nervousness. What was this timepiece? Was he about to be ripped off? This confusion and fear, she said, was comparable to the emotion most consumers experience when confronted with the ‘wall of wine’ in a supermarket.
Wine, Halstead continued, involved several different levels of complexity for its buyers. Quite apart from the ‘category’ complexity of region and grape varietal, and the ‘product’ complexity of vintage variation, there are ‘situational’ and ‘social’ complexities of where and when a wine is going to be consumed, and with whom. These issues are surprisingly ubiquitous across the globe. As Halstead said, “Wine is complex but people are very similar” in the way they handle its challenge. Referring to Daniel Kahneman’s bestselling book, Thinking, Fast and Slow, Halstead explained that, instead of using slow, analytical thinking to try to decide which wine to pick up from the shelf, most consumers make their choices quickly and instinctively, relying on elements with which they feel most familiar.
Producers, she continued, need to think about this when deciding whether to focus on acquiring new customers or trying to persuade existing ones to buy more bottles. Regular wine buyers are a minority, so relying on them to help build volume sales is risky. On the other hand, creating awareness among new consumers is not simple either, as was demonstrated by Wine Intelligence research suggesting that a third of regular US wine drinkers struggle to name a single wine brand without prompting. Only half can recall more than two. As important as awareness is memory, and the buzz marketing term ‘centrality’, which refers to the role a brand has within a consumer’s life. (Apple, Coke and Nike all have strong centrality, with their customers unwilling to switch allegiance to a competitor.) Many people buy a wine brand once, Halstead explained – few buy it frequently.
Linda Petta, head of Entertainment Solutions for Brands at YouTube, pointed out that her company is second only to Google in the list of most widely used online searches. Four hundred hours of material are uploaded every minute; however, with some 11m wine-related videos already on offer, it is hard to get noticed. The answer, Petta explained, lies in offering ‘snackable content’ – informative clips delivered with passion and humour in under two minutes and delivered regularly. Uploading one great clip is not enough, she stressed, as brands that succeed on YouTube upload material at least weekly.
Kevin Shaw of design agency Stranger & Stranger discussed the lack of imaginative thinking in the wine industry. Shaw, whose award-winning packaging concepts have included the paper-covered Paperboy brand and square-shaped California Square bottles said that while his studio is constantly working on new concepts for spirits brands, he had only been asked by clients to create bespoke wine bottles on four occasions. “Watch consumers pick up spirit bottles. They are more interesting, more tactile, with much more to discover.”
Shaw’s tactile spirits bottles tend to benefit from bigger marketing budgets, and greater consumer awareness, than most wines.
What retailers want
Annette Alvarez-Peters, head of wine buying at Costco, one of the world’s biggest wine retailer, pointed out, “It’s very difficult to pioneer new items. How do consumers know if it’s a value wine if they’ve never seen it before?” Costco, she said, has a “five-by-five” rule – products have to be recognisable from five feet and buyable in five seconds. This strategy allows wines to be moved around the store and a minimum of signage to be used. “Our customers hunt for wines and they know that our rotation means that if they don’t buy today, they may never get another chance. Having a lot of one-off purchases gives excitement.”
Terry Creaturo of Kroger, the biggest supermarket chain in the US, offers a much larger range – 800 to 3,500 wines compared to Costco’s 235, with a more provocative retailing style. “We hit customers in every way possible,” she says, including offering an app with food-and-wine matches. A shelf-talker saying “goes great with fish” will sell a wine, she says. The time it takes to read those words, it seems, is “how long you’ve got” to make the sale. Wines, she says, are given nine months to prove to the buyers that they are worth listing. Both Alvarez-Peters and Creaturo agreed that points out of 100 still work. But not necessarily points from the Wine Advocate, Wine Enthusiast or Wine Spectator. “You could get a 95-point rating from the chef down the road and it would be enough,” Creaturo suggested.
The two retailers also concurred that it is up to the brand owner to create demand. “Most purchases are based on what customers already know and recognise. Your wine could be made from 100-year-old gnarly vines and hand-picked by the full moon by a family who’ve owned the land for hundreds of years, but it won’t reach my customer unless you have a way to tell them that story,” said Creaturo. She made another important point: “Suppliers want to be in all our stores, but it’s logistically impossible for a smaller winery to service 350 stores twice a week.” People, she explained, have to be realistic about what they want and what is really achievable.
The future
The focus shifted to China, with Marc Soccio of Rabobank and Edouard Duval of East Meets West, one of China's most dynamic distributors, picking up the ball. Soccio demolished some widespread exaggerated impressions of China’s wine industry. “Only 15% of the grapes are used for wine and only a small proportion for quality wine,” said Soccio, and China has yet to find a “globally competitive” region in terms of price and quality. He also revealed large recent increases in imports of both bottled and bulk wine. France is still king among these, but Australia, Spain and Chile are showing faster growth. Duval also discussed the great potential that is now offered by online sales to market to hundreds of millions of people across China, and the need to have a memorable Chinese name for a brand, and to protect its ownership.
Chris Savage from California's Gallo joined Hugh Reimers, the Australian-born president of Jackson Family Estates, to talk about sustainability, which is a big focus for the Sonoma region, while Stephanie Gallo surprised the audience with a frank admission of subsequent generations’ failure to achieve founders Ernest and Julio’s aim to popularise wine in America. She suggested that the industry has to change the way it thinks when talking to Millennials. Martin Brown, CEO of Wine-Searcher, revealed that retailers now offer much wider ranges than in the past – up to 25,000 SKUs in some cases – though without necessarily holding stock. Price transparency had not made wines cheaper, he said, but it has reduced the range of prices for the same products, bringing the highs and lows closer together.
No major wine conference would be complete without a discussion of closures, and there were two talks on offer — one by Dr Eric Wilkes, group manager of the Australian Wine Research Institute, and the other by Dr Stéphane Vidal, vice president of enology & wine quality solutions at Nomacorc, from which attendees learned that while the quality of corks had improved, reliability was still an issue. Using data from over 100,000 entries to the International Wine Challenge, Wilkes showed that the incidence of TCA-taint had dropped from 1.6% in 2007 to around 1.1%. A similar proportion of cork-sealed wines also suffered from oxidation, though this was also a problem for other closures.
Perhaps the most memorable speaker was Dr Ahmed El-Sohemy, Canada Research Chair in Nutrigenomics at the University of Toronto, who talked about ongoing research into links between health and personal taste and individual DNA. In the 1990s, it was established that some people – the socalled ‘super tasters’– are more sensitive to bitterness than others. More recent studies show that particular individuals may be hardwired to desire more sugar, or to strongly dislike cilantro.
El-Sohemy was less than convinced by the claims of a US wine company being able to tailor wines to customers’ DNA, but did not rule out the possibility of this becoming a possibility in the near future.
If El-Sohemy is right, perhaps the ‘stories’ that help to sell wine in the future won’t be created by producers and distributors. Maybe they’ll stem from the genetic characteristics of the people buying the bottles.
