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Tag Archives: Big Wine

Post-modern wine marketing

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wine marketing

Wine marketing is not just about shelf talkers anymore.

Wine marketing, like the rest of the wine business, has always been done the same way — some junk written on the back label, mostly useless, and the cute labels that have been the biggest innovation over the past couple of decades. Otherwise, unless there is a shelf talker (the printed card attached to the shelf under the wine with a score or description of the product), you’re on your own.

That was always fine with the wine business, which assumed that anyone who went into a store was going to buy a bottle, so what was the point otherwise? There is even a term for this — “building a brand,” in which the distributor and retailer work together to sell you certain wines.

This is one reason why there has traditionally been so little advertising, TV or otherwise, for a $40 billion industry. Ketchup ads are everywhere, even though the ketchup market is 1/80th the size of wine.

All of which is changing, thanks to our friends at Big Wine. They understand, in a way that their forebears did not, that wine has become just another category in the food business, and it needs to be marketed like ketchup. We may not see TV spots with fresh young things touting wine the way they do yogurt, but we’re going to see more and slicker efforts to get us to buy specific wine brands.

Perhaps even more important, these ads will focus on consumers who don’t buy wine in the small retail shops that have traditionally been the backbone of the wine business. As an executive at one of the biggest wine companies in the world told me a couple of weeks ago, the future of wine retailing is Costco, Total Wine, and grocery stores, so expect Big Wine to target consumers who shop there. This is revolutionary for wine, where it has always been about making a decision on brand in the store. You may want red wine for dinner, but which red wine? Big Wine, knowing no one is around to help you pick a specific red wine at a supermarket, wants you to decide on their brand before you go to the store. It’s all about brand loyalty, the same way it is with Heinz and Tide.

Hence, these two marketing efforts, which are just the beginning. This spring, Little Black Dress, the $8 brand owned by Fetzer (which itself is owned by Chile’s $1 billion Concha y Toro), did a spa day sweepstakes, where “entrants will be asked to tell Little Black Dress about their best friend and why she deserves a day of pampering for a chance to win two $300 gift cards to a local spa.” I can’t imagine too many of the Winestream Media’s favorite “oaky and toasty, redolent of cigar box aroma” wines doing this.

Or baseball wine. Seriously. Nineteen teams have official wines, made by some company called Wine by Design and part of the “MLB® Club Series wine collection.” Who cares what the wine tastes like? It has my team’s logo on it, so let’s buy a case.

Again, this is about cutting the tie between retailer and consumer, which has always been essential to selling wine. Big Wine doesn’t need the traditional retailer, and it’s going to do everything it can to usher in post-modern wine marketing.

For more on wine marketing:
Chateau Ste. Michelle, wine marketing, and wine blogging
Diet wine, and why we’re stuck with it
When Blue Nun ruled the world

Winebits 403: Big Wine, wine scores, wine regions

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big wineThe big get bigger? An industry analyst says Diageo, one of the biggest wine producers in the U.S., should merge with beer giant SABMiller to increase profits as the global drinks business slows down. Talk about Big Wine: the combined company would total $8 billion in sales, and its products would include Miller beer, Johnnie Walker scotch, and Rosenblum and Sterling wines. How do we know the speculation is more than gossip? The news story included the word synergies, as in the combined company would save money because it had them. As regular visitors here know, synergies — which, like unicorns and wood nymphs — exist only in the minds of those who believe in them, and are always given as an excuse for a multi-national merger. Because, otherwise, what’s the point?

A wine snob temper tantrum: The Italian Wine Guy, who knows more about Italian wine than almost anyone else in the world, recounts his experience with a wine drinker, and it’s not pretty. The customer wanted a 100-point Robert Parker Brunello, and he wasn’t going to suffer anything as foolish as advice from one of the most knowledgeable Italian wine people in the world. What’s worse is that the customer was rude about it, treating the Italian Wine Guy as if he was some idiot foisted on the customer by an inept store owner. This is the harm in scores, regardless of anything else: If all we do is buy wine by scores, we cheat ourselves of all wine has to offer. It’s snobbishness of the worst degree, as bad as the snobs who make fun of people who drink sweet wine.

Calling wine by its regional name: The U.S. and the European Union have been arguing for some 20 years about strengthening the international agreement that prohibits U.S. producers from calling their sparkling wine Champagne and stops French companies from calling their potatoes Idaho. Now, though, the two sides may be close to an agreement, thanks to a U.S. compromise. The article, from the Conversation.com website, is long and little legalish, but it does a good job of explaining why these trade laws exist, why the U.S. traditionally didn’t care for them, and what might happen next. Who knew Feta cheese was a deal-breaker?

Why Big Wine will keep getting bigger

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Big WineThink this year’s wave of Big Wine buyouts was impressive? Just wait. Big Wine is only getting started.

The wine industry is going through unprecedented consolidation, and even I’m surprised — and I’m the one who predicted it. That’s because three things have made this the perfect time for companies like E&J Gallo, Constellation, and The Wine Group to snap up smaller producers the same way a small child attacks Chicken McNuggets. This is a mixed blessing for the consumer, who will get increased access to well-made wine, but at the cost of much of the wine tasting the same regardless of where it’s from and who made it:

• Cheap money. Interest rates are not just at historical lows, but have been there for almost 10 years. That makes the cost of borrowing to buy a winery so low that even those of us who aren’t M&A geniuses understand how much sense it makes. Plus, rumors of an interest rate hike this fall may have spurred this summer’s wave of buying, so that Big Wine could lock in all that cheap money.

• The biggest wine companies are preparing for a world where we buy most of our wine at grocery stores, warehouse stores like Costco, and large chains like Total Wine. This will happen sooner rather than later (if it hasn’t already), and anyone who doesn’t understand how important this is is missing the biggest change in the wine business since the end of Prohibition. Big Wine wants product to fill all those store shelves, and the easiest way to do that is to buy another winery. Could the local wine shop, with someone who waits on you, become as quaint as the corner drug store and gas stations with attendants who clean your windshield?

• The end of the family winery era in California, which started in the 1980s and did much to make California wine some of the best in the world. But wine is not immune to the laws of family business, which say that any family business that lasts past the first generation is the exception. And most of the family wineries that have been sold in the past couple of years are first- and second-generation companies. As one banker told me, there are more wineries that want to sell than anyone can imagine.

The other thing about all these buyouts? That wine, despite what so many think, is no different from any other industry, and the same kind of consolidation that has transformed U.S. business since the beginning of the century — Heinz buying Kraft, for example — will transform wine. This is a change many don’t like and even more don’t understand, but it seems inevitable.

 

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