Wine Marketing guru, Dr. Larry Lockshin reflects on the major trends for our industry and shares useful insights on how to build successful wine brands
A lot has changed, but strong brands continue to be a valuable asset. In a world of proliferating wine labels constantly being released into the market, consumers need some shortcut to thinking: a symbol and design that can be associated to positive reasons to buy a wine, such as trust, tradition, quality, pleasure and lifestyle. That is where brands enter the scene and, therefore, developing a consistent brand strategy will be vital for the survival of any wine business.
But can a smaller wine business compete in a world of large consolidated brands and lavish marketing budgets? One of the most distinguished researchers on Wine Marketing, Professor Larry Lockshin agrees that it is a challenge, but a possible one. An Associate Director at the Ehrenberg-Bass Institute for Marketing Research, in the University of South Australia, Larry has published over 100 academic articles and over 250 trade articles on consumer choice behavior for wine, including the role of brands in this process.
In a kind interview to Winext’s Blog, he reflects on the continuing relevance of brands and how wine businesses, especially small ones, can develop a successful brand strategy. Moreover, Larry analyses some of the most important trends for the global wine industry, along with the potential long-term impacts of the Coronavirus pandemic on wine consumers’ behavior.
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W: Thinking about today's consumers, what is the relevance of wine brands in guiding their buying decision?
LL: Branding has been and will be the most important factor in how consumers choose wines, probably simultaneously with the price. People go to the market with an idea of how much they will spend, whether it is in a store, a restaurant or online, and they might go a bit above that – but not substantially. Something that has not changed at all overtime is that, for the vast majority of people, “what” they will buy is only something they think about temporarily. For most of the time, they are thinking about their wife, husband, kids, job, dinner, etc. And that is why branding is so important – it is a shortcut for thinking.
“When someone goes into a store and sees several hundreds of wines, they are not going to look at every label. They will look for something familiar and recognize it from the brand and packaging.”
So, when someone goes into a store and sees several hundreds of wines, they are not going to look at every label. They will look for something familiar and recognize it from the brand and packaging. From all of the options available on the shelves, there will be maybe two or three things they are interested in. The same happens in a wine list, the brand name is the first thing they will notice, and maybe then they will also start to think of the wine region. Another important factor is grape varieties: I might look for a Cabernet Sauvignon and will find several options available. But it is the brand that will narrow down the choices. So, branding and all its visual aspects – such as packaging – are very, very important!
W: Is it possible for a small or medium-scale producer to develop a successful brand?
LL: Of course, without or with very little money, it is not so easy to build a successful brand. But there are several things we can recommend. First, for small wineries, there is often this trade-off where they want to have interesting labels – doing artistic and colorful designs that get noticed, which is fine. But they must be careful.
For example, there is a small winery in Australia – quite successful at winning awards and having an old fashion label – and they dramatically changed to these colorful and bright labels. Of course, many of those who knew that wine before will no longer recognize it. Conversely, there are also cases where wineries want their bottles to look more expensive, so they might change it to something similar to a French label; and, of course, they will become unrecognizable because they will look like every other wine. In both cases, they will have to start all over again building what we call “mental availability”: that link between the brand and their package, region, quality, history, story, etc.
“One advice for small wineries is: do not change your labels. If they are not good, maybe you can change them gradually, such as in a 5-year plan.”
So one advice for small wineries is: do not change your labels. If they are not good, maybe you can change them gradually, such as in a 5-year plan. Otherwise, know that it is going to hurt you in the short term, although it might be better in the long term. We so often see small companies having – let's be honest – one of their relatives, their sister, aunt or daughter designing their labels, and they end up with different labels for each wine. They will not build a brand if different wines in their portfolio cannot be identified as part of that same brand.
The second aspect is communication. We know that, for small wineries, social media is probably all they can afford, and most wineries do not advertise. So, every time you are promoting your brand online or in a consumer show, always think of how many new consumers you can attract with that. Many things wineries do are aimed entirely at their existing customers, and they cannot grow their sales without branching out into new ones. There is always going to be people who will stop buying your wine, so you need to replace them. Things like an email list, or clubs (many wineries in Australia are creating clubs), social media, anything that can help you to reach new customers. Otherwise any small winery will find it very difficult to gain some sort of brand awareness.
Whether traditional like a French château, or modern like this Californian Pinot Noir from Aesop Wines, Larry recommends that a wine label be consistent and long-lasting, so as to build brand awareness in consumers’ minds (Credit: Aesop Wines).
W: Is it important for small and medium-sized wineries to take a global approach when building and promoting their brand?
LL: If you look at consumer brands in general, many of the most successful brands are old: it has taken them a long time to build their brand. Somehow, in this 21st century, we want to come up with a brand like Uber, that comes from nowhere and becomes internationally known in a short time. Wineries have to realize that this kind of success is very unusual. There are thousands of brands launched every year and most of them do not gain global recognition.
For a smaller winery, my advice would be to think of the markets you want to get into and focus your efforts on them, rather than trying to be in 20 countries with 50 cases each. Instead of taking a global approach, why not be in 5 cities with 500 cases each, and work with your distributors, sommeliers and other market players to get well known in a smaller area?
W: From the standpoint of marketing, what other sectors could we take as benchmarks to develop the wine market?
LL: Every industry is a case study. Here at Ehrenberg-Bass Institute, we have sponsors from diverse sectors, such as HSBC, Procter & Gamble, Unilever, Uber, Google and the Meat Producers Association. They are all subscribing because the Marketing we teach and we do research on shows that people are people – no matter what category you work with, the same principles apply.
“It is something I call “mental availability”: if people do not know about you, they will not buy your products.”
So for a winery, if you are going to sell at slightly higher price points, you want to look at other products in those higher price points. We have done some research in the US, China and the UK, looking at the purchase of expensive watches, luxury fashion goods and champagnes, and we found the same patterns across those countries that we would find for buying breakfast cereal or coffee; it is something I call “mental availability”: if people do not know about you, they will not buy your products. Even with luxury goods, those that more people know about sell more product with no effect on price; there is no benefit to be ‘undiscovered’.
There have been tests done, people will walk through a market and if they want to buy Coca-Cola or they want to buy Pepsi, they will look for their favorite brand and they will not see other brands that are right there in the shop, because they are not thinking about them. The same principle applies to any product because we are all human beings and we cannot think about more than one thing at a time. We talk about multi-tasking, but that is just switching our consciousness between different things. Thus, if a winery cannot come into their customers’ minds in buying occasions, they are never going to purchase it.
So, when you are thinking about your marketing, figure out what you can do that is memorable; that tells that story and keeps telling that same story. We always say to companies: “you are going to get bored with your marketing long before the consumer does”. Most consumers do not know your story, so even when you are doing your weekly updates on social media, you must keep reminding people of who you are, where you are and what you are doing, and then maybe you have something special, like “today we are out in the vineyard and we are looking at how ripe the grapes are”. And even then, you must tie today’s story to your main story.
After mental availability, the second part is physical availability: can they find your wine? Can you make that easy? If you are Coca-Cola you want to be everywhere, but if you are a small winery you cannot. So, if consumers are reading your blog, can they in just one click access your website and be able to buy your wine? Or get information on where to do so? How can you quickly transfer that brief thought about your wine to: “I want to buy it and I can get it right now”.
Published in Larry Lockshin's book “This little Pinot went to market: a guide to wine marketing”, the photo perfectly exemplifies one of the most important questions in a brand strategy: what can we do that is memorable? (Credit: Larry Lockshin)
W: What would be the most important marketing strategies to help an emerging wine market like Brazil to attract new consumers?
LL: I have been doing a lot of work in China, where wine consumption has grown dramatically. And what changed it was the government. Under Mao, the Chinese State decided that they were using too much of their grains to make spirits, while they needed it to feed people. So, they began to make a push for other alcoholic beverages like wine: supporting the planting of grapes, allowing more imports; it was a government decision.
In Australia, in the 1980s, we were a beer-drinking country: we were second or third in the world for per capita beer-drinking and we were way down the list for wine-drinking. No government changed that, but it was our culture that changed as we began to export wine to the UK, and that started to get publicity within Australia. Sounds crazy, but I think we are going to see countries like China and even India doing that; then they will return to their domestic markets with stories of global success.
Of course, you can also lobby the government against whatever barriers you have on wine. Australia has been quite good at having a small office lobbying the government for the agricultural side of the wine industry: how it provides jobs and has a positive economic impact on their regions. As a result, we have been able to keep the tax on wine lower per unit of alcohol than the tax on beer or spirits.
“What we see with young people is that they seek authenticity: the reality of a family of farmers growing grapes and making wine.”
There might be other barriers to wine, such as availability. But if the problem is just that it is not part of the country's culture, then we do not have a quick fix to that. I think what we see with young people is that they seek authenticity: the reality of a family of farmers growing grapes and making wine. So my view would be: you cannot only target young people, but you have to think about what they are drinking, and in what places, and how can the wine sector interface with their current habits.
For example, as we start exploring other types of packages like cans, pouches, tetra packs, and others, we are finding that those types of packaging are a convenience for consumers who would not take wine to the beach or some other place. It opens up the potential for more people to consume wine, who otherwise would not. You have to think more broadly about wine as a beverage.
The Qiu Chan Valley is home to one of the most recent vineyards established by the Rothschild family (Lafite), in China – which is now the most important emerging wine market and one of the few countries where vineyard areas continue to expand (Credit: Lafite).
W: How are we performing in attracting younger generations to wine?
LL: In what number of occasions is wine seen as appropriate? Too often in the wine industry, they are formal occasions. So should the wine sector in Brazil have a festival where wine is mixed with soft drinks, or whatever, to make different kinds of drinks and get people to think about wine differently? Maybe. Is that a risk of having people seeking sweet beverages rather than dry wine? Maybe that is also true. The wine industry has to allow the enjoyment of the wines young people like to drink. If these are sweet wines, or mixed with other beverages, they are still drinking wine.
For example, in Australia, even though we are a very traditional wine country, since 2007 we have an event called the “Young Gun of Wine”, where young winemakers submit their wines to be judged, and the top 50 winners go on a tour to the major capital cities of our country with their wines. It is a kind of festival, with music, but they only serve the wines made by these young winemakers, who are also present in the event to talk about it. Some of them are making very natural focused wines, which might not please more traditional drinkers. Others are making more traditional ones but using new varieties. One guy, for example, had wines that were buried in a lake on his farm for 5 years before he brought them up. Is that good or bad for the wine? I don't know, but it is a story!
“If you are going to make a market for young people, you need young people to promote it. And you need to remove what is often seen as barriers, that frighten young drinkers away.”
So, they are trying to promote wine to young people, using young people, rather than having some grey-bearded old guy telling them what to drink. If you are going to make a market for young people, you need young people to promote it. And you need to remove what is often seen as barriers, that frighten young drinkers away: like sniffing or swirling the wine in such a way. From the research I have seen, young people are spending more per bottle of wine than many drinkers from other generations. They will buy more expensive wine if the experience is part of it, and that is partly what they are paying for: the experience of wine.
The “Young Gun of Wine” awards have been promoting several events in Australian since 2007, taking young winemakers to present their wines to a new generation of consumers (Credit: WBM).
W: Thinking before the outbreak of the Coronavirus pandemic, what do you see as the most defining trends in the global wine market?
LL: What we were seeing before COVID-19 is in some sense a continuation of trends of the last 5 to 6 years. First, overall global production is slowing down. Some countries, like China, are planting more grapes, but most of them are not. That is a trend that is going to continue.
Another trend is that the wine industry has more competitive beverages. Companies are making hard seltzers, ciders, and other products. Many of those are large consumer product companies that have the ability not only to get mental but also physical availability – get in the stores, on the shelves. That trend is not going away. Some might call it a commodification of wine, but it is branding: they are selling you a brand and they are very good at it.
For example, you might have heard about the brand “19 Crimes”. It is a decent wine made by a large group – Treasury Wine Estates, the same company that owns Penfolds – and it is marketed as a brand. They have created a brand story around that wine, which is selling a lot in the United States. We are going to see more of that kind of brand story as a trend; and that is going to make it even harder for smaller wineries to find where and to whom they are going to sell.
“Not every US state grows wine grapes, but all of them have wineries that are building on the trend of the wine experience.”
Another trend is the wine tourism experience. For example, not every US state grows wine grapes, but all of them have wineries that are building on the trend of the wine experience. People come and visit these wineries because they have a lake, tables, music, and finger foods that you can buy and eat outside. Also, it is close to the city, so it is an easy afternoon visit; they are building some accommodation. These are the kind of things that are going to attract local people to the wine industry.
Australia is another example. We ask some wineries we advise why would they export their wine, if they are close enough to some big city that would allow them to create tourism and localization. And even if you are further away, like Tasmania, you can provide accommodation to tourists that want to come and visit your region. It does not have to be luxury: why not have at the same time something that young people can afford? Some wineries now have an eco-accommodation built with shipping containers, put out into the vineyard, fixed up very nicely. Some have even made these containers movable, so they can shift them to different parts of their property or share them with other wineries in the same region.
With augmented reality technology, the Australian wine brand “19 Crimes” became a top seller in the United States, telling the story of criminals banned to Australia by the British Crown in the 18th century (Credit: Campaign).
W: Do you think social distancing will have a longer-term effect on wine consumers’ behavior after the pandemic?
LL: Yes, it must have an effect. We are currently going to the field with a survey in multiple countries to understand what people are doing under lockdown, and we will hopefully repeat that twice more during the next year. So far, in the US, the UK, Australia and China, data has shown some stocking up. When the pandemic is over, will people go back to drink what they used to in restaurants, or will they decide to drink wine to go with their food? I think we will see some of that. And I think we will see sales in retail stores flattening or even going down for a few months. You know, there is a lot of toilet paper stocked up in people's garage, and we are also going to see some of that with wine.
“People are using technology to learn about wine, and to visit wineries virtually. They are also getting used to buying wine online – for the first time in many cases.”
Besides, people are using technology to learn about wine, and to visit wineries virtually. They are also getting used to buying wine online – for the first time in many cases. In China, around 30% of retail sales were online before this epidemic. In most countries, online sales are around 7 to 10% of total retail, and now it is going up. After the pandemic, it is going to recede, but it will not go back to the beginning. So, wineries that manage to use and maintain an online presence will have an advantage. At the same time, we are going to see a lot of closures of bars, cafes and many small businesses. That outlet for small wineries is going to be smaller for some time – maybe two or three years till those get renewed.
With tourism, I see in Australia more local people visiting wine regions than before because they just want to get out. But will they fly to France and Italy? I think that is going to be a longer-term issue, maybe a couple of years. After the crisis, we will see some airlines unable to come back, while the remaining ones will possibly raise prices in the short-term. So, if people can travel locally by car, bus or train, I think that this is going to be more attractive than international tourism.
Although not being among the traditional American wine regions, Ohio – where Larry was born – is an example where wineries are focusing on the wine tourism experience to attract visitors and consumers; in the picture, the Blue Barn Winery promotes open-air rock concerts with their wines (Credit: Ohio Magazine).
W: What are the questions you would like to have the answers to regarding consumers’ behavior?
LL: We know that human beings’ brains are fairly similar, and we already understand how the building of memory structures work for big brands that invest on traditional advertising. We do not know, however, especially for a smaller business, what is the impact of social media and websites on memory structures. For a Tik Tok video, an Instagram or a Facebook post, how long-lasting are these kinds of impressions? We still do not know that. For example, we know that if a person sees a television commercial three times in a month or a few weeks before they go shopping, that has a small effect on their purchasing decision; and after three times it has almost no effect. We do not know the equivalent of that for social media.
“There is a lot of positives to change people from drinking, let’s say, hard liquor to wine. But we do not understand why in some countries it has happened and in others, it has not.”
Also, how do you develop a wine-drinking culture? There is a lot of positives to change people from drinking, let’s say, hard liquor to wine. But we do not understand why in some countries it has happened and in others, it has not. Even if we take the Chinese Government’s decision to promote wine, still, their number one alcoholic beverage is beer, followed by a spirit called “Baijiu”. Wine is still far below.
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Cover photo: Geronimo Giqueaux on Unsplash
