The Top 6 Mistakes in Wine Marketing
These will stop a wine brand from growing
This is a write-up of another interesting session from the Australian Wine Industry Technical Conference I spoke at in late July.
It’s the presentation given by Professor Jenni Romaniuk of the Ehrenberg-Bass Institute.
The Ehrenberg-Bass Institute, based at Adelaide University, is the world’s largest centre for marketing research, particularly renowned for its wine marketing insights. Prof Romaniuk is also the author of two books.
And, for someone with such a formidable CV, she's very down to earth.
Her goal, she said, was to talk about the things marketers do that backfire.
“I chose six,” she said. “I don’t know why — seven seemed too many.”
1. Loyalty is not the way to grow
“Loyalty is not going to save you,” she said. “We know this, because it’s what the data tells us.”
Prof Romaniuk said even brands with a “really great direct-to-consumer loyalty programme” can get into trouble. This is thanks to the Law of Double Jeopardy, which says that “small brands suffer twice. They have many fewer users and those users are slightly less loyal.”
(I looked it up: The Law of Double Jeopardy, first described by William McPhee at NBC in 1963, states that smaller brands suffer from both a lack of customers [lower penetration] and lower customer loyalty compared to larger brands.)
If a brand wants to become bigger, whatever its current size, there’s only one pathway. Expand the customer base and more sales — and more loyalty — will inevitably follow.
“You’re probably thinking, ‘Why will my existing customers buy more?’” she said.
It’s because any marketing done to reach new buyers will be noticed by the old ones as well. It reassures them they’ve made the right purchasing decision and thereby reinforces their loyalty.
“You have to go out and reach the ones that are not currently buying from you,” she added.
2. Target wide, not narrow
If “I don’t have that much money to spend on marketing,” she said, “I better make sure that every dollar goes to exactly the right person.”
The problem is that “you don’t know who that person is.”
Even if marketers could identify the person who was perfectly matched with their product, it’s impossible to use the “vast media landscape” out there to target them. “Most of the claims of media targeting are overstated and really don’t deliver on the promise.”
Prof Romaniuk said the best course is simply to target the market.
“Obviously, there are people who aren’t going to buy from you. There are people who don’t live in places where you distribute, and people who don’t drink wine. They’re obvious,” she said. “But once you’ve got over those hurdles, then treat everybody like they could be your customer.”
By this she didn’t mean spray advertising at random.
She pulled up a table of luxury brands selling in the UK, with a list of their target audiences next to them.
“Look at how similar the social class is,” of all the brands, she said. “They’re basically selling to the same profile of people,” rather than trying to carve out their own distinct segments for themselves.
“Give as many people as possible the opportunity to choose your brand.”
3. Go for reach, not engagement
Don’t spend your advertising money trying to reach a small group of people.
“A small reach activity, even if it’s 100% successful, will only have a small effect on your bottom line — and rarely are they 100% successful.”
Not only that, but it takes a lot of resources to deliver even a small reach, so it’s better to get in front of as many people as your budget will allow.
“Think of it as a game of chance,” she said. “Once you’ve ruled out the people with zero chance, there’s a lot of people out there with some chance, but you won’t be able to predict which ones they are.”
The more people who see you, the more chances you have.
“I’m using ‘advertising’ in the broadest sense here,” Prof Romaniuk went on. “Everything you do that reaches out to consumers is advertising. But it’s important not to waste money going back to the sale, over and over again.” It’s better to target new customers, instead.
That doesn’t mean ignoring existing customers. “I might come back to you in six months’ time. This is the idea of cumulative reach.”
Another challenge for wine brands is how to communicate to the average person. “Talking to lighter buyers is often more complicated than talking to heavy buyers — with heavy buyers, you can talk to them like they’re part of the industry, because they probably know a lot.”
But brands can’t ignore the people who don’t know a lot, or who might be intimidated by the category.
“Speaking to them is an important part of growing your brand. Remember, light buyers are less engaged. They come into the category less frequently. They’re the people you want to get out to.”
4. The cellar door is a product in its own right
Prof Romaniuk recently visited Champagne — and was surprised at how poor the cellar door experience was.
“There was a big mismatch between the people coming in the door, and what the cellar door people were trying to sell,” she said. “Everyone was treating it like a distribution channel rather than a product in its own right.”
Meaning, the producers were treating the cellar door like a cash-generating gift shop, whereas the people who were coming wanted to experience Champagne itself.
At the very least, she said, cellar door management should have been thinking about different product segments and category entry points.
These were the missed opportunities to take someone from being just a visitor to “being a category buyer, and therefore a potential brand buyer,” she explained.
A category entry point can be something like the drink options on the lunch menu. What those options are doing is signalling that they are suitable pairings with lunch.
Champagne has done this particularly well, as it’s promoted itself as the right product to go with celebrations of all kinds, from weddings to promotions. But there can be a downside to being over-associated with one type of occasion.
“What happened to Champagne sales during COVID? They went down. Why? Because there was so much link to celebration — and we were not celebrating very much.”
“Understanding category entry points is important because they’re about people’s lives and how the category fits with them,” she said.
5. Distinctiveness over information
People have got to be able to find your product, regardless of how crowded the retail environment is. It’s therefore better to make the package memorable at a distance rather than crowd it with information or branding that can only be seen up close.
“I always encourage people to create shopping assets— these are the things people use to find you in a crowded room,” she said.
Prof Romaniuk used the example of a liqueur called RumChata, bottled with a gold cap. They even run advertising campaigns called “Comes With a Gold Cap”, so “people can navigate and look for the gold cap”.
6. Brand cohesion over product individuality
Products from the same family must look like they belong together.
“All products sold under the same banner should look the same,” said Prof Romaniuk.
She pulled up a picture of Yellow Tail, a distinctive-looking brand, and then showed its Pink Bubbles range, which gets completely lost when listed alongside lots of other rosés, because its Yellow Tail branding isn’t signalled strongly enough.
“Remember, the big battle is against other brands, not the other options within your portfolio,” she said. “Every brand you produce, every variant, should look like you and not like your competitors.”
So how do brands grow?
“Getting more customers. Mental and physical availability.”
Meet the man who’s optimistic about wine
There’s a wine downturn going on, and yet The Wine Group, America’s second-largest wine company, is snapping up brands like the market is expanding. This week, the Drinks Insider podcast features CEO John Sutton, who explains why he’s bullish on wine.
He talks about:
Why The Wine Group bought so many Constellation brands and vineyards earlier this year;
How the company rehabilitates neglected brands;
How to handle portfolio segmentation;
Why premiumisation still matters; and
The surprising growth of high-alcohol styles
And many other interesting topics! You can find the episode on Spotify, Amazon or Apple.