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Campaign trailing

Published:  23 July, 2008

As recently as three years ago, Bordeaux remained resolutely upbeat about its most valuable foreign market. Though shipments to the UK fell 4% in 2002, they were up 5% in value. Total exports had maintained a steady upward trajectory over the previous decade, even if they had slipped back from their all-time high of just over 2.5 million hl in 1997. The curve speaks for itself,' declared Tanguy Chatillon, the then marketing director at the Conseil Interprofessionnel du Vin de Bordeaux (CIVB), as he laid the sales graph in front of me. Here are the figures. The rest is bullshit!'

Over in the UK, especially within the big retail chains, the CIVB's confidence didn't quite ring true. Here the leading brand-owners from the New World had been steadily increasing their domination of the market at the expense of the old guard and regions like Bordeaux. Australia was beginning to rule the roost, and anyone who questioned her superiority on the supermarket shelf was met with derision: Listen mate - we've got the latest stats from AC Nielsen at our fingertips, and we're not afraid to use 'em.'

To be fair to Bordeaux, most major ngociants supplying the UK off-trade with own-label and mainstream brands had recognised the threat from the New World since the mid-nineties, if not before. Those at the front line had seen it with their own eyes - the problem had always been communicating the message back home. With the extraordinary blip of '97 and the fevered build-up to the Millennium, no one wanted bad news. And besides, so what if Mr Tesco had become partial to that over-oaked fruit juice from Down Under? There were plenty of other thriving export markets to satisfy.

In fact such was the demand for Bordeaux that there was a shortage. People began to plant new vineyards on a scale that was impressive at the time, but now looks reckless. The total area under vine has swollen to 120,000 hectares (ha), an increase of 15,000ha on the mid-nineties. Today, that figure has come to haunt the CIVB as it tries to grapple with the problems of over-supply. It is a global issue for the whole industry, but nowhere is it going to be harder to resolve than here in a region of thousands of growers that produces more wine than Chile.

The first objective that Bordeaux has to reach is to restructure its vineyards to produce less, but better,' Pascal Loridon, the CIVB's new marketing director, told me in London after the 100 Everyday Bordeaux' tasting in May. Last summer the CIVB announced that yields for the 2004 vintage were to be restricted to 50hl per ha across the board. Looking ahead, the plan is to uproot 8-10,000ha of Bordeaux's vineyards. Deciding who must go and how much compensation they are going to receive is not an enviable task, but there is a feeling that the region must be proactive. Leaving it purely to market forces is considered unacceptable. First, because of the human cost and the need to give people a chance to convert to other crops before bankruptcy sweeps them away; and second, because it would take too long to balance supply and demand. According to the ngociant Jean-Franois Mau, it would take decades for Bordeaux to find its true level given the way farming is distorted by subsidies within the EU. In the meantime, oversupply would continue to drag prices downwards. Already there is some frighteningly cheap, sub-3 Bordeaux swilling around the shelves of Asda and the like. This wine does not create value for anyone in the trade,' says Loridon.

As the man charged with revitalising the fortunes of Bordeaux, Loridon has one of the toughest jobs in the entire industry. Yet in one sense he has an advantage over his predecessor Chatillon, whom he replaced six months ago. As long as the Bordeaux establishment was insisting that all was the best in the best of all possible worlds', to quote Pangloss in Voltaire's Candide, underlying issues were never going to be tackled. As long as the region was in denial, tough decisions were something for the future.

Very few people in Bordeaux are under any illusions now. The CIVB's own figures for 2004 show only Belgium, among the main European export markets, holding its own. The UK remains the most valuable, but the value of shipments fell 32% last year. In the US it was even worse, with value down 52%. It is very hard for some of the 12,000 growers when a wine that always performed in the past, with a label that was probably designed by their grandfather, suddenly doesn't perform any more,' says Loridon. It's hard for them to accept that the environment has totally changed.' He points out that such changes have speeded up recently. Who could have foreseen that Penfolds would be ahead of Foster's? Or that Constellation would compete with Pernod Ricard to buy Allied Domecq? No one would have suggested that three or four years ago.'

Unlike Chatillon, whose background was international marketing with Tefal and Rossignol, Loridon has 16 years in the wine trade under his belt. Twelve of them were spent with Rothschild and Mouton Cadet, the biggest brand in Bordeaux, with sales of 12 million bottles. He says this gave him an international outlook, since Mouton was always benchmarked against other global wine brands rather than just those of Bordeaux.

He now works closely with Patrick Jestin, of ngociant Dourthe, who chairs the CIVB's promotion commission which decides where up to 90% of the CIVB's budget is spent. Globally that figure is between e20-25 million, which by generic standards is huge, even if it is dwarfed by the New World mega-brands. The CIVB and Peretti Communications, who handle the PR strategy in the UK, are coy about the precise spend here. But if it hasn't changed in three years, as they say, we are talking of around 1.7 million. Whether the money has been used to good effect has been the subject of lively debate on both sides of the Channel - of which more later. First, though, Jestin is keen to explain the context.

In 1999-2000, Bordeaux was booming and demand in the US and emerging markets like Russia, Japan and China was accelerating,' he says. The problem was how to handle the situation, and so the campaign was focussed on promoting the image of Bordeaux. Since 2002, we are now in a completely different situation, with volume sales down, and we are challenged in some markets like the UK. The problem now becomes more and more how to promote our wines efficiently and to create a more seductive image in the market.'

Three years ago the CIVB voted to raise its budget by 25%, because of the enormous advertising of Australian and US brands, and in order to give us sufficient ammunition,' explained Chatillon at the time. In the UK the B Bordeaux' campaign was aired on TV in a series of 10-second ads and in magazines like Cosmopolitan and Esquire. This year the above-the-line spend will be much less and based on a completely new strategy that is being worked on at the moment in Bordeaux. It will be interesting to see where the creative input will come from. The simple and apparently successful Think Red' campaign for Rhne, with its cartoon hippo and hedgehog, is very British. By comparison, B Bordeaux', developed by the Paris-based Frierson, Mee & Partners, was all too French and failed to relate to UK consumers. The old agency was also too close to the CIVB and its promotional committee of 28 members. Keeping the client at arm's length is one of the 10 commandments of successful advertising.

Talking to the big ngociants, the main criticism of the CIVB's previous marketing thrust was that it was premature, that Bordeaux was trying to run before it could walk. The issue is not so much helping to pull bottles off the shelf as getting them there in the first place. Loridon agrees: The truth is we need to put Bordeaux in front of the consumer. Unless it's there - why advertise?' The only example he could think of in France is Amstrad, which ran a big ad campaign, despite not having distribution. Apparently it carried on stoking up demand until it finally got listings. And that was a miracle,' says Loridon. But even if it did once work for computers, wine is completely different. Michael Cox, UK director of Wines of Chile, believes it is about push rather than pull. People didn't come into supermarkets in the early nineties demanding Australian wine,' he says. They just found it there, bought it and kept coming back.'

Of course Bordeaux is still widely available in UK supermarkets, but each time the buyers reorganise their displays the number of facings seems to decline. Increasingly the most important shelves - those at eye-level - now belong to the competition. Dominique Cruse, who looks after the UK for Ginestet, believes the trade should invest more at the point-of-sale. Having a collarette where consumers can get money off a bottle of Bordeaux at a restaurant has been a success,' he says, referring to the Dine with Wine' offer in The Times. This has become a well-established promotion and will be running again this September through to March. As for TV, Cruse is unconvinced. I don't think it works very well,' he says. It does work with a big budget and if it's done regularly, otherwise it's a waste of money. It is much better to work direct with retailers and suppliers. I don't think Bordeaux is strong enough - it's total spend is smaller than Gallo's.'

His wishes look like coming true. More and more the focus is on the trade,' says Jestin, who explains that 60% of the budget will now be on promotion rather than communication. Not that the CIVB is about to fund price-offs, which remain illegal under EU law, but it will be buying space. According to Charles Sichel of Maison Sichel, not having access to the gondola end, where take-up can be 22 times the normal rate of sale, has kept the whole country back. If France could get the same promotional slots as Australia, France would surge ahead,' he says. Paying for the actual offer is down to the individual brand-owners, who are beginning to realise quite how much margin has to be built into the RSP to succeed in the UK. For example Ginestet's new French Roots' range, unveiled at the LIWSF, will sell for 6.99 when not on offer, allowing it to dip down to 4.99 when on promotion.

Of course the danger of waving a big, fat cheque-book at the grocers is that it will only encourage them. You've got buyers playing a very smart game, playing the Old World against the New,' says Jean-Franois Mau. With only so many gondola slots available, the fee for booking them will get higher as buyers raise the ante. On the supply side, everyone from Bordeaux to the Barossa Valley would love to break the pernicious and ever-more-costly cycle of price promotion, but what can they do? The retailers have them by the balls.

The CIVB still wishes to promote the idea of Brand Bordeaux, and still hopes that its swirling B' logo will be adopted on more labels. In the meantime, it wants to give the brand-owning ngociants the chance to compete in what Mau calls the most critical and most difficult market in the world'. Yet Loridon believes that there is still plenty of goodwill towards the region in the UK. The key accounts would like Bordeaux to prove it can come back on the market,' he says. The message from the UK big buyers is that they are not going to close the door. They are prepared to listen.'

Bordeaux certainly has the will to succeed, but whether it has the infrastructure and unity of purpose remains to be seen.