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Jerry Lockspeiser: Are brands the answer to Wine UK’s problems?

A simple explanation of how red, white and rosé wines are made is straight forward enough, as are the keys to deciphering a label. For someone starting from a place of ignorance these explanations can produce a feeling of empowerment and confidence.

However, as soon as you dig below the surface you discover additional information that suggests what you previously understood is more complex than it seemed. Further digging is called for. The next level down sheds light but also throws up more issues that require yet more digging. And so it goes on for as far as you want to dig. It is easy to be left pining for the simplicity of not knowing too much.

• Read more: Jerry Lockspeiser: What can wine learn from Southgate and Stokes? 

I felt rather the same when thinking about the importance of brands in the wine business. Brands are obviously important, aren’t they? They offer the lure of consumer loyalty, regular sales, better margins, reputational enhancement and equity value. If only it were so simple.

I have no intention of trying to hold your attention through an academic discourse on what is meant by a brand, but a few points relevant to trading in the wine sector stand out to me.

The old definition of a brand was all about ownership. The Oxford English Dictionary call it:

An identifying mark burned on livestock or (in former times) criminals or slaves with a branding iron.

They offer a second more modern meaning, closer to our business concerns:

A type of product manufactured by a particular company under a particular name.

This is a very flat and minimalist definition for today’s world, one which the brand marketing industry left behind long ago. Alas, many in the wine trade have yet to move on.

I have had more discussions than I care to remember with wine producers who called their wine a brand before it had any market presence or consumer traction. I explained that in my view it was not a brand but simply a bottle of wine with a label on it. Nothing more. It might have the potential to become a brand, but for that to happen it would need to take on a life of its own in the minds of consumers.

Seth Godin’s definition seems closer to an understanding that can help guide business strategy: “A brand is the set of expectations, memories, stories and relationships that, taken together, account for a consumer’s decision to choose one product or service over another.”

I see two key points in this definition.

The first is that the brand is not the product. It is the responses and associations that swirl around it. That is a big mental leap to make. The brand isn’t the thing we make, sell or distribute, it is an intangible mental response.

The second is that these responses and associations swirl around in consumers’ minds – not winemakers, producers, agents, distributors or retailers. This is perhaps why some in the branding industry talk about consumers owning brands.

I found it easier to understand this concept – that the brand is not a material thing but a series of mental responses – by referencing the ownership of football clubs. When top level clubs are sold, the new owners often talk about being the guardians of the club on behalf of the fans. This may be just good marketing – a £4 billion purchase price surely gives more than guardianship – but it does recognise that brand power rests with the consumer. Whether wine or football, if the consumers turn away and spend their money elsewhere there is no brand.

The most recent IWSR report points to the continued global decline in the volume of wine sold across almost all markets. Despite a few shafts of light around premiumisation, there is no hiding the fact that the overall backdrop is not encouraging. In a declining market, building brands may seem an obvious way to create resilience in sales and grab as big a share of the cake as possible. However, this is easier said than done.

I believe five factors are necessary to give a wine with a label the chance of becoming a brand with a following:

1)      Style. It has to have a taste that the target consumer likes – or preferably likes a lot, so they keep returning to buy more. Style is not the same as quality. Thousands of bad business decisions are made because the trade is blinkered by an elitist concept of wine quality. Quality is a rather meaningless term unless there is a specific definition of what it means, against which a wine may be judged. We are notoriously good at looking down our noses, but more fool us if we criticise Barefoot, Kylie’s Rose or 19 Crimes for successfully providing a style of wine their target consumers love. They provide the right style of drink for their market just as Grange and Domaine de la Romanée-Conti do for theirs.

2)      The packaging must be eye catching, usually but not necessarily centred around the label. People buy the first time with their eyes, the second with their memory of enjoyment.

3)      The packaging must also be memorable, making it easy to find again (and again).  And it must be aligned with the wine style and the brand feeling.

4)      Distribution is key. The wine must have distribution in retail outlets where the target consumers shop, on or offline. It is impossible to create a brand otherwise, be it mass market or specialist.

5)      Lastly and critically, it must generate positive emotive responses as Seth Godwin articulates. These can range from reliable functionality to aspirational rarity, but whatever they are they are needed. As the response belongs to the consumer not the brand owner, owners need to accept that the consumers and their responses may not be the ones that they originally intended.

Then there is the question of money. It isn’t essential to have a war chest to fund brand communication and other proselytising activity, but it certainly helps. Wine has miserably low margins compared to strong brand sectors like spirits and small companies making a few wines have scant budgets compared to large conglomerates with global alcohol portfolios. But needs must and creativity is often born out of necessity.

A few corporately owned wine brands – Yellow Tail, Barefoot, Concha y Toro et al – have an identity of their own that surpasses country, region or grape. But for the rest in the UK, the generic type is the predominant brand. Suppliers are fighting to gain shelf or wine list space under those umbrellas – to be one of the four Italian Pinot Grigio’s or five Rioja’s selected by the retailer. This is second division brand stuff, the wine being less secure and more easily replaceable by both retailer and consumer.

As a case in point, when legal requirements necessitated a change of name for the apparently successful Montana Sauvignon Blanc from New Zealand it was replaced with barely a squeak. Far from cries of outrage at the disappearance of a popular brand, the new brand name – Brancott Estate – appeared to seamlessly replace Montana. In this case the weakness of the brand may have played to the owners’ advantage, enabling a switch without loss of market presence or sales. They must have had strong retailer relationships to be able to carry that out.

Is brand ownership the answer to survival and growth for every wine supplier in these difficult times? Clearly not. Each business has its own purpose and place in the supply chain. The answer for a company focused on B2B relationships may lie in exceptional service that stands out above the fray – whether a producer or wholesaler supplying independent retailers or an importer/distributor feeding the big players. Building brands can be creative, energising and fun, but also onerous, expensive, long term and difficult. Business leaders need to know the purpose of their enterprise first, then plan how to achieve it.

As I was about to send this piece to Harpers, retail expert Mary Portas wrote an open letter to the John Lewis Partnership about how they should respond to their deepening performance crisis. John Lewis department stores have been a British institution for many decades. They are synonymous with solid production quality, an honest and reliable ethos, and the feeling that they can be trusted. Their supermarket chain Waitrose elicits similar feelings. As they seek a remedy to the financial decline, Maty Portas urged them to put brand values at the core of their search. I have a hunch Seth Godin would approve of what she wrote: 

“What’s worrying me is you might think your fight is purely financial. It’s not.

“The battle in hand is far more nuanced. It’s about what makes up the soul of your brand. The intangibles, the shared beliefs, the beautiful things that can’t be captured in financial projections but earn a little space in people’s hearts.”

Here, here.

Jerry Lockspeiser donates his fee for this column to The Running Charity who work with homeless young people in the UK.

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