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Friday, 14 August 2015

On Wine, Branding And Behavioural Economics

Talking to Robert Joseph about wine and branding at the IPA

I have always enjoyed reading Robert Joseph's irreverent but commercial jottings.

We met up at the home of branding, the Institute of Practitioners in Advertising, to talk about wine and brands. Robert is researching an innovative interactive book; for me it was the opportunity to share a mix of personal views and IPA insights with him.

Robert's starting point is that the Brits have an uneasy relationship with luxury goods and status symbols - we inherently suspect expensive things to be no more that cheap things with a fancy label added; walk around the IOD and you'll see company directors with £200 M&S suits in preference to something costing five times the amount with an Armani label.

We have coined the term label-snob as if to indicate that inverted snobbery about labels is the only correct way of looking at things and that a positive, aspirational attitude towards brands is an aberration.

We share this cost-conscious attitude with the Dutch, and Robert attributes it to us having had a Dutch monarchy in the late 1600s - a tantalising if elusive argument.

We then move on to wine as a signifier - some purists would have us believe that the only thing that matters is the liquid in the bottle (often the same people, I find, who embrace other forms of oenological zealotry, such as an enthusiasm for low-intervention, natural wines).

Back in the real world, we may be happy with a simply-packaged screw-top for a midweek quaff, but come the weekend when our posh neighbours or boss come round, we want a heavier bottle with an embossed label and a cork - regardless of whether the contents are actually any better.

This leads on to the positioning of wine and Behavioural Economics, the idea that in a world of Spock-like rationality, we would make decisions about wine on a simple price-quality ratio and an objective assessment of our personal preferences.

In practice, however, emotional factors play at least as large a part if not more so - do we like the label, what would our choosing of a particular wine say about us, is it a gift and packaged in a carton (as whisky and Champagne so often are, yet table wines are not)?

Part of the problem that wine has created for itself is that it's just so complicated - the various appellations and informal hierarchies of Premier Cru and Grand Cru all date back to a pre-globalisation age when wine was not an FMCG product.

New World countries, with less heritage and a more gung-ho attitude, can cut through the burden of so much history to build brands that are more meaningful and easily understood with varietal labelling at one end and trendy areas at the other; Pinot Grigio, suggests Robert, is the Camembert of wine - a ubiquitous, go-to option - whilst Napa adds a high-end cachet to any bottle to which its name is appended.

Two factors account for the low margins in winemaking:

- a sense of inferiority that, given the best wines come from a small number of plots in Bordeaux and Burgundy, nothing else can be priced aspirationally

- a highly-fragmented market, production-side, in which no-one quite dare raise their prices above regional averages.

The people who in the Old World have most successfully overcome both of these limitations are the champenois; Champagne is not actually a wine at all these days but has evolved into a de rigeur synonym for celebrations of victory or life-events, a gift, a lifestyle we aspire to.

Even if the fizzy liquid in our flutes is actually Prosecco or Cremant, our universal reference point remains Champagne - and anything else with bubbles is a mere inferior alternative to the real thing.

So where does this leave the branding of wine? I share some IPA research findings with Robert:

- short term sales activation drives volumes but the effects fade rapidly and there is no overall cumulative effect; rational messages work best for this;

- longer-term brand building drives pricing advantages but needs a sustained effort over three years; emotional messages work best here.

To balance the competing demands of long-term value creation and short-term sales requirements, the ideal mix is 40% sales activation and 60% brand building.

More on branding from the IPA (registration required but free access to the website)
The Long And The Short of It
Behavioural Economics
What is a C21st Brand?
IPA Social Works

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