A successful wine brand is relevant to the consumer because it evokes a feeling of trust and value. Global wine brands are specific wines that are available and well known all over the world. Just how relevant a global wine brand is to the consumer depends on its abilities to meet consumer needs and expectations. Based on reviews of various international studies of several markets, for the purpose of this article, consumers will be divided into four categories according to their expectations and needs. These four categories shall be called “prestige purchasers”, “aspirants”, “newcomers” and “simple drinkers”. Each of these groups comprise close to the same share of consumers in each wine consuming country, except for simple drinkers. Simple drinkers are found predominantly in traditional wine producing countries where wine consumption is an established part of the culture and rarely in emerging markets. Different wine categories appeal to each of these groups. Each group will be assessed as to whether global wine brands are relevant to them now and if global wine brands will be relevant to them during the rest of the century. Evidence for a global brand’s relevance will be based the ability of the marketing mix (product, place, price and promotion) to meet the needs and expectations of the consumer. Predictions for relevance for the remainder of this century will be based on history as well as current shifts in the market and consumer behavior due to the economic crisis and emergence of new markets.
Prestige purchasers make up approximately 5% of wine consumers worldwide. These are the purchasers of fine wine – demanding connoisseurs, conspicuous consumers, collectors, and investors that are very specific in their requirements. The first decade of this century marks a drastic change in the demographics of this group of consumers. The financial crisis in the west has brought less luxury spending and it is now the wealthy elite in Asia that are driving the fine wine market. According to Liv-Ex studies of performances of top Bordeaux chateaux in the last century, vintage and critic opinion were the determining factors for price. From the second half of 2008, brand became the determining factor with the entrance of the Chinese consumer on the fine wine market. Unlike the US market, which is about collecting rare wines with high scores, China is characterized by conspicuous consumption of high-profile brands. The 5 premier cru of the Medoc have become the most highly demanded and valued wines on the fine wine market. These brands are relevant to Chinese consumers because:
- The pinnacle of the 1855 Bordeaux classification provides historic assurance of being the best of the best.
- Giving extravagant luxury items as business gifts is part of the culture
- Family saga, history and tradition are important values to the Chinese
- European brands are perceived as classy and fine wines are consumed in public view on-trade
- Relatively high production volume of the five premier cru makes these wines accessible. (11-25 thousand cases for each label).
Brand-led demand from the Far East is the reason for the surging prices of second wines and can also be seen as a signal that the consumer base for fine wines is broadening and deepening in Asia. McKinsey has forecast that luxury goods spending in China will grow 18% per year to 2015 while the Hong Kong based brokerage CLSA predicts market growth of 25% per year to account for 44% of global luxury goods sales by 2020. As the market grows and matures and consumers become more knowledgeable, it can be expected that they will expand their tastes for luxury wines to include other global prestige brands outside of Bordeaux. LVMH has already demonstrated their understanding of the importance of building social bonds and catering to the conspicuous consumption culture in Asia. Their new joint investment project in a luxury shopping mansion in Shanghai could possibly prove to be a perfect launching pad for their Champagnes. For some prestige purchasers the prices of certain global fine wine brands will become unattainable and they will look to lesser known and perhaps smaller production wines that can no longer be classified as “global” wine brands, but give them the quality and value for their money that they desire.
Aspirants make up about 45% of wine consumers. These are curious, adventurous consumers that are less loyal to a particular brand. They are willing to experiment and want good value for their money. While they also purchase luxury wines for special occasions, they do not drink them on a regular basis. This is perhaps the most intellectual wine consumer category. According to Wine Intelligence, they purchase their wines at supermarkets only for everyday at home drinking. For weekends, invitations and special occasions they make their purchases at specialty stores and will spend 30 minutes enjoying the shopping experience. What were once emerging markets (US, Australia) are now mature and instead of basing their purchase decisions on popular brands and varietal labeling, their decisions are becoming more focused on origins. Studies of the US, UK, and Switzerland markets show that aspirants values increasingly include:
- Trust in a particular origin – artisanal and handmade are attractive
- Environmental sustainability – organic and low carbon footprint
The Wine Market Council and Nielson studies of this consumer group in the US showed that 64% use the internet for information about wines and read not only professional critics’, but customers’ ratings and reviews of wines. 39% use smart phone applications for making their wine, food and restaurant choices. It can be expected that increased transparency and exchange of information will enhance the experimental and fickle nature of this group of consumers. It is difficult for a global brand to communicate provenance, heritage and family image combined with high quality at affordable middle and upper middle class prices, but Gallo is a producer that is successfully doing this with several of their brands. Small artisanal producers that are able to create an emotional bond and offer environmental advantages will have increasing relevance to aspirant consumers over global wine brands.
Newcomers make up about 35% of consumers and are not particularly involved or interested in wine and do not drink a lot of it. Most of their wine purchases are in supermarkets because they find specialist shops intimidating. Wine is consumed primarily off-trade. Their wine choices are based upon convenience and price. Alternative packaging such as single-serve sizes, non-breakable PET bottles for the outdoors, bag-in-box to keep wine fresh and pouches that can be quickly cooled in an ice chest or water present uncomplicated, unintimidating initiations into the world of wine for this consumer group. Global wine brands that are able to connect to consumers emotionally are quite successful. Gallo’s Grenache Rosé does a great job of communicating provenance, heritage and a family message. It’s pink colour and off-dry flavor style is appealing to irregular wine consumers and they will come back to it as long as the price remains attractive and packaging is adjusted globally to connect with its target consumers.
Contrarily “own brand” labels are becoming increasingly successful in other segments with consumers becoming increasingly loyal to retailers rather than global brands. Own label can also permit more innovation and tailor target a particular market better than a more generic cross-cultural global brand. If one looks at other products (shampoo, detergent, food) own label copy cats of global wine brands at lower price points can be expected to gain ground. According to Warren Anderson of Sainsbury’s in the UK, the own label range already accounts for 20% in volume sales and 10% growth is expected over the next two years.
Simple drinkers represent about 15% of consumers. They drink wine by habit or tradition, but have no keen interest in it. These are often middle aged and older people in traditional wine-producing countries and regions. They are brand loyal bargain hunters that make price-driven choices at supermarkets and discounters. This consumer base is currently found predominantly in Europe, but it can be expected to expand to New World wine producing countries in this century. When they find a wine brand they like, they remain with it as long as they remain satisfied with the product and its price and it remains available to them.
The relevance of global wine brands in the 21st century will be dependent on a number of factors. On the one side, with new communication technologies, market transparency, and maturation of emerging markets, it can be expected that the informed group of aspirant wine consumers will grow. It is for this fickle, intellectual consumer group that global wine brands will have a decreasing appeal. Environmental concerns and the desire for something personal and unique will enhance the desirability of small artisanal produced wines as well as the trend to purchase local. In the group of prestige purchasers, the fixation of the Asian market on classified left bank Bordeaux brands may continue for the next decades and escalating prices will drive connoisseurs in more mature markets to concentrate on lesser known alternative wines from smaller producers. Global wine brands can be expected to hold their appeal for newcomers and simple drinkers. Fierce competition will force global wine brands to make more differentiation, often with varying packaging and messages for the same liquid to tailor target their consumer base. This can already be seen in all categories. In fine wine for example, Lafite’s use of the Chinese symbol for eternity and the lucky number eight on the capsule of the 2008 vintage caters to Asian consumers. A global wine brand catering to simple drinkers will package in bag-in-box for the Swedish market, but may chose glass bottles in continental Europe. As always, consumers will be quick to turn their backs on global wine brands if they do not meet their demands on quality, image, or price. Not to forget is that the place of distribution is vital as in no other category for communicating a wine brand’s message.