Marketing Flashcards
Consumer outreach
“The consumer sits at the end of the supply chain, and yet it is his/her buying power that drives demand.”
What drives consumer brand awareness:
- PR + Advertising
- events
- digital platforms (incl. social media)
- hospitality
- trade education (indirectly)
PR campaigns
Include:
- Writing and sending press releases
- Organizing events and trips for journalists (this has variable effectiveness. In Europe, pay for play is more common while US writers may accept invitations and not write anything)
- Advertising (a more controlled means of ensuring coverage in a target publication)
Advertising costs
- Full page 4c ad in Wine Spectator - $33,000
- Sotheby’s paid wine-searcher $5,000 to have their ad align with key search terms, reaching targeted consumer seeking top Burgundy and Bordeaux
- Google Ads: pay per click
- Social Media
(in China is Weibo or WeChat)
Old School:
- build a website (using Squarespace), scalable cost
- write a newsletter & capture emails (free-ish)
- direct digital sales (market dependent)
Other PR costs
- Consejor Regulador de Jerez, 1 year contract with Colangelo $250,000 for US promotion
- Thurner PR charged Tenuta di Trinoro $10,000 each for media tastings in Zurich & Monaco
Large Scale Consumer Events:
Pebble Beach: $25,000 for a dedicated seminar, $5,000 to include one wine
Nantucket: $750 table fee + cost of wine and travel
Collector Programming:
A Matter of Taste, Wine Spectator Grand Tour, NY Wine Experience: $7,500 per winery + travel costs and wine
Charity Auctions (donations)
Themed Events:
Volcanic Wine Tasting, La Paulee, La Fete du Champagne – all cost wine and travel
(Note: European wineries can use subsidies to offset costs)
International Market facts
- according to Wine Intelligence, China is world’s largest AND fastest growing online wine shoppers. 49% of adults buy wine online compared to 25% in UK and 11% in US.
Hospitality
- enotourism rising around globe
- Beasejour-Becot in St. Emilion received 1.6 million tourists in 2017
- According to Wine Australia, there was an increase of 7% international visitors for wine sector from 2017 to 2018 (mostly from China, UK, US)
Tour examples:
$40 deluxe tour at Flaneur in Willammette
24 Euro tour and 3 wine tasting at Castello di Monsanto. 10 Euro more for their top experience.
Promontory - $200 normal private 90min
abbreviated non-private tasting 9am Saturday $50
- In US, 2018, over $3 billion in DTC sales (cellar door, wine clubs, etc)
- In Europe, sales and hospitality generally kept separate but this is changing (ex. Guiberteau vs Huet)
Consolidation
Constellation: buys Meiomi for $315M, prisoner for $285M, Schrader for $60M
- and just sold 30 brands and 6 wineries to Gallo for $1.7B - mostly lower end brands
Italy:
- Bertani bought Puiatti, Ferrari bought Bissol, Bellavista bought Sella and Mosca
Climate Change
Changing and erratic climate affecting wine production world wide
- Col d’Orcia put 15% of non-2014 into his Brunello (legal max) AND made no riserva (was a cool rainy wet disease laden year)
- Frost + Hail:
- 2016 Chablis down 40% (frost)
- 2017 Loire down by as much as 90% (frost)
- Fire
- 2017 Napa difficulties
- 2018 Wagner cancelled many S. Oregon fruit contracts (2,000 tons)
- Other
- Trimbach: no botrytis
- Selbach: no ice wine
International Trade Relations
- US/Mexico relations straining labor
- Chinese tariffs. Turnbull paid $30K on dry goods fees for 2019 bottling
- Brexit causing insecurities in ZA market and in BDX futures pricing
- Chinese/Chile trade agreement dropping tarriffs on 98% of items took place May 1, 2019
- in 2017, 24% of Chilean exports were to China
Private Wine Labels
Winery Advantages:
- economic benefits
- flexibility to buy in
- flexibility of harvest/grape/fruit sourcing
- Brand over appellation might mean sourcing outside of appellation
Winery Disadvantages:
- no brand visibility
- association with “cheap” wine
- price pressure
- loyalty
example: Rocca della Macie makes the Head to Head Red Blend Rosso Toscana IGT for the Olive Garden.
Turnbull makes a Kirkland Cabernet for Costco
Distributor Advantage:
- Guarantee case sale and placement, pre-sold
Distributor Disadvantage:
- price pressure, low margin
Retail Advantage:
- Consumer can’t price compare.
- revenue generating, covers lower markups on other competitive brands
Retail Disadvantage:
- lower quality?
- customer supply and demand
DTC
DTC = cellar door, winery website, wine club, hospitality & event
Pros:
- More margin
- Direct connection with consumer/intimacy
- Consumer data
Cons:
- Legal constraints (direct shipments of wine illegal in: Singapore, Utah, Ontario)
- Bad feelings on part of distributors
- time and energy to implement
- interstate DTC shipping only allowed in US after 2005 supreme court case. This jumped DTC sales from 2% of total sales to over 10% as of 2018
Price fixing:
- Hirsch Bohan Dillon $39 to wine club, $44 average on wine-searcher
Example: Macari in Long Island sells over 50% to wine clubs and from cellar door
Example: Bartolo Mascarello: customers come to cellar at set time or forfeit their access
Example: Ryme/Massican pick-up parties
Example: VinConnect recreates the DTC experience for Americans who want European wines. Work with wineries to navigate shipping and legal hurdles, collect emails and create mailing lists
Mailing Lists:
- can move undesired (by distributors) formats (such as magnums), back vintages, and off vintages
example: Castello di Monsanto produces a varietal Cabernet their importer does not want to sell, they sell it direct. Also Corison with her Gewurz.
Intermediaries
Intermediaries = agents, distributors, wholesalers, sole traders, brokers, sometimes even retailers
What do they provide?
relationships, sales force, marketing
How do they make money? commissions and margin. This drives up consumer cost.
Example: US 3-tier market
Example: April Collins broker in TX, adds $ to bottom line but provides on-the-ground presence in large and powerful market
Supply chain
Why does the supply chain for wine differ from that of other grocery/ag products? There are social, legal, economic and historical reasons.
Hong Kong
- In 2007, slashed wine tax from 80%-40%
- In 2008, got rid of it altogether
- timed with US market crash, shifting of auction market to HK
- According to Wine Spectator, in 2017 the city’s auction market sold nearly $100Million
- From 2007 - 2018, imported wine increased by four times to $792million USD
