the psychology of successful trading

Ladder Branding in the Wine Industry

Yalumba and Viognier

Ladder branding is well illustrated by Yalumba’s wine marketing.  I will explore that in this article.

Yalumba is a successful winery which has occupied the Australian Viognier space in a convincing fashion since around 1970.  There are strong sales into the UK.  The flagship super-premium member is “The Virgilius.”  This is a very serious wine which is entirely appropriately placed to add brand equity to the other members of the brand.  One potential criticism however might be that the ladder can seem to contain quite a lot of members.  This could be a symptom of a tendency to overexploit a successful approach to the market. 

Members of the Ladder Brand

Y Series  £11 Entry level — affordable
Organic Viognier £11 — £15 Affordable / Stretch
Eden Valley Viognier £21 Stretch
Yalumba Virgilius Viognier £30 — £35  Flagship ladder brand member

The entry-level member Y Series is still not cheap.  Yalumba wish to avoid the opposite of a ladder brand benefit occurring where a super-premium member would not be credible if the entry-level product shipped at £5.

Yalumba have included a member (Organic) which could act as a bridge between the entry level Y Series and the pricier Eden Valley.

Some separate products are co-marketed with the above, which runs the risk of diluting the ladder branding effect.  The Botrytis Viognier is really a separate product.  Technically it is more expensive often than the Virgilius but this is a niche entry with limited supply available only in 375ml format.

There is also a Shiraz/Viognier product range which has only two members but they are also clearly located at distinct price points (Y Series at entry level and Hand Picked at premium level).

Also, Yalumba offer an Eau de Vie named V de Vie.  This is made from Viognier which is co-marketed with the ladder brand even though this is really only coincidentally made from Viognier.  There will be few varietal characteristics visible in a spirit.

Potentially these other products could be considered as not really part of the straight Viognier range, but they all go towards giving Yalumba a strong mind share of the Australian Viognier space.

The Eden Valley product is located just south of the premium slot. The name is well-chosen because it emphasises a sense of place but also there are positive associations between “Eden” and quality.

The Virgilius is available in Magnum, is suitable for ageing and is among few Australian wines to be given a flagship location in the main wine displays at 67 Pall Mall, for example.  So it has clearly established its premium nature.

Main markets

Yalumba is not a listed company and is therefore not required to provide extensive public data on revenue generation.

However, Wine Australia provide some statistics on Australian wine exports generally.  Australia’s top five export markets by value as at year ending March 2020 are listed below.

        1. Mainland China (40 per cent of total export value)
        2. United States of America (14 per cent)
        3. United Kingdom (12 per cent)
        4. Canada (6 per cent), and
        5. Hong Kong (4 per cent)

Clearly China is of extreme importance in general but there may well be an opportunity for Yalumba to move more Viognier there.  There is only one Chinese stockist listed on Wine Searcher and Eden Valley is priced at £75.  This suggests there is effectively no supply and no information available to consumers in China.

Target consumers

As with any ladder brand, the various rungs are aimed at different consumers.  

The entry level Y Series is an excellent example of an appropriately placed product — it is interesting, fresh and approachable with decent levels of complexity without excess complexity.

Consumers who are new to the brand will find nothing to put them off but have every chance of being enticed into looking in to the upscale members on an appropriate occasion.

Many novice wine drinkers have moved from casual to serious interest in wine as a result of noticing the unassuming yet defined qualities of Y Series.

Placing a member (Organic) just north of entry level but still reasonably priced enough to be a potential step up is intelligent marketing.  It means that a customer is more likely to step up the ladder.  This is especially likely perhaps when a consumer has had the entry level product a few times or it is unavailable.

Making this wine organic and being very clear about that feature is also wise since Millennial Treaters will be a key segment here. Organic produce features prominently on their wish-list for products

The pricing may just overlap with the entry level product which again is intelligent because it encourages switching.  The entry level product is sometimes available at a discount but great care should be taken with this.  Strenuous efforts should be made to avoid the discounting of the Organic product so as to maintain its identity as “just slightly premium in a premium range.”

Eden Valley will be aimed at consumers celebrating a special occasions.  It is the “stretch” entry within the ladder branding.

The Virgilius is the “aspiration” product within the ladder branding.  It is aimed at serious wine drinkers but is nevertheless attractively priced in comparison to e.g. Meursault.

Sample marketing materials

The marketing materials are complemented by an immediate link to the wine club.

There is an effective strapline. “Thoroughly captivated by this elusive, luscious and complex white variety, a visit to Viognier’s spiritual home saw the beginnings of a journey that would define Yalumba’s white winemaking future.”

This provides a strong brand story showing the roots of the product in the past.  The streamline also makes strong and clear statements about the qualities of the varietal that the consumer can expect.  The streamline also bootstraps from Old World experience with the varietal.  This leaves an impression that the product is made with care and experience.

In sum, we may conclude that Yalumba have very successfully employed ladder branding within their range of Viognier wines.

By Tim Short

I am a former investment banking and securitisation specialist, having spent nearly a decade on the trading floor of several international investment banks. Throughout my career, I worked closely with syndicate/traders in order to establish the types of paper which would trade well and gained significant and broad experience in financial markets.
Many people have trading experience similar to the above. What marks me out is what I did next. I decided to pursue my interest in philosophy at Doctoral level, specialising in the psychology of how we predict and explain the behaviour of others, and in particular, the errors or biases we are prone to in that process. I have used my experience to write The Psychology of Successful Trading. In this book, I combine the above experience and knowledge to show how biases can lead to inaccurate predictions of the behaviour of other market participants, and how remedying those biases can lead to better predictions and major profits. Learn more on the About Me page.

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