the psychology of successful trading

How To Analyse Wine Marketing

Casillero del Diablo Cabernet Sauvignon, Central Valley, Chile 2018— Producer: Concha Y Toro


    • Value wine which aims at large volume; production is 22m cases a year
    • Concha Y Toro are among the ten highest volume producers globally
    • Cabernet Sauvignon is a very well-known variety and Chile is a very well-known country of production though maybe still slightly exotic and interesting


    • £8 in in Tesco; online £7.49 plus shipping; Majestic also have this wine at £6.99 so a special deal must have been done
    • This is just towards the top of the value end of the price range
    • Price per bottle paid in the UK has been increasing slightly.  In previous decades, supermarkets would move a lot of wine at £5 per bottle but Millennials are more health conscious.  It seems inconsistent to them to go to the gym most days but also consume alcohol every day
    • Many older customers would have drunk wine every evening and therefore, as a reflection the UK’s price sensitive market, would not have been prepared to pay £8.  These consumers are being replaced by Millennials who are more likely to drink only at weekends and are prepared to trade up somewhat 
    • £8 in Tesco is thus perfectly positioned for the bulk of the current market. The typical customer is a Millennial professional picking up a bottle on the way home from work to drink with a meal. They want to have something which is good value but with some interest to it to go with a meal or prior to going out


    • This is a wine aimed at the low-involvement consumer who is slightly above the absolute minimum price-sensitive consumer but not willing to pay for additional structure or complexity
    • As noted above, this is well-aimed at the modern market of Millennial consumers; it could sell well on the same basis to similar people in the US and more widely though probably not in wine producing countries like Spain or France.  Here, there will be too much local competition which will be offering fair quality without needing to carry a transport spend and marketing budget 


    • Value wines like this are normally sold in supermarkets, convenience stores and online
    • Probably not in deep discounters unless some deal can be done because deep discounters will not want to pay for the heavy marketing/ad spend of a major brand like this. It is possible that deals can happen in some years though because 2.2m cases is huge and an economic downswing could cause the producer to be holding large quantities which will not really benefit from bottle ageing.  In fact, they will likely deteriorate quickly (some commentators recommended drinking the 2018 in 2018 and no later in fact)
    • In this case, the wine is available in specialist wine retail though that is slightly surprising.  It is possible that Majestic have specifically chosen this wine to capture the value-seeking customer.  Or they carry it as a response to specific market conditions currently obtaining.  It may well be the case that they are moving very high volumes online to a lower-involvement customer base than would normally be the case.
      • They could also be using a very good value wine as a hook to lure customers to their online space where they may well be able to persuade them to trade up, but even if not, a sale is a sale


    • “Uk’s No.1 Cabernet Sauvignon” (according to Amazon) — this is sticking strictly to the facts — people are known to prefer choices already made by others since this seems to reduce risk
    • Concha Y Toro make the following remarks on the product:
      • ORIGIN: Central Valley
      • VINTAGE: 2018
      • SOIL: Mainly alluvial
      • AGEING: Aged in American oak barrels.
      • COLOUR: Deep, intense ruby red.
      • AROMA: The expression of cassis in this wine perfectly represents the Valle Central and its richness in fruit such as cherries and plums. The barrel ageing length thanks to the toast and coffee notes (sic)
      • PALATE: Medium bodied with silky tannins and long, ripe fruit and berry aftertaste, with impressive balance of fruit and polished tannins.
      • FOOD PAIRING: Red meats, well-seasoned dishes, and aged cheeses such as Gruyere or blue
      • There is a deliberate gradient of complexity to this description — some information can be conveyed to the low-involvement consumer (cassis,  richness, cherries) before potentially causing him to switch off by mention of tannins
  • Packaging is simple and straightforward
    • The main facts are clearly stated and the brand name of the wine and the producer are prominent
    • The “Reserva” keyword is used to signify higher quality to potential customers
      •  However, this is slightly misleading because in Chile “Reserva” only indicates a minimum abv of 12% (“Reserva Especial” means some minimal period of oak ageing has taken place) while in Spain, this would be a defined term definitely requiring some maturity and oak ageing
      •  The handwriting section towards the bottom of the label could intrigue some customers, suggesting that “there is more to find out about this wine”
      • “Diablo” is a well-chosen term, because even non-Spanish speakers are likely to know that this means “devil” and that could also draw them in
        • In fact, the handwritten section explains the story that the founder of the producer kept marauders away from his stocks by explaining that the devil lived there, hence “the cellar of the devil” — a quick appealing outline of the brand story
      • Stating that the producer was founded in 1883 gives a sense of history
      • Some bottles show a large gold award seal which does not actually contain any very persuasive award data (“the world’s most admired wine brands 2015/2016/2017 from “Drinks International” ”) but many low-involvement customers will just absorb the fact that “the wine has an award” without further investigation
  • Overall this is a strong marketing profile as one would expect from such a successful brand/producer

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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