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Wine Business

Wine Marketing: How To Analyse It

Introduction

This article outlines the analysis of wine marketing. I will use as an example product Casillero del Diablo Cabernet Sauvignon. This is from the Central Valley, Chile 2018. Concha Y Toro is the producer.

See: http://www.casillerodeldiablo.com/wines/reserva/cabernet-sauvignon

Product

This is a value wine which aims at a large volume of sales.  The 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. Chile is a very well-known country of production though maybe still slightly exotic and interesting for some consumers.

Price

This wine costs £8 our bottle in Tesco. It is available online at £7.49 plus shipping. The wine is also available at Majestic for £6.99. That suggests that a special deal must have been done. The wine is positioned towards the top of the value end of the price range

The average price per bottle paid in the UK has been increasing slightly.  It is a price-sensitive market, but there have been some signs of a trend to premiumisation. 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. These customers would not pay £8.  Millennials are replacing these consumers. Millennials are more likely to drink only at weekends. They are prepared to trade up.

The price of £8 in Tesco is perfectly positioned. It will hit the bulk of the current market. A Millennial professional picking up a bottle on the way home from work to drink with a meal would be a typical customer. 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.

People

The low-involvement consumer is the primary target demographic. This customer is slightly above the absolute minimum price-sensitive consumer but not willing to pay for additional structure or complexity.

Millennial consumers are likely to be reached by the marketing of this wine. 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.

Wine Marketing: The Place

Ssupermarkets, convenience stores and online are the normal sales channels for a value wine like this.

Deep discounters will not carry this wine normally. They might do so if a special deal is available. This is 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 a huge quantity. An economic downswing could cause the producer to be holding large quantities which will not really benefit from bottle ageing.  In fact, this wine 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 now.  They could be moving very high volumes online to a lower-involvement customer base than would normally be the case.

Majestic could also be using a very good value wine as a hook to lure customers to their online space. They may then well be able to persuade them to trade up, but even if not, a sale is a sale.

Wine Marketing: The Promotion

Amazon describe the wine as the “UK’s No.1 Cabernet Sauvignon.” This is sticking strictly to the facts and is a positive message. People 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. The low-involvement consumer receives some information (cassis,  richness, cherries) immediately. Low-involvement consumers could be switched off by the mention of tannins.

It is slightly confusing that there seem to be some issues with the English. One would not normally expect this in the wine marketing of a major conglomerate.

The “Story” in Wine Marketing

One of the keys to modern wine marketing is having a good “story.” Here, this means that people can wonder why there is a devil on the bottle. They will be intrigued and look into what the name means: why is it called “The Devil’s Cellar.”

See also: https://timlshort.com/2020/04/22/marketing-sherry/

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.