Wine Business: Missing the Target with Millennials
(Cementing the 5 P's of Wine Brand Development, M.Elling 2017) “While Direct To Consumer (DTC) is all the rage for domestic wineries, it is baffling that PR/Social Media is so often underutilized in brand development. It is even more surprising to see that happen with U.S. wineries because DTC would especially benefit from elevated communications. With typical comments such as "we are up 4% since last year this time without doing anything different", there is a level of laid back satisfaction without consideration for what is truly achievable. Sending out one more email blast is very often as good as it gets.”
(Wine & Spirits: The U.S. Marketing Challenge, M. Elling, 2015) The word "marketing" was born in the early 1900's in the U.S., and regardless of language, people around the world use it in its English form. America, as the birthplace of the discipline, is the land where consumers demand and expect brands to build direct connections to drive loyalty. This is not optional, and a consumer-centric marketing philosophy is essential for brand traction, growth, and longevity.
It is not about what you produce, as much as it is about the wants and perceived needs of the target audience. The W&S sector often has a tendency to forget that this is key to unlocking a market's potential. (Do wineries in a far flung country understand what U.S. consumers really want in their wines? In my experience, the answer is rarely "yes", but that's another, upcoming blog.)
(Wine Marketing: Industry, Please Meet the Backwards Bicycle; M. Elling 2017) With wine as an agricultural product, it is without a doubt a significant enough mindset for wineries to be production driven. However, the need for consumer orientation has passed many traditional wineries by the wayside. The pride of history and generations of owners lends itself to a focus on the land, and the people who serve it. It is a gracious and at times a hard lifestyle, but to its detriment, has the business of wine rooted solely in its terroir and cellars.
With few exceptions, the industry has to rethink how it brings to market its wines as they travel through the convoluted route to market in the U.S. and beyond. Between the explosion of brands and continued constricted channels of distribution, the sector needs to understand that in the end, it is the consumer who is in charge. The industry believes it understands the market, but by and large, it has not yet learned or even considered it has to learn to ride a backwards bicycle and forget most of its preconceived notions.
The consumer is in charge, and when that is not recognized at the production level, problems abound. The industry needs to stop the assumptions about what products to bring to market, and elevate its efforts to create wines that will actually be wanted in the marketplace. Is it too late for many? Perhaps already so as wineries are being sold at a decent pace, and consolidation is the name of the game.
This measure of understanding will mostly fall to a next generation of winemakers, as they will adjust and create brands with a voice and palate preference that is consumer driven. That future is here today and those that don't pay attention will fall by the way side, and fall off the backwards bicycle. Case in point, the Forbes article on the rapid rise of winery mergers and consolidations. Perhaps today's read from Rabobank adds more weight to the realities: "European wine category to continue M&A activity with eye on US market,"
The alternative is that the industry resists and remains stuck on the current path, plugging slowly forwards, but pedaling in the wrong direction.
Monika Elling, March 2019