Being a former sommelier, when I hear the term value, my mind instantly journeys towards wine. As a wine lover, I relish in the opportunity to find wines that offer tremendous experiences and quality for a more favorable price than other wines. In fact, the concept of value is so fun for sommeliers that we often set off on scavenger hunts and blind tastings to test our skills. But what makes a wine a value?
Value is a ratio of the bundle of goods a customer receives from an offering compared to the cost incurred by the customer in acquiring that bundle of benefits (Marshall, 2010). Yet with wine, as with many products, there is another component in the value equation: competitor products. With over “6,027 bonded wineries and 1,089 virtual wineries [in the U.S. alone]” (Fisher, 2012), those in the business of selling their wines have well versed in appropriate marketing strategies.
To understand how successful wineries navigate the saturated marketplace is to be very aware of two things: situational analysis and the value chain.
At the root, making wine is about sharing first an ethereal experience with the earth and last sharing with the end consumer. Wineries largely go about inbound logistics in two primary ways: grow the grapes themselves, or source the grapes from growers. Neither way is better or worse than the other, as the goal for most is to get the best grapes possible. Some will pay a hefty premium for the very best, whereas others will sacrifice some quality for price. This decision also represents the first example of situational analysis in action. Simply put, the style and quality of wine grapes selected are done so to fit the identified clientele that the winery is targeting at a macro level.
Once the grapes are harvested, the wineries go through the operational means to create wine. This process is headed up by the winemaker(s), who through a series of chemically triggered reactions is able to take a bunch of grape and convert it into wine. However there are a couple more steps before we are staring down the business end of a good time.
The winery’s outbound logistics and marketing play a significant role in how we select our wines. It is during this step that the targeted end-user dictates the marketing strategy(s). This outward deployment of a firm’s situational analysis is carried out in two ways. In the case of some wines, they are purchased directly from the winery. These are typically referred to “mailing list wines” and the only marketing that is done is the name recognition/word-of-mouth that has been developed through the years. This approach is typically pursued by wineries that produce high-end or collectible wines.
The other example of delivery and marketing is the one that most are used to. Typically, wine is purchased by either state liquor commissions or distributors, shipped to their locations and then made available to the masses through retail locations (typically a 4- or 5-tier system). To support the sale of some of these wines, there may be certain promotions or the occasional advertisement. However a majority of wine marketing is done the old fashioned way, creating a buzz. This is why you will see an attractive woman (no offense) or an astute sommelier pouring samples at the local shops or presenting wines in a restaurant.
Although both of the approaches just mentioned are effective, the most impactful strategy, outside of word-of-mouth, is not carried out by the winery at all. Critical reviews by the magazines, Wine Spectator and Robert Parker’s The Wine Advocate act as the “go to” resources for everyone…even you dear reader. Do you recall a time when you were in a wine shop or liquor store and you saw a tag describing a wine and giving it a score? Did you buy that wine? If so, then this form of marketing was effective. Of the two mentioned, Robert Parker carries the most clout, so much so that “[he] has almost single-handedly created markets for wines that once were overlooked, or even scorned” (Teague, 2012).
Finally, there is the service component. Beyond the aforementioned attractive woman pouring samples, there is very little service provided in-house during the pre-sale, unless you go to a local wine shop with a dedicated staff. The experience with “mail order wines” is actually quite different. Many prestigious wineries recruit the consumer and coax them along the buying experience. Afterward, there is a pleasant level of appreciation and outward show of worth between when you purchase and the anticipated next purchase occasion. This ongoing cycle creates an extreme level of loyal clientele.
The goal for all wineries is to create a product that people enjoy drinking and sharing. Yet as this brief example shows, there are different means to come to the same end. The difference being a winery’s ability to effectively read the situation and follow the approach best suited for their success and our enjoyment.
Fisher, K. (2012, Feb). U.S. Wineries Up 5% to 7,116. Wine Business Monthly. Retrieved from http://www.winebusiness.com/wbm/?go=getArticleSignIn&dataId=96717
Marshall, G.W.; Johnston, M.W. (2010). Marketing Management. (1st ed.). New York: McGraw-Hill Irwin
Teague, L. (2012, Dec 10). Big Shake-Up at Robert Parker’s Wine Advocate. Retrieved from http://online.wsj.com/article/SB10001424127887324024004578169492614023194.html?KEYWORDS=wine+marketing
Categories: Wine & Spirits