Smarter wine marketing crucial for industry

wine pouring into a glass BUSINESS & LAW

The Australian wine industry has transformed itself over the past 50 years to become a producer of quality wines but the rest of the ‘new world’ has caught up and to keep pace globally, it is wine marketing that is high priority.

This was the key theme at the inaugural Australian Wine Industry Marketing Conference held at UniSA’s City West Campus last month with 200 attendees from across the industry and sponsored by the Wolf Blass Foundation, PIRSA and the Ehrenberg-Bass Institute.

Dr Justin Cohen from UniSA’s Ehrenberg-Bass Institute who delivered the closing address said industry growth had been restricted in the last decade as a result of market saturation in key export markets, combined with the challenges from fluctuating exchange rates and rising costs of labour.

“Smarter marketing has never been more important,” said Dr Cohen. “Australia certainly is a nation of great marketers and there are many creative people in the wine industry doing really exciting things.”

“The challenge is making sure there is science behind that creativity and that strategies for growth are evidence-based.”

‘Success Through Smarter Marketing’ was the conference theme, with the purpose of exploring relevant route-to-market pathways deemed most important to Australian wine brands.

Dr Wolf Blass opened the event with a passionate speech about the state of the industry, which was followed by UniSA’s Professor Larry Lockshin who set the stage with some scientific truths for the industry audience.

Prof Lockshin said at this critical time for the Australian wine industry, it is important for wineries to invest in their marketing the same way they would invest in planting and maintaining a vineyard.

“It takes time and effort to create a brand and to grow it into something worthwhile,” said Prof Lockshin.

Conference attendee and editor of Australian Wine Business Magazine Anthony Madigan said in the boom times, Australia didn’t have to try too hard to sell wine but ‘how things have changed’.

“Savvy, educated, global-thinking marketers are crucial to the success of any wine business,” said Madigan.

“In terms of wine quality, Australia can match it with any wine country in the world. We also have the technical side of things covered, with the Australian Wine Research Institute recognised as a genuine world leader.

“However, where the industry can improve – and must improve – is in wine marketing.”

Overseas opportunities were a key focus throughout the event, especially in light of the fact that Australian wine exports in 2015 reached the highest value since 2007 as revealed in the Wine Australia Export Report for December 2015, with a jump of 14 per cent to $2.1 billion.

The strongest growth was in China, which grew 66 percent to $370 million.

Dr Cohen said the significant opportunities in China were no secret, but acknowledged that this market was a challenge for the world.

“Australia is positioned well in China. France is still the top dog, but Australia has a strong standing,” he said.

“However, there is much to be done in terms of how to acquire new customers and grow the category. Australia’s proximity to China and the China-Australia Free Trade Agreement should make this easier.”

Dr Cohen said the domestic market was obviously challenged by the dominance of Woolworths and Coles controlling a lot of retail categories.

“However, there are still opportunities for small and medium sized-brands to work in Australian retail channels.”

The conference heard how the excitement about Australian wine in the United States was long gone.

“The category hardly exists anymore,” said Dr Cohen. “There are a few commercial Australian brands that are dominant in retail, but there is almost no demand for the Australian premium offer.

“The industry has to work towards creating a demand again in the US. If consumers are interested in buying these products, we will see channels want to sell them.”

He said there was a similar, but slightly less severe pattern in the United Kingdom.

“There is consolidation in retail meaning only the biggest brands can compete having sufficient volume and the ability to cope with small margins,” Dr Cohen said.

“There are opportunities in independent retail and on-premise, but again we have to find a way to communicate to UK consumers that Australian wine is premium and suitable for on-premise channels and independent retail.”

Dr Cohen said his closing remarks tied together knowledge from the day under the umbrella of the marketing principles espoused by the Ehrenberg-Bass Institute of the need to acquire new customers and to build physical and mental availability.