Wine Vision Conference Inspires Industry Towards Action

Thursday, 29 July, 2004
Wine Business Online
Wine Vision's 'Great Awakening Summit,' held this week in Santa Rosa, California, served notice to the 170 wine industry attendees that the wine industry must turn their attention back to the basics - specifically, what customers need and how the wine industry can deliver that to them.

Also, much of the summit's focus turned towards attracting under-served market segments, especially women, minorities and the 76 million-strong Millennium Generation.

'Perception is all there is,' said Sue Cook, president of the marketing consultant company Think Customer, introducing the rallying cry for the summit. 'People are the lifeblood - structure everything around them,' she said. 'It is not enough to satisfy the customer, that is the price of staying in business. It's about delighting them.' She cited research that indicated that 65 percent of existing customers provide 85 percent of future business - and that customers are 5.7 times more likely to abandon a company or product because of quality or service concerns.

If customers are satisfied, they can become 'evangelists' for the company. Cook revealed that 67 percent of the US economy is affected by word-of-mouth. An average American is 'inundated' with 3,000 marketing messages per day, and word-of-mouth from trusted friends and family cuts through much of that noise. Customer messages should personalize, humanize and demystify the product being sold. She challenged the wine industry to 'inspire the innovator in everyone,' and to ask itself, 'What is the one thing you can do to build satisfaction and loyalty?'

John Stallcup, a wine industry brand marketing consultant, addressed some of the underserved consumers that the wine industry could be targeting. Citing research completed by Scarborough Wine Research, Stallcup revealed that 10 percent of wine consumers are African-American and 10 percent are Hispanic.

Additionally, Hispanic consumers are 96 percent more likely than the average American wine consumer to spend $20 or more on a bottle of wine, and are 13 percent more likely to purchase Champagne or sparkling wine. Stallcup also reiterated that women, on the whole, purchase 57 percent of the wine bought in the United States and control over $14 billion in wealth.

There are 38 million Hispanics in the United States, with 11 million more expected to arrive in the next decade. As a group, the US Hispanic population has a spendable income larger than the GNP of Spain or Mexico (in excess of $550 billion), and 53 percent of this population is on the Internet.

The Millenium Generation is the largest consumer group in the history of the United States, with an annual income of $211 billion, of which they spend $172 billion. These children of Baby Boomers were born between 1977 and 1999, and the oldest are turning 28. They are described as 'positive' and 'optimistic,' and they embrace diversity and are environmentally conscious.

Liz Thach, associate professor of wine business at Sonoma State University, found that 66 percent of these consumers drink wine at least sometimes. Thach recently studied the Millenials in Sonoma County. She found that her research 'completely validates' the findings of the Wine Market Council. Forty-five percent of her respondents are categorized as 'core' consumers, while 21 percent are 'marginal' and 34 percent are 'non-adopters.'

In her study, consisting of 108 interviews, 48 percent of Millenials drink red wine, 34 percent drink both red and white and only 18 percent drink only white wine. However, 61 percent of the respondents do not perceive wine as 'hip' or 'cool,' with most citing that wine is 'too elite to be hip or cool. In fact, Millenials describe wine most often as 'expensive,' followed by 'snobby,' 'snooty,' and 'way too serious.'

Millenials in Thach's survey felt that wine was not marketed towards them, and they felt the wine industry needed to 'broaden market focus to diverse audiences,' and 'advertise more.' Kate Shields, one of the students in the Wine Business Program, said 'It's scary. This is the largest consumer group, and they like wine, and they are not being marketed to.' Shields strongly encouraged the wine industry to start advertising to the Millenial Generation, using the same suggestions as the survey respondents. Put younger people, in a casual, everyday environment, relaxing and having fun with wine, such as a game night or watching sporting events or movies.

Larry Lockshin, director of wine marketing at the University of Australia, presented the findings of his Australian research that explored consumer attitudes in regard to brand, region, price and varietals. They found that, at least in Australia, consumers are most loyal to a price category, followed by the regional source, then brand and varietal, with white wine consumers more loyal than red wine consumers.

Consumers 'tend to repurchase in the same price point time after time after time,' said Lockshin. The researchers found that the highest loyalty - 'excess loyalty' that goes above and beyond what is expected for the category given their market share - goes to the lowest-priced wines (below $7.49) and the highest-priced wines (above $17.50). Wines in the $12.50-$17.49 range had the lowest repurchase loyalty.

There were some interesting findings in the brand loyalty categories. Not unexpectedly, the top 10 brands have the highest market share, but 'are repurchased even more that we'd expect given the market share,' said Lockshin. Interestingly, brands just outside of the top 10, those falling within the 11-30 range, have a lower-than-expected repurchase loyalty despite having the second-largest market share. By far, the lowest market share and repurchase loyalty falls to brands 31-50, but the smallest brands (51 and over) have a high loyalty.

Lockshin also theorized why the US wine consumer base isn't as varied as it is in Australia or the UK. 'We promote wine too narrowly,' said Lockshin. 'There's no magic answer, but I really believe that we've focused on the wrong consumers. We've made wine something for only specific situations and occasions and we've made it a complex choice.' In the UK, though, 'wine is being seen by supermarkets as a money-making category,' he said. 'Wine has become widely available and promoted as an everyday product in the supermarket.' He also cited the 'café culture' in both countries that creates a non-serious, fun environment to drink wine.

Proving that the needs and wants of consumers are universal, Wine Vision also invited Michael Turner, executive vice president of KTM North America, an Austrian motorcycle company, and former manager of training for Harley-Davidson, to discuss how Harley-Davidson retransformed their flagging business in the 1980s and, in the process, created a zealously loyal customer base.

Urging the wine industry to 'think off the vine,' Turner constantly reinforced what would come to be the theme for the day: create a positive use environment, talk to the customers and, more importantly, listen to what they have to say and respond to their needs.

'We stopped selling motorcycles and started selling a lifestyle,' said Turner. Like the wine industry, Harley-Davidson had to change the stereotype of their customer base - while they fought against the 'Hell's Angels' image, the wine industry fights against the 'snooty' or 'elitist' perception. 'We had to create the opportunity to share - to do it together, to do it with each other. We actually made it okay to ride our motorcycle anytime, anywhere,' said Turner. 'Do you make it okay to drink wine, in any instance? Do we make it okay for the ignorant to have fun?'

Turner advised the wine industry to make it easy and fun for the customers to become involved with the company by becoming involved with the customers. 'Are you in synch with your customers? Are you finding family or are you finding distribution? We have to make them all part of our family,' said Turner. 'You can't talk down to people, can't talk up to people. You need to talk with people.'

Source:
www.winebusiness.com

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