The wine industry needs a new strategy to revitalise and grow local wine consumption and sales. Research by The Moss Group in collaboration with the Consumer Insight Agency (CIA) into Brand SA as part of the Wine Industry Strategic Exercise (Wise) has highlighted key points.
Growth in the liquor market over the past five to six years has been driven by RTDs, premium beer, premium whisky and, more recently, premium vodka.
This points to two major areas of opportunity for the wine industry: how to make wine as a category more relevant to drinkers of ready to drink beverages (RTDs), and how to take advantage of the clear premiumisation trend within the liquor market.
The wine category, while growing numbers of consumers, has not benefited from a strong increase in either volume or value.
Consumers’ options have increased over the past four to five years and, as a result, wine has effectively lost ‘share of throat’. Almost more importantly, wine has not reaped the rewards of value growth that other categories such as whisky and RTD have shown over the past four to five years. This needs to change: value and volume have to be balanced. Win the local fight before you take on the world market.
There is a lack of strategic and intentional consumer marketing within the wine industry.
Whisky is an excellent case study for strategic consumer marketing. Johnnie Walker, the flagship whisky brand in SA and arguably the core brand that drove the growth of the whisky category, is founded first and foremost on very solid consumer insights drawn from in-depth consumer research.
The brand used robust consumer marketing techniques and strategies to position and grow the brand over time. Johnnie Walker was also very successful in anchoring itself as a premium brand and was then able to extend itself up and down the premium continuum as it grew market share and appealed to different consumers within different occasions. The College of Whisky also played a pivotal role in educating consumers about a category that has always been seen as complex and intimidating. The College of Whisky focused on taking whisky to the people and creating an enjoyable experience they would remember and share with friends and family.
The wine industry, in stark contrast to whisky (and other categories such as premium vodka), tends to be driven by the supply-side of the industry, with too much focus placed on intrinsic product attributes.
The wine industry sells wine to itself, not to consumers. There is little or no focus on understanding consumer behaviour and motivations, and on translating that into brand offerings that meet their needs. Innovation in product and packaging should also be more consumer-driven.
Key aspects need resolving should we wish to grow the SA wine consumer market.
- The market is over-traded and therefore highly competitive, particularly within the retail environment.
- Lack of margin makes it challenging for wine producers and brands to invest in actively marketing and activating their products.
- Consumers are confused and intimidated by the category. The onus is on us to educate them in a more innovative, engaging and fun manner about wines.
- There is definitely opportunity to link food and wine and tourism and wine (highlighted by the Australian case study).
The story has to be rewritten, starting at the end and working its way back to the beginning. The wine industry should tap into the aspirational values of the consumer and take it from there.
Where to from here?
The wine industry should focus on creating a vision for the local wine consumer: to be the alcoholic beverage of choice in South Africa. To do this new entrants must me enrolled, share of throat must be grown and the category must be premiumised.
Phase 2 of this project will focus on developing the detailed strategies under the first three focus areas of the strategy, namely understand and segment consumers, simplify and streamline the category and thirdly, educate consumers.
In understanding and segmenting consumers, a rubust consumer segmentation model relevant to wine must be provided. This will provide detailed qualitative insights into the key future opportunities for the wine industry.
To simplify and streamline the category a wine category strategy is important. This involves product tiering, which will enable the category to target particular wine consumer groups appropriately with the correct pricing while also potentially creating room for additional margin in certain tiers. Streamlining the category also means alligning the learnings from Wines of South Africa’s (Wosa) international brand positioning to the local context.
Educating consumers is crucial to the future success of the wine category in South Africa. A consumer education strategy is much needed and can be based on a comprehensive review of best practice wine consumer education from around the world, as well as local consumer education in other categories. This will identify key factors for a successful consumer education programme and will also highlight potential innovative ideas that could be leveraged locally.
Published in the July 2015 issue of WineLand magazine.