How Can Wine Reverse its Decline On-Premise?

September 6, 2014 § 1 Comment

Before I write another word, let me provide a brief background of my experience in this industry. I have a B.S. in Soil Science and have worked as a vineyard manager and winemaker. I began drinking wine as a college freshman and took a job upon graduation picking grapes in upstate New York to learn about wine, excuse the pun, from the ground up. That ocurred because I had, during the 30 hours a week that I worked while going to classes full-time, I managed to accumulate the funds to purchase a 1969 J.Grivot Vosne-Romanee and a 1966 Chateau Calon Segur, two wines that changed my life forever.  I have worked every imaginable job in this industry, from production to sales and marketing.  In the course of my wine industry career of over 30 years, I have launched a number of successful wine brands and products. I have also witnessed failures and collapses of wine segments and brands largely due to the arrogance and close mindedness of those responsible. Market conditions in some cases played a role in these failures but the changing market conditions were apparent and largely ignored by those that could have affected the necessary changes to avert disaster.  Based on this experience and my position at Winemetrics, which has allowed me to track the progress of wine on-premise for the past decade, I offer the following heartfelt advice to my industry.

1. Start Innovating before it is too late

Innovation means creating compelling unique products, not a new name or label that you hope the consumer will find appealing. Look at what the artisanal spirits and craft beer industries are doing. New flavors, new processes, with exciting products as a result. Where are the new varieties to entice our wine consumers, where are the new production methods to create new flavors. Why not a Port barrel-aged Zinfandel or a Tannat-Syrah blend?

2. Listen to consumers and make something that fulfills a need

Do you think that the Master Distillers at Jim Beam woke up one morning and decided to create a Black Cherry flavored whiskey on a whim? There are currently more placements on cocktail lists of flavored whiskeys than there are for traditional ones, the same is true for vodka and rum. I’m certain the decision to make flavored products was not popular with the traditional production team but had they ignored this direction their companies would be out millions of dollars in profits. Fortunately, the distillers realized they were in the beverage business, not the whiskey business.

3. Discard the old models that are no longer relevant.

Mixologists have given us cocktails with an incredible variety of flavors using non-traditional ingredients that have vastly expanded the flavor landscape of libations. Craft brewers have created entire new categories of beer. I remember when the first Pumpkin Ale was introduced, now the annual release of this single product overwhelms that of the venerable Oktoberfest beers. Both artisanal mixology and craft beer are American (i.e. U.S.) phenomena. We have a culture of innovation and chafe at the rules meekly followed in Europe. Rheinheitsgebot? Sorry Hans, we’re putting pumpkins and nutmeg in our beer and it tastes great. How does the wine industry react to new ideas? Let’s review a historical example.  I was already working in the wine industry for several years when Jess Jackson released his signature Chardonnay. The reaction of most of the wine press was not positive. I remember the backlash in the wine press about this upstart winery (KJ) that blends grapes from different regions and allows some residual sugar in the finished wine! Quelle horreur! To this day I read blogs and hear wine buyers rail against this ‘inauthentic’ wine that happens to be the #1 wine on-premise and has probably made wine drinkers out of millions of otherwise disinterested consumers. Let me put this another way. This is probably the most popular wine in America, which wine consumers obviously love, and you, Mr./Ms. Wine Gatekeeper loath this product because it does not conform to your parochial definition of ‘acceptable’ wine. Are you really serious? Do you think there is an equivalent individual or group of individuals in the beer industry saying this about Pumpkin Ale? No, because its introduction captured new drinkers and was overwhelmingly positive for the industry. My suggestion to self-appointed ‘wine authorities’ who hate products that encourage consumers to drink wine? Find another career.
 
4. Bypass the Gatekeepers
 
The wine industry is cursed with a group of narrow-minded gatekeepers who prevent excellent products from reaching a demanding and appreciative audience. 
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§ One Response to How Can Wine Reverse its Decline On-Premise?

  • jigsawmcs says:

    Charles:
    It’s all about how our brains process & interpret product information. I’ve been in the wine industry for over 20 years, National Sales & Marketing Director, partner in an importing business and senior manager of a wine & craft beer distributor. What those “narrow-minded gatekeepers” fail to consider is the consumer’s primary reason for purchasing any product, emotional need satisfaction. In fact Prof. Zaltman, Harvard Business School, researched project found that 93% of consumer’s decisions are formed in the emotional brain, not the cognitive. But the industry continues to target with verbal & visual communications to the cognitive mind. Another mistake is the scientific language they communicate in, let’s put that problem on the sidelines for now. So why do consumer’s buy? Each product acts as a symbolic resource to support one’s weak inner and social self-identities. Generally speaking a younger adult will have a weaker self-identity thus they truly need more symbolic resources to support themselves. The bad news, this trend is gaining strength, so future generations will be seeking more symbolic resources to consume.The spirit industry does a good job providing younger consumer’s “vehicles” to help express who they are or want to be. Craft-beer industry not as good as the spirits industry but way ahead of the wine industry in meeting their needs.
    Part of the problem lies in the fact that our brains are exposed to 11,000,000 pieces of information every second but only encode into memory 40 pieces ( research from MIT).Our brains are so busy that they will attempt to save energy by going into sleep-mode and the only method to move the brain out of seep-mode to an alert state is by stirring their emotions. Do products-facts emotionally move you? Therefore all of the wineries verbal communications are not being encoded into memory.
    So until the wine industry understands what consumers are really paying for their growth will never be maximized.
    Tomorrow industry leaders will be those who learn how to communicate to consumer brains.
    All the best from the west,
    Ed Donegan

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