Marketing matters

Wines & Vines, May, 2005 by Larry Walker

Wine advertising was off 8.9% in 2004 compared to 2003, a drop from $118 million to $107.5 million. John Gillespie, president of the Wine Market Council (WMC) said that he was "a little puzzled" when he first saw the numbers. "The total had been rising for several years. It could be a reaction to what is now perceived to be the tightening up of supply," he said. Gillespie also pointed out that some $4 million of that decrease came about when E. & J. Gallo cut spending on the Turning Leaf brand from $14.1 million to $10 million. When a major wine advertiser like Gallo starts making those kind of cuts, it makes a difference.

Gillespie's comments came after it was learned that in an Ohio test market, the generic advertising campaign developed by WMC resulted in a 3.6% gain in wine sales over the same period a year earlier. (See page 8 for more on this.)

"We've shown that the ad campaign can be used effectively to expand the U.S. market for wine when the industry is ready to fund a long-term and broad-based effort to grow the base of consumers enjoying wine regularly," Gillespie said.

Given that the WMC numbers would seem to indicate advertising does work, what do wineries and consultants have to say about the effectiveness of an advertising program?

In contrast to total spending for the industry, the advertising budget for Beringer-Blass was up in 2004, according to David Bigger, vice president of marketing. "We more than doubled our investment in a combination of print and radio ads," he said. The largest chunk of support went to the Beringer brand.

Bigger said one Beringer print ad played off the Napa Valley image. "It was an aerial view of three different cities, with directions on how to get to Napa. We think it was a very striking ad, and very different," he said. He added that Beringer's research showed a direct link between advertising and sales.

He agreed that some of the industry has a tendency to be "rolling hills and bottle shots, a little dull and boring." Bigger said what his team tried to do was capture the "emotional relevance" of wine. "When I tell people I work in a winery, I can see in their eyes the dream of a fantasy escape to Napa Valley."

Paul Wagner, owner of Balzac Communications in Napa, said the biggest challenge in wine advertising is simple: "How to distinguish your product when all consumers want basically the same thing." He added, "Wine is an aspirational purchase at every price-point. And every one of those consumers wants a sense of a commitment to quality, of handcrafted care and of integrity. If wineries really want their ads to deliver what the consumer desires, then we are going to see a lot of handcrafted, elegant bottles in classic lifestyle settings. And the finer points of brand differentiation are going to be pretty subtle."

The result, according to Wagner: "The ads are going to be pretty boring. Everyone wants the same positioning: Our wines are the ultimate expression of quality. At least until now, there are very few brands that have said: Screw the quality, we just wanna have fun!"

Wagner praised the work of the WMC. "They have defined wine advertising in terms that really appeal to the American consumer--and they have done it by stressing wine as a part of a wonderful, civilized, enjoyable lifestyle. That's great. The ads clearly work. The only problem is funding--wineries would prefer to spend dollars increasing their own market share, rather than on a generic program that would benefit their competitors as much as themselves."

The budget issue turned up quite often in relation to wine advertising. Harvey Posert, a public relations consultant formerly with Wine Institute and Robert Mondavi, agreed that keeping the brand visible is a crucial activity, but advertising can be quite expensive compared with publicity work. "Third party endorsements, whether in wine or general media, seem to have far more influence with wine buyers than paid time and space," Posert said.

Gallo is also rethinking its approach to advertising, it seems. No one wanted to be quoted, but apparently Gallo feels that the medium for advertising, even the nature of advertising is changing. Gallo was once reliant on television (remember the company's witty wine cooler spots?) and has also spent heavily on print ads. The feeling in Modesto seems to be that with more than 200 channels, the power of television has eroded, and the company is putting its money into more diverse efforts, such as Internet advertising and third party endorsement through product placement.

"If you see our product on a television screen during a program, that creates quite a buzz," I was told. "We are also seeing wine getting increasing attention in magazines like Better Homes and Gardens that at one time wouldn't even discuss adult beverages. Now they are recommending wine to go with recipes. That's a plus for Gallo, since about one out of every four glasses of wine served in the U.S. is made by Gallo. We are always interested in people putting wine on the dinner table."