Talking about a Devolution
by Dudley Brown
“Jane Crofut; The Crofut Farm, Grovers’ Corners; Sutton County; New Hampshire; The United States; Continent of North America; Western Hemisphere; The Earth; The Solar System; The Universe; The Mind of God.” – Thornton Wilder, “Our Town.”
A subject that I spend a lot of time thinking about is the notion of “place” in wine.
The one rule that seems to be true for almost all labeled wine is that it must say where the wine is “from.” At a minimum, what country it is from. Then there is the (usually) familiar hierarchical litany of state, province, department, zone, region, sub-region, town, village, etc.
There are examples of this that are particularly frustrating and confusing such as the place of origin named “Southeastern Australia.” I can’t say with certainty how many folks from abroad have asked me if Adelaide or McLaren Vale (where I live) is in South Eastern Australia, but it is a dispiritingly large number.
For those unaware, South Eastern Australia is a “place” enshrined by Wine Australia and international treaty that embraces Victoria, New South Wales and Tasmania and most of the grape producing parts of Queensland and South Australia and is an acceptable “place” for wine to be from. It is also the single biggest “place” that Australian wine is from in numbers of bottles using it a descriptor of place. Given the similarity of actual state names like New South Wales, South Australia and Western Australia, South Eastern Australia sounds like somewhere.
Eyeballing it on a map, it looks to be about half the size of Europe. That this non-place confuses people with little familiarity of Australia (eg most of the rest of the world) is unfortunate for Australia and New Zealand (“do you think it’s these little islands down below Australia honey?”) as a whole. How can wine be “from” a place that doesn’t actually exist on a common map?
Has anyone ever bought a wine labeled Wine of USA thinking it would be good because it was from somewhere in the USA? Would the unarticulated possibility of some Missouri grown Norton mixed with some Virginian Merlot and New York Cabernet get you over the line?
But what of wine from known wine places like South Australia or California or Burgundy? They sound better. But still, absent any other information about their place of origin, would you buy them? Now, if they were from McLaren Vale, Napa Valley or Cote D’Or, would your confidence improve in what you were buying?
You get my drift. Regional brands inordinately matter at the margins of decision-making because the margins of our awareness are where all new experiences originate. As such, to get a consumer to do something different (like buy a product that is new to them), you have to create confidence for them at the margin with information that is somehow reassuring. With wine, familiar names and places provide this.
Wine is either of one place or blended from many places. While Australia is at least an actual place, it’s a big one. Australia is about 4300km wide and has 60+ designated wine regions of immense diversity of which each is at least one or more smaller “place.”
Less than 150 kilometers away from McLaren Vale, Napa or Cote D’Or, you will find regions with much lesser reputations for wine quality but still in the same state or department. As a national wine industry we continue to think and speak as one Australia when viticulturally and oenologically, there are many Australia’s. McLaren Vale, Margaret River, Mornington Peninsula, Hunter Valley and Orange bear less resemblance to each other than they do to similar regions in other parts of the world.
When selling Australian wine overseas in the last eight years, the most common feedback is that “the Australian category / brand isn’t moving.” In response, Wine Australia developed the Regional Heroes program to talk about Australian wine regions a few years ago. Prior to this there was little talk of regions. The problem with building a sub-brand called “insert region’s name here” is that the brand Australia has effectively no value above about $7 per bottle retail overseas.
It seems obvious that a sub-set contains some attributes of a set but no different ones from the set. In this case, how a can a regional sub-brand be marketed or perceived as better or more valuable than a brand with little value? If you are Australian this observation may grate – particularly if you’ve devoted your life to make fine wine here – but I could make the same case, country by country worldwide for all wine-producing countries. In short, nations don’t matter very much to consumers as brands but regions matter a great deal.
What semi-knowledgeable consumer buys a wine designated as French, American, Italian or Spanish because it is so designated? Does anyone talk about a French wine they had last night or rather a Bordeaux, Champagne, Rhone, Burgundy, Chablis, etc.? Consumers of better wine want to know more than “Australia” before they hand over more than $10. And, if they don’t want to hand over more than $10, we’re targeting the wrong new customer.
Wine stores in other countries are usually divided into regions and varieties – Cabs and cab blends from Napa in this corner, Bordeaux over there, Italy upfront, Burgundy on the wall. And, sometimes, there’s the often-dusty corner (when it gets its own place anyhow) called Australia. In very good large wine shops there might be 30 Australian offerings out of the sometimes 1000’s offered. It’s usually void of life and stocked with wines I have often never even heard of with various vintages and regions. It’s a strange experience as you gaze across at the well stocked and busy Tuscany, Rioja, and Burgundy sections.
Wine Australia is trying to change this, and, good for them. Unfortunately, they also have serious historical, structural and governance hurdles to jump in doing so.
Wine Australia cannot credibly tell knowledgeable critics and buyers worldwide that all Australian regions are above average (or better) with credibility. And, it can not let down its famous non-regional or South Eastern Australia brands. It also cannot credibly tell its levy payers that it does not “pick winners” in what stories it markets. Of course it does. It has to. Action of any sort would be impossible without doing so. It is permanently stuck in this quandary of half truths; another non-place. And, the problem grows worse each year because the industry is increasingly a different industry from the one it initially organized itself to support.
The story goes that it was the French who were merciless in their negotiations between the EU and Australia regarding rules called Geographic Indications (think Reggiano Parmesano or Bordeaux). For example, no longer could Hunter Burgundy be called Hunter (if the fruit came from McLaren Vale as it often did) or Burgundy. Worse if they wanted to call that wine something from somewhere it would have to be called McLaren Vale Shiraz to comply with the EU rules. Lucky for the EU, McLaren Vale was just a place in another state where people grew grapes and had just started calling its wine McLaren Vale (some called it Southern Vales and other things). It was a brilliant strategy to see off these mad Australians who had not followed Europe’s old rules but made pretty tidy wines.
In the wash up, Australia had to declare Geographic Indicators for its regions that conformed to the EU treaty. McLaren Vale suddenly needed boundaries and a name. Although it is the oldest wine region in South Australia and second in Australia, it had never had a proper regional name. Prior to this treaty, there might have been a dozen recognizable “wine regions” in Australia. I’m sure the story has been embellished over time but the facts are roughly correct.
25 years ago Wine Australia had these dozen or so regions and three Vitis varieties (Cabernet, Shiraz and Chardonnay) to talk about to maybe three or four principal overseas markets (but really just the UK and the USA). Now they have 60+ declared regions of vastly different characteristics and qualities with dozens of emerging Vitis varieties and styles expecting them to tell their stories in at least a dozen key countries worldwide. The former scenario had about 100 permutations or possible outcomes, the latter north of 10,000. It is a logarithmically different, and more difficult, challenge today.
By any measure bar “holding the line” and talk of “green shoots” (there are always green shoots in any market), Wine Australia is failing its mission in export markets. Not failing because they aren’t trying or capable but failing because it is a fool’s errand to expect one body to market 60+ different regional stories successfully or for 60+ different regional stories to fit into one silver bullet market strategy. It simply isn’t reasonable to expect success. If you accept that one definition of insanity is doing the same thing over and over expecting different results, we need to consider that Wine Australia may have to do things differently to get different results if we care about results.
One obvious problem with all of this is that the three largest producers – Treasury, Orlando and Casella – largely do not sell regionally branded products (of course there are exceptions). Jacobs Creek may meander through Barossa but it isn’t where they source most of their fruit. All of the big wine companies have some regional products but the big bucks are in multi-regional (e.g. South Eastern Australia) blends.
To the extent that these businesses do not have to sell regional messages is a credit to them and their marketing investments. It is also a disincentive to care much for the Australia brand at the expense of their own. Penfolds Grange’s extraordinary success was the template for marketing multi-regional Australian blends at all price points worldwide. Casella’s Yellow Tail is basically the same product strategy at a (very) different price point. And, it worked as long as the perfect storm of a cheap Aussie dollar, nearly free water and favorable tax policies held sway.
One of the laws of business is that the strategy that successfully supported one stage of growth often needs to be inverted to support the next stage. This is why so many market-leading companies fall by the wayside so quickly – they miss the switch either through direction or timing. In this case, a lot of these wines got on the stage quickly but lost appeal at an equal pace because consumers of better wines don’t want the Coca Cola promise of an identical taste each time – they value wine as a continuous process of discovery. This has been much discussed and publicly understood since at least 2005.
While it seemed odd for CEO of Treasury Wine Estates David Dearie to publicly encourage small brands to “re-build” Australia’s image overseas, (exactly which companies screwed it up Dave?), he makes a crucial and valid point. It would be good for him and for Treasury for small brands to do that on Treasury’s behalf. Nobody has accused Dearie of not being clever.
Rather than rebuild the “Australia” brand that has connoted uninteresting sameness to consumers worldwide for nigh on 10 years and which largely benefits big companies (Dearie’s comments implicitly acknowledge the Australia brand is nearly worthless and at least undifferentiated in New World terms) with lots of multi-regional blends and lower price points, we need to continue to double down on our differences and educate the world about our regional brands of wine from Australia and recognize that Australia is, in fact, the sub-brand. This should not be a controversial proposition.
I recently read about an initiative by the California wine industry body to improve exports. They’ve found in the UK that if they can get an independent retailer to buy multiple “linked” products (5-6 different California Chardonnays at different price points instead of one Chardonnay, one Cabernet, one Merlot, etc.), that sales skyrocketed on a semi-permanent basis because the consumer could “explore” the differences of one segment of California wine. Once this succeeded, the retailer was then keen to repeat the exercise with California Cabernet thereby taking his customers on a permanent journey through Californian wine. This is the sort of insight and action we need more of, particularly in the fast growing “above $20” segments. And, it is an opportunity ideally suited to collective action.
As Dearie’s statement presupposes, brave and spirited competition amongst regions and smaller brands would create excitement for all Australian wine businesses by increasing interest in our category and hence demand. In my experience, the inevitable counter argument of “its too confusing, people don’t even know Australia makes wine, let alone where Yarra is” is generally put by beneficiaries of the status quo with safe jobs and self-motivation issues. (Can there be a better example of region trumping country than Marlborough? The rest of New Zealand has done a great job of recognizing the primacy of this asset as it builds other brand and varietal stories.)
The wine public we need to attract worldwide is perfectly aware that Australia makes wine; they just don’t like the offering they have experienced from Australia. They are, by and large, intelligent and discerning buyers who choose to purchase wines from many countries regularly with an eye to value at all price points below say, $75 per bottle, when brand attributes like prestige begin to eclipse all other purchasing decisions.
There is one very simple insight that we seem to miss – these very desirable consumers perceive that the Australia brand is not as good as others because we are competing on the wrong playing field. We market a national brand or category they don’t like or have no interest in to consumers who deeply understand and regularly buy regional stories such as Bordeaux, Maipo Valley, Barolo, Stellenbosch, Napa, Marlborough and Champagne.
The net is that we have a national marketing body that cannot credibly tell the regional stories that the market wishes to buy. This is not to blame anyone for this situation but simply to suggest we are using an out of date metaphor to organize our offering and the wrong structure to implement a solution for seemingly no other reason than it is the way we’ve always done it.
The structure we have was built for a different world – the Hazel Murphy era of 1980’s to the early 2000’s. It was wildly successful (250x export growth anyone?) in that world but all of the key ingredients of standardized high volume quality and variety at a low price into a few key markets have changed for many reasons internal and external to Australia. The only blame being cast here is for “missing the switch” a la Nokia, Blackberry, etc. nearly 10 years ago.
The adaptations of Murphy’s brilliant and pioneering work used by Wine Australia today, including group road trips to many regions for foreign trade, sommeliers, journalists, etc., reflect the understanding of the need to show diversity. Private comments from participants are always on the whole positive but the negatives follow a few revealing lines.
One is the un-tailored approach where fine wine cognoscenti visit industrial wine-making facilities. Similarly, the “one day here, next day there” itinerary fails to immerse the guest in one of Australia’s greatest wine assets – its utterly uniquely casual vibe and culture. Another is the predictability of venues and featured wineries due to the conflicted nature of the Wine Australia’s premium “user pays” programs where members pay extra for visibility to certain markets and visitors.
The Internet exposes all of this to our guests – they’re not going to turn down an all expenses paid trip to drink their way across Australia without even taking a holiday from work. Nor are they going to appear ungrateful because it is a pretty cool deal in any case. But, they are usually as aware (or more) of smaller high quality regions and producers as anyone domestically and wonder why Wine Australia isn’t pushing these new and different stories with the same enthusiasm as the other stories. As such, the implicit tensions are unfortunately exposed at the margins of our most valuable guests’ consciousness of the brand Australia.
Just as Tourism Australia is constantly trying to find the new advertisement that will equal Paul Hogan’s landmark “put another shrimp on the barbie” TV ad, (think “Where the bloody hell are you? and Baz Luhrman’s “Australia” advertising fiascos) we are trapped in the myth that we can repeat our one great success that has long faded. That Wine Australia and Tourism Australia are now strategic partners is superficially a good idea. It may also be akin to two rocks lashing themselves together expecting to float this time. Being lucky isn’t a business plan.
There is another analog that comes to mind in thinking about this subject – there is a vegan ice cream store in New York City that is so good that it doesn’t advertise or mention anywhere that it is vegan because they correctly reason that they don’t have to. Vegans will find the store through word of mouth and non-vegans aren’t intimidated. We could do the same – the Australian wine brand promise could be the nice surprise after the rewarding experience and not the un-discovered, un-tried and un-sold due to invalid or out of date consumer impressions that we are unable to change.
My modest proposal for Wine Australia is to recognize the brand “Australia” as a national sub-brand and to get behind individual regions or clusters of similar regions that are also willing to back themselves financially as the primary brands. It is a recipe for both cooperation and competition – small regions may find they can work together with other like regions while big ones may find they really need to differentiate their offering better once they’ve been shooed away from behind Wine Australia’s apron. From a governance point of view it is honest and transparent – help those prepared to help themselves. The “Australia as sub-brand” approach also supports multi-regional blends in a way that “South Eastern Australia” never will. Can’t these wines just be proud to be “Wine of Australia?” Or do our least expensive wines also find the brand Australia unmarketable and or cringe worthy?
Wine Australia could also act like a venture capitalist (not to be confused with investment bankers) fostering regional “start-up” brands by providing capital along with a regional partner. Provide initial seed funding to develop a good plan. More funding for travel to investigate / interrogate plans. Bigger funding for tangible results. Rinse. Repeat.
We need to encourage creative chaos and lots of different messages. The market will learn our real story from the ensuing dissonance – that the regions of Australia are among the most diverse in the world with outstanding producers in nearly every segment and variety. This is our story.
Wine Australia could then continue to act as a data gatherer, data disseminator and act as a consultative and investment partner to regions wishing to develop markets rather than continuing to exist as a monopoly provider of one size / one brand fits all. The beauty in this approach is that Wine Australia already does many of these things:
“As the Australian Government agency responsible for providing strategic support to the wine industry, Wine Australia offers a range of services and insights to help the wine industry make informed business decisions, protect the reputation of Australian wine, remove market access barriers and grow demand for Australian wine globally.”
Regions and groups of regions with shared interests have enormous opportunities to build new categories and open new spaces in markets worldwide by surprising and delighting customers and showing them new ways to understand, categorize and sell their wines.
“Alpine” might focus on certain overseas markets or segments where those styles are preferred while inland regions might team up to make new or emerging “warm” varieties fashionable at far better prices than they can obtain for less differentiated varieties and wines.
The magic in this formula is perhaps the least appreciated element – Australian ingenuity and a story telling culture. Who better to tell regional stories than the real regional heroes – the winemakers and growers who are pushing the boundaries of expectation and experience? A few corner offices might be lost in the short run but in the long run, we will need a lot more of them.
The lazy counter argument to this superficially chaotic and devolutionary proposal is that money would not be efficiently allocated or spent and / or that there would be needless duplication of overheads in doing so. Bottom up / competitive is always short-term inefficient and long-term efficient while top down / centralized approaches are the opposite and have along track record of failure. Witness the multi-billion dollar losses in the Australian wine industry of the last decade resulting from the top down myths of consolidation, centralization and long-term strategic planning in a dynamic worldwide environment.
We need to recognize that the odds of any top down worldwide marketing strategy with broad support from 60+ different wine regions and major wine companies actually working are effectively nil for the following reasons: any consensus marketing strategy is, by definition, out of date before it begins. Add in the fact that our peak bodies lack the moral authority and funding to do something truly radical. Most importantly, information technology, rapidly changing consumer preferences, emerging markets and horizontal fragmentation of the supply chain are so dynamic in practice that only bottom up solutions can possibly be responsive and resilient enough over time to work.
We need to invert the current model of national leadership if we wish to thrive once again rather than continue down a gradually declining road to serfdom. We need to appreciate our homegrown regional difference makers as well as the discerning and informed intelligence of the consumer we wish to target. We’ll stumble often enough on our new path but the costs will be small for the education acquired for the next effort.
A great place to start would be to do a “do over” on the upcoming Savour Australia event .
This event, billed as the first global wine forum in Australia, starts with a keynote speech on “Power of Country and Branding” followed by the syntactically and grammatically mangled “Premiumisation of branding and application to Australian wine and how it can impact your market” followed by “Myth Busters: Destroying the top 10 myths about Australian wine.” (All this before lunch on Monday). Really? That’s our best shot? Fighting the national stereotype after reinforcing the importance of national branding? How about “being the change” instead? It’s like they just can not see beyond the square to pay anything but lip service to the unique components of a unique national offering. Listen to the pitch video – does the word region ever arise? Fresh produce gets at least one mention. What are we selling? Bok Choy or Barossa? Oranges or Orange?
Oddly, Wine Australia expects the regions to fund a significant portion of the event.
How about something like Savour the Great Wine Regions of Australia? Make the entire event about all things regional – regionality (Alpine vs. Coastal vs. Inland distinctiveness), sacred (wine) sites, innovation, personality(s), food culture(s) and storytelling. The event is to be held in Adelaide; the guests will be able able to grasp the geographic and national subtext without the assistance of myth busters..
Positive change only occurs when the fear of not changing exceeds the fear of change. For me, that line got crossed a fair ways back.
What do you think?
BTW – my annual $700 invoice from Wine Australia for the right to export wine arrived today. Coincidence?