The marketing of wine farms and the preferences of new consumers

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di Luca Rossetto, Università degli Studi di Padova
Evento organizzato da DuPont: International Wine Grape Symposium.
Lazise, 6 aprile 2011

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The marketing of wine farms and the preferences of new consumers

  1. 1. Università degli Studi di Padova Dipartimento Territorio e Sistemi Agro-forestali INTERNATIONAL WINE GRAPE SYMPOSIUMThe marketing of wine farms and the preferences of new consumers Luca Rossetto Università degli Studi di Padova PACENGO DEL GARDA (VR) - 6 aprile 2011
  2. 2. The marketing of wine farms and the preferences of new consumersSUMMARY1. OULOOK ON THE WINE INDUSTRY2. THE MARKETING OF WINE3. WINE CONSUMER ASPECTS4. STRATEGIC ASPECTS5. FUTURE CHALLENGES
  3. 3. Outlook on the industry FRAGMENTATION ANDSupply DUALISM • ¼ of vineyard is divided among Farms with vineyard: farms having less than 1 hectares 496 thousands and 710 (80% of total farms) thousands hectares (Istat) • 1/5 of vineyard is owned by farms with more than 10 hectars (1%) • 90% of firms has a business less Wine firms: ~164 housands than 5 million europroducers and ~3.900 bottlers (CCIA) • 1,5% of firms produces more than 30 million euro • 10% of market is concentrated on 4 firms only (table wine)
  4. 4. SUPPLYOutlook on the industry VARIETY • Big cooperatives PRODUCERS • Small and isolated producers • Private big firms • Private medium firmsCOMPETITIVE CHOICES • Price range • Product extension • Territory
  5. 5. Outlook on the industryTERRITORY VARIETY- 34 DOCG- 313 DOC- 118 IGT- 84 wine roadsCONSORTIA EXPERIENCES- Historical experiences – Success- Producers initiatives- Growth: 15 (1960) => more than 100 (1990) => more than 140 (2006)
  6. 6. Outlook on the industryCONSUMPTION TRENDS 70,0 Consumo pro capite (litri/anno) 60,0 50,0- Decreasing consumption in Francia Italy 40,0 Italia Germania- Consumption between 30,0 Svizzera producing and not 20,0 Australia producing countries are Stati Uniti 10,0 converging 0,0- Preferences have been Fonte: Gti, 2010. 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 shifted towards VQPRD wines 2000 2007 var. %- Bottled vs. bulk wine mil. Litri in % mil. Litri in % 07/00- High share of sales TOTALE VINO E SPUMANTI 964 791 -18,0 Spumanti 51 42 -16,7 between 3 and 5 Vino 913 100 748 100 -18,1 euro/bottle Per denominazione:- Increasing power of large - Vqprd 197 22 212 28 7,8 - Da tavola 717 78 550 73 -23,3 scale retail Per formato - confezionato 744 81 660 88 -11,3 - sfuso 179 20 102 14 -43,0 Fonte: Ismea AcNielsen.
  7. 7. Outlook on the industry CONSUMPTION PRICE RANGE >150 Icon >30 Ultra 75.1 - 150 premium 15-30 II Ultra 15.1 - 75Price (€/lt)3.35-15 premium )3.35 I Mass 10 € Super market 7.1 - 14 Premium 5 .1 - 7 1.65-2.2 Premium 5€ Popular 3.1 - 5 premium Basic <3 <1.1 To consumer Fonte: Bruni, 2011
  8. 8. Wine MarketingThe Marketing of Wine
  9. 9. Wine MarketingCan we do marketing?
  10. 10. Wine MarketingCan we do marketing? FINAL CONSUMERS
  11. 11. Wine MarketingWHAT MARKETING SHOULD BE APPLIED?THE PRICIPLES OF MARKETING DO NOT CHANGETHE WAY IN WHICH WE BUILD AND APPLY MARKETIG STRATEGIES CHANGE ACCORDING TO INDUSTRY OR TO PRODUCTSTHE MARKETING MIX IS DEFINED AD HOC ACCORDING TO THE MARKET, TO THE PRODUCTS AND TO THE CONSUMERS OF A SINGLE FIRM
  12. 12. Wine MarketingCompetitor FIRM Competitor Product Price Place Promotion CONSUMERS (potential)
  13. 13. Wine MarketingPRODUCTIl product wine is composed by:• Wine (variety, vintage, alcohol, color, flavor, taste, etc.)• Packaging (bottle, brick, bag in box, demijohn, no pack)• Label and back label (mandatory/voluntary elements, communication tool)• Capsule and cork• Pack (technical and communication tool)• Brand (to find, to recognize, to communicate)• History (communicative and evocative/suggestive tool)• Services (wine tasting, visits to wineries, delivering wine home, etc.)
  14. 14. Wine MarketingPRICEHow to fix the price:• Demand (customer/target)• Competition• Distribution channels• Production costs• Product lifecycle• Perception about the wine quality• Psychological price• Veblen effect (ultrapremium/icon wines) (ultrapremium/icon
  15. 15. Wine MarketingPLACE (marketing channels)• Direct sales (85% bulk wine)• Wine shops (specialized channel, high variety, expert target, high prices)• Large scale retail (> 50% of sales, increasing sales, strong price competition)• HORECA (dynamic channel, eating out, wholesale suppliers, restaurant and hotel chains, catering)• Delivering sales (not developed in Italy)• E-commerce (firm website and specialized web retailer)• The exportThe choice of marketing channel depends on: da: da:• The final consumer (target)• Positioning
  16. 16. Wine MarketingPROMOTION (communication)Exchange messages on the market through:• Point of sales• Salesmen• Advertising• Promotions• Public Relations• Internet (web 2.0)• SponsoringObjectives of communication:• Gathering brand prestige/value• Gathering product prestige/value• Reinforce the product image• Reinforce the brand image
  17. 17. Wine consumptionAspects of Wine Consumtpion
  18. 18. Wine consumptionWine consumption and needsThe Pyramid of needs (Maslow) Physiological, security, social, self- • Needs esteem, Self-actualization – Physiological needs (convenience products) – High needs (specialty products) • Pleasure (emotions) • Re-assurance (value for money) • Self-esteem (distinction) • Self-fulfillment (gratification, conspicuous consumption) • Belongings (status)
  19. 19. Wine consumptionWine consumption and informationWine as experience good • Search goods – Qualitative aspects can be measured and appreciated before the consumption. • Experience goods – Qualitative aspects that cannot be checked before buying the product. The quality can actually be appreciate after consumption only (Philip Nelson, 1970) • Credence goods – Aspects of a good which can never be verified by the consumer regardless the consumption of the good
  20. 20. Wine consumption Wine consumption and information Components of the wine• Search components – Quality aspects – Tools: wine guide, wine experts, seller’s advices, wine tasting• Experience components – Quality aspects – Tools: external cues associated with tangible elements (vineyard, vintage, price, packaging, marketing channel) e no tangible ones (brand)• Credence components – Geographical denominations, wine made from organic grapes, technologies employed in viticulture and/or enology – Tools: certifications, traceability• Reputation of a wine
  21. 21. Wine consumption Wine consumption and information The knowledge and wine consumer choices Choice Risk Knowledge Experience Criteria• Conduct extensive solvers – Purchasing new wines, low knowledge high low limitated few and experience, no choice criteria – The risk of making mistakes is high• Behavior solvers limited – The customer has a medium knowledge even if limited to some products – The customer is no able to understand if the brand will satisfy or not its choice criteria• Behavior Routine solvers – The customer has hierarchical personal preferences and he makes his decisions following criteria established over time low high high many – The customer has clear expectations on specific brands Fonte: Mattiacci, 2011
  22. 22. Strategic AspectsStrategic Aspects
  23. 23. Strategic Aspects 25,0 4,0CHANGES IN 3,5 Quantità (milioni ettolitri) 20,0 3,0 Prezzo (euro/litro) Valore (mldi euro)CONSUMPTIONS AND 15,0 2,5 2,0 10,0CONSUMER 1,5 1,0 5,0 0,5PREFERENCES 0,0 0,0 Q.tà Valore Prezzo- Fast changes on 900 800 Germania international market Esportazioni (milioni euro) 700 Usa 600 500- Strong growth of Italian 400 300 UK exports F 200 100 J CH CAN A NLS DK 0 RUS- Significant differences on -20,0 -10,0 -100 0,0 10,0 20,0 30,0 40,0 50,0 -200 markets (red, white and Variazione media annua (in % 2001-2004) 1.000 rosè wines, price range) Usa 900 800 Germania- Growth of sparkling wines Esportazioni (milioni euro) 700 600 500 UK- Growth of large scale 400 300 retail CAN 200 CH NL Japan 100 DK F S A RUS 0 -14,0 -12,0 -10,0 -8,0 -6,0 -4,0 -2,0 -100 0,0 2,0 4,0 6,0 Variazione media annua (in % 2005-2009)
  24. 24. Strategic AspectsSTRATEGIC ASPECTSDIFFERENTIATION APPROACH- High variety of wine firms- Competitive positioning LOW PRICE MEDIUM PRICE HIGH PRICE MARKET MARKET MARKET Mass Market, Differentiated Visibility on high volumes products markets Fonte: Bruni, 2011
  25. 25. Strategic AspectsSTRATEGIC ASPECTSDIFFERENTIATION APPROACH- Customers (target)- Products (wine) All market MARKETING MARKETING DIFFERENTIATED NOT DIFFERENTIATED (product extension, TARGET (mass market) high volumes) GEOGRAPHIC NICHE MARKETING MARKETING (low volumes) One (close winery) segment Low High Level of differentiation
  26. 26. ChallengesFuture Challenges
  27. 27. ChallengesCOMPETITIVENESS AND CREATING VALUEPRODUCT- Quality and customers- Products (wines)MARKETING E COMMUNICATION- Brand, label, bottle, etc.; promotion on markets and marketingchannelsRESOURCES AVAILABLE- Economic/financial resources, management- Raw material (grapes)COSTS- Production- Transportation and logistics- Ageing processes- Scale/scope economies
  28. 28. ChallengesQUANTITATIVE AND QUALITATIVE GROWTHLOOKING FOR MARKETS AS TARGET- Customers- Countries- Marketing channelsKEY ELEMENTS: CHANGE, POSITIONING, COSTSDEFINING STRATEGIC PRIORITIES- Push strategies (distributors, es. large scale retail)- Pull strategies (final consumers)KEY ELEMENTS: MINIMUM SIZECUSTOMER SATISFACTION E CUSTOMER EDUCATION- New models of consumption (enotourism, wine bar, etc.)- New approaches to consumption (sensory marketing,neuromarketing)

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