Wine Current Thoughts 2008

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Wine Current Thoughts 2008

  1. 1. Change and maturity in the Australian wine industry Dr Jim Fortune R&D Consultant, Adelaide jfortune@bigpond.net.au Friday, 28th March 2008 1
  2. 2. …and how did that first sip taste again? 2
  3. 3. My caveats Opinion is the lifeblood of conversation Inspired by Richard Huntington Predicting is difficult especially if it concerns the future. Anthony Burgmans, Chairman Unilever 2007 3
  4. 4. General order of presentation • a bit about diversity • a bit about the business and factorials • a bit about finding the consumer • a bit about the changing environment 4
  5. 5. Modelling & simulation; some WA & UWA branding & a great early learning experience for the wine value chain Stella / iThink MIDAS 5
  6. 6. About diversity 6
  7. 7. A quick note on markets – 100+ countries Domestic Export ~300m l <100m l ~450m l ~790m l 7
  8. 8. Scale influences grape and wine questions Markets National Catchment Property Block 8 (Graphics derived from Prof D Pannell)
  9. 9. The grapes we grow Australian grapes - bearing area by variety (ha); total about 165,000 ha 45000 Shiraz 40000 35000 Chardonnay 30000 Cabernet sauvignon 25000 Top 5 about 70% of production 20000 15000 Merlot 10000 Semillon 5000 0 9
  10. 10. A quick note on WA The grapes The wine Bearing Area  Yield (t) Avg yield  litres (million) as 9l cases (m) Millions of  (ha) (t/ha) consumers if  avg = 20l/hd 2007 12,200 68,252 5.9 46 5.2 2.3 2006 11,375 60,840 5.7 41 4.6 2.1 2005 11,747 79,948 7.2 54 6.0 2.7 2004 11,068 87,523 8.3 60 6.6 3.0 2003 10,730 62,683 6.3 43 4.7 2.1 10
  11. 11. Chardonnay – about 25% of fruit . . . . Giaconnda . . . . . . . . . . Stefano Lubiana Kooyong . . Pierro . CHARDONNAY Lilleydale . Leeuwin Estate . Ashbrook . Jacobs Creek . . Moondah Brook . . Bin 65 Bannockburn Eileen Hardy Hanwood Estate . . . . . Tyrells . . . . . . . . Tapanappa Tiers . . . 11 . After Brand Tao - Slideshare
  12. 12. Age of vines plus experience – an 8 year journey to best performance? About 106,000 ha planted from 1994 to 2005 Cumulative new plantings (ha) 100000 80000 60000 Known area 40000 Actual area 20000 0 12
  13. 13. Business & factorials 13
  14. 14. The wine business – how we would like to see it 10+ year adventure path $ I’m making I’ve got money a great idea. 14
  15. 15. The wine business – how it can be! 10+ year adventure path $ I’m NOT I’ve got making a great money idea. 15
  16. 16. The wine business for company X – a high order factorial Producing wine (about 10% of Finding consumers 2008 crush) • 156,000 tonnes • 35 varieties • 109 m litres wine • 33 areas • 12 m cases • 520 growers • 4.4 m consumers* • 3123 harvest units • for 104 unique wines * At 25 l/ person/yr 16
  17. 17. Changing analytical needs along the chain 17
  18. 18. Finding the consumer 18
  19. 19. Connecting with consumers… some market lessons 19
  20. 20. Consumer insight – who loves Australian wine number of Litres consumers (if all Export (million) l/person average) UK 274.3 17 16,136,734 US 228.2 10 22,816,171 rest 283.8 4 70,950,211 Domestic 437 28 15,607,143 Lots of people 125,510,259 20
  21. 21. Clamoring for space – EU retail Consumers: 160,000,000 Customers: 89,000,000 Outlets: 170,000 Supermarket formats: 600 Buying desks: 110 Manufacturers: 8,600 Semi-manufacturers: 80,000 Suppliers: 160,000 Farmers/producers: 3,200,000 21
  22. 22. Consumer Success Stories • Bottled water • Prepared salads • Ice cream • Yoghurts • Wine 22
  23. 23. These categories have • Been highly innovative • Tapped into changing lifestyles • Changed consumers’ views • Driven consumers upmarket • Generated profits 23
  24. 24. What Consumers Want Increasing interest in wine Value Flavor determinant Emotion 80% of your guests want: 20% of Experts want: • Pleasing wine flavors • Large number of selections • Range of price points • Rare finds, high scores • Approachable wine list • To be left alone with the list • Approachable servers 24
  25. 25. Some messages & data quite simple - can they still read your label? 25
  26. 26. The simple elegance of consumer education 26
  27. 27. Of frog wines & frowning watches: Semantic priming, perceptual fluency, and brand evaluation 27 (Title from: Labroo et al, J Consumer Research, 2008)
  28. 28. 5000 10000 15000 20000 25000 0 Jan-2001 Apr-2001 Jul-2001 Oct-2001 Jan-2002 Apr-2002 Jul-2002 Oct-2002 Jan-2003 Apr-2003 Jul-2003 Oct-2003 Jan-2004 Apr-2004 Jul-2004 Oct-2004 Jan-2005 Apr-2005 Jul-2005 Oct-2005 Jan-2006 Apr-2006 Jul-2006 Oct-2006 (sales in millions litres per month) Jan-2007 Apr-2007 Jul-2007 Oct-2007 The domestic consumer polygraph red (1000 l) white (1000 l) 28
  29. 29. The real market – US example where about 50% of sales = 28 brands ( = no of brands in each category; yellow marker in large group ~ 14%) 28 ~7000 20 47 60 114 29 Impact data, 2005
  30. 30. Segmentation… 30
  31. 31. Brand personalities… a bit more to learn and describe accessibility Brand Champions innovation Generation Next ∫ interest . Regional Heroes aspiration Landmark Australia AWBC 2007 31
  32. 32. The changing environment 32
  33. 33. Market change 33
  34. 34. Climate change 34 D.B. Lobell et al. (2006)
  35. 35. It works – consumer & commercial 35
  36. 36. Social change …the leader is the one who doesn’t drink (France 2004) 36
  37. 37. Wine as a unique beverage I am from the wide open spaces of Australia I would like to join you Look up flavonoids on with your meal Google Nature Health Food 37 (Inspired from Leo Burnett)
  38. 38. Conclusion – we might have a level of maturity but hang on for the continuing ride 38
  39. 39. THANK YOU Jim Fortune jfortune@bigpond.net.au 39

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