Screwcap presentation
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Results of a study conducted for final year paper in Innovation and Entrepreneurship, Victoria University of Wellington Business School, MBA. Much of the primary information came from several sources: Statistics New Zealand, Michael Brackjovich, wine industry veteran and the driving force behind creating the climate and demand for change amongst New Zealand winemakers, Corporate Direct Wines (now called Winesale.co.nz after being sold to DFS) and other trade sources including Eurowine and web-based research. The paper earned an A+ grade, and several sample bottle of wine were consumed during the original presentation to industry judges from HSBC and Tradenz. Images are not owned by me. Phil Wollerman, MBA
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Screwcap presentation
- 1. New Zealand Wine: The Case For Screw Caps A presentation to the Board, New Zealand Trade and Enterprise 9th June, 2006 Presented by: Phil Wollerman
- 2. Why are we Here? …To find out how a bunch of New Zealand winemakers overcame 250 years of tradition to screw the New Zealand market, and take their ideas to the world!
- 3. What’s the Story? • Problem • Challenge • Innovation • Strategy • Result • The future
- 4. The Problem Cork costs! • Quality – Cork taint – Wine oxidisation – Recognition – Awards – Variation • Returns – Freight – Administration • Reputation – Distributors – Customers
- 5. The Challenge Introduce a viable alternative to cork and overcome 250 years of tradition! • Gain industry acceptance – Overcome reluctance • Shift consumer perception – Cheap & nasty association – Loss of romance
- 6. The Innovation Adding a new twist to a vintage industry! • Stelvin caps – Proven technology • Significant advantages – Non-taint – Consistent quality – Reduced returns
- 7. The Strategy Changing industry opinion! • Forming a significant collective – Reaching critical mass – Premium winemakers • Key influencers – The trade – Wine critics – Media – Customers
- 8. The Result Getting some closure. • An innovation that adds value and reduces cost – An idea that’s time has come – Demonstrated by public acceptance • Consistent quality – Customer acceptance – Fewer returns = reduced costs – Less winemaker frustration
- 9. The Future World domination? – corks go the way of VHS and steamships • New Zealand as a leader – Knowledge – Promotional value • France – the final frontier? – Grand cru – Customer preference?
- 10. Conclusions The adaptation of the screw cap for wine was the innovation… - but the adoption and diffusion of the concept was driven by entrepreneurial factors • Leadership – Clear vision clearly communicated – Drawing on networks – Spreading risk • Motivation – Passion for quality – Drive and persistance
- 11. a toast! “Some weasel’s stolen the cork from my lunch!” W. C Fields
Editor's Notes
- Introductions. Give report. Smile. Professional – selling IDEA of Case Study to THEM! Move on
- The story of this struggle to introduce a simple product innovation that had significant consumer benefits. Benefits were outweighed initially by consumer acceptance difficulty – and had little impact wordwide New Zealanders took risk and contributed to world wide movement – cooperation, leadership and kiwi can-do spirit mixed with enrepreneurial attitude - It is an effective example of both industry cooperation and entrepreneurial marketing
- Winemakers had always had the problem of cork taint and oxidation spoilage – since 1600 when oily rags used. Wine became transportable, and the benefits of bottle aging discovered. Oeneology ever since – traditions built around cork, some spoiling is accepted as romantic… PROBLEM Around 10% return rates represent significant cost Challenge - There are moves to find alternatives, INNOVATION The Stelvin scew cap closure is ready to be used following extensive testing on wines in Swiss and France, and most recently commercial release buy Clare Valley – innovation looking for an application strtegy Strategy – before it can be adopted, need industry acceotance - key strategic aim + plus public opiinion RESULT Phenomenal result 90% except sparkling – great intl publicity FUTURE - NZ seen as a model for rest of civilised world (where wine is drunk) Recent first bottlings Grand Cru
- 5- 15% failure rate with corks is somehow accepted when we would n’t dream of accepting similar failure rtates for jet engines or safety belts! Costs associated with failure high Variation in corks diffucult to deal with poste ante Some recoverable – recall brako shipment to states and back and freight costs Can harm reputation – customers do not repurchase that wine, distributors may apportion blame to winemaker Inconsistent quality runs risk at awards competition which are so important for sales No wonder frustration!
- Getting the industry to take a risk - Changing consumer attitudes – quite a steep climb
- The proven technology Stelvin trademark but others too Liner two part with polyethlene and tin laminate. Seals on rim. Bottles should be cheaper, but supply and demand Selected as most appropriate by Kiwis
- Strategy- Streamline business processes and reduce significant amount of cost by using the 112 year old screw cap idea. Industry would introduce but reluctant to risk public perception: Aussies had shown effectiveness of going it alone, but failed to go in boots n all – kiwis learn and understand need too take a greater risk with a complete vintage to gain acceptance by default. Better to create customer acceptance based on benefits – significant for both industry and buyer. Key to effective introduction recognised as industry acceptance… Key to industry acceptance is to dispel concerns about public acceptance…. PR campaign to educate industry and buyers based on benefits Research Collaborate Collective/coalition – getting sponsors senior/premium winemakers Recognition Adoption by industry AWARDS – getting key premium winemakers almost assures awards – Awards raise profile and gain acceptance Apparent endorsment/vindication – Halo effect Actively promote off the awards PR campaign to gain customer approval – includes tastings for the wine press/critics Customer education – leaflets, instore demos. Benefits focus Acceptance Worldwide movement stimulated by New zealand?
- Awards generate major publicity, educating the buying public “scew caps are now ok”. Demand outstrips supply for 5 months Restaurants – initial concerns dispelled Proving the acceptability of the screw cap with awards – adds to perceived value Industry moved as a soon as acceptance was clear – after some major risk takers took the plunge – as advantages are clear. Just forming a group and doing it anyway may have been an initial strategy, but the inclusion of premium winemakers in the group ensured awards were won and the innovation accepted. While cost reduction is secondary to the goal of consistent quality, consistent quality is the means by which the cost reductions are achieved… An additional benefit is international publicity for NZ wines far in excess of international market share, and positioning NZ as innovative and quality focused
- Spreading throughout the world – NZ as a model Acceptable in US, Britian, Aust. Less so in Germany, Italy France. Like you’d expect really! Domaine des Baumard in Anjou, recently selected by Robert Parker as one of only three Loire producers to qualify for inclusion in his book The World's Greatest Wine Estates, is the first top quality Loire producer to opt for screwcaps. Domain Lachroche – Grand cru The French may be predicted to be the last to accept the change from tradiiton – but already some premium producers are coming on board New classier stelvin may help Americans learning quickly, some napa valley wineries already.
- Spreading throughout the world – NZ as a model Acceptable in US, Britian, Aust. Less so in Germany, Italy France. Like you’d expect really! Domaine des Baumard in Anjou, recently selected by Robert Parker as one of only three Loire producers to qualify for inclusion in his book The World's Greatest Wine Estates, is the first top quality Loire producer to opt for screwcaps. Domain Lachroche – Grand cru The French may be predicted to be the last to accept the change from tradiiton – but already some premium producers are coming on board New classier stelvin may help Americans learning quickly, some napa valley wineries already.
- The Stelvin caps are on me!