The document discusses how the wine industry is focused on serving people rather than just selling wine. It notes that the industry has undergone significant changes driven by globalization, changing demographics, and consumption patterns. The wine market has expanded to include a "long tail" of many more brands beyond the top ones. Keeping pace with changes requires understanding shifting consumer behaviors and preferences that are influenced by a variety of social and environmental factors.

1. Wine is a people business
(some thoughts based on Australian experience)
Jim Fortune
jfortune@bigpond.net.au
1

2. ..we are not in the wine business
serving people, but in the people
business serving wine
(to paraphrase Howard Schultz, Starbucks)
Culture
Commodities Products Services Experiences
?
$.10 $.25 $1.00 $4.50 $???

3. Nuts & bolts
• something about the scale
of Australian wine
• long tail
• about disruption in markets
• about the wine market
• about people
• about changes

4. 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

5. Which one is your customer?

6. A disruptive world
..incumbents prevail because they have the motivation
to protect their current business and the resources to
fight for it
…good companies are supposed to—cater to their
most profitable customers and focus investments
where profit margins are most attractive—and thus
they leave themselves open for disruptive technologies
to bury them.
…disruptive innovations—which are typically
cheaper, simpler to use versions of existing products
that target low-end or entirely new customers—
emerge, established companies are paralysed.
After Christensen (1997), Innovators Dilemma

7. 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
47
20
114
60
Impact data, 2005

8. Long tail ‐ a real feature of the wine
market
• democratise the tools of production
• democratise the tools of distribution
• connect supply and demand
Anderson, C. (2006) The Long Tail: How endless choice is
creating unlimited demand

9. Resource changes
– the tools of production

10. Distribution changes

11. Help! Matching supply & demand

12. What information or data do I want as
a wine consumer?
breadth of data
depth
of
relevant
data

13. Finding & relating
Google's share of all
searches was 64% in
March 2007

14. All sorts of networks
• incentives for provision of quality in markets where the
quality level may be unknown to consumers
• a complex network of social relationships is used by
consumers for transmitting/ receiving information about
quality

15. How likely is it that you would recommend
wine to a friend? (& some do both vis Sideways)
Pinot noir
Merlot

16. Australian Brand personalities
accessibility Brand Champions
Wines that appeal to a broad market base through
accessibility, ease of enjoyment and a strong premium brand
message about product and country.
innovation Generation Next
Wines driven by innovation (marketing; product; packaging)
that appeal to consumers who drink wine for social occasion
and/or peer group affinity, rather than for wine attribute.
interest Regional Heroes
Wines from somewhere rather than wines from anywhere -
adding and sustaining interest for consumers by fostering a
clear association between region and variety and/or style.
aspiration Landmark Australia
High-profile, aspirational wines built on inherent quality and
world-class reputation.
Australian Wine & Brandy Corporation 2007

17. Consumer occasion & brand mapping
– what does your distributor’s matrix
look like Luxury
Consumer Occasion
Special
Everyday
Basic
Pubs/Clubs Cafes Restaurant Fine Dining
Location
after Fine Wine Partners 2006

18. Where to now?
Influence & change

19. Change is constant for the wine
consumer
• Closures
• More wine by glass in restaurants
• Casks becoming understood in Europe & US
• PET bottles
• New varietals
• Imports fight back
• What’s happening with demographics

20. Wine and life experience
I am a hearty red
from the wide
open spaces of
Australia
I would like to join you
with your meal this
Look up flavonoids on
evening
Google,but while you wait
join me and think flavour
Nature Health Food
(Inspired from Leo Burnett)

21. Supermarkets
from Larson, Bradlow & Fader (2005)

22. Describing what you smell – when
did you last hear that it smelled like
a young or old riesling?

23. Simultaneous change – lines
between culture, craft and modernity

24. Environmental footprint- consumer
power or trade manipulation?

25. World arrivals – we move and learn
(Source: UNWTO World Tourism Barometer Volume 5, No 1, January 2007)
Arabian Travel Mart 2007

26. Internet is driving buyer behaviour
*Comparison Shopping Engine
From Channel Advisor 2007

27. Online shopping continues to grow –
wine delivered to your door
Virtual Surveys Ltd 2007

28. Opening doors – modern biology
and genetics (examples from all directions, this one rice
aroma)
• SOMETHING MISSING
• determined that fragrance in rice, a recessive trait, is
due to a large deletion (8bp) and 3 SNP’s in a gene on
chromosome 8 which encodes a putative betaine
aldehyde dehydrogenase 2 (BAD2)
• SOMETHING ACCUMULATES
• this leads to an accumulation of the principal fragrant
molecule, 2-acetyl-1-pyrroline
AIM = SIMPLE DIAGNOSTICS &
MEASUREMENT TOOLS
Louis M. T. Bradbury et al 2005

29. Australian food and beverage
exports by destination – sharing
experience
meat
Pacific
dairy
grains & flour
Europe
fruit & vegetables
seafood
Americas
wine
Asia other food &
beverages
US$b
0 2 4 6 8
ABARE, 2007

30. To conclude: people are fickle, fast
and fascinated
• globalisation
• changing demographics
• changing consumption patterns
• natural resource & environment
• regulation and activism
To keep pace, the wine sector needs to
work with change from all of these people
driven directions.

31. THANK YOU
Jim Fortune
jfortune@bigpond.net.au

32. 0
10000000
20000000
30000000
40000000
50000000
60000000
1
E&J Gallo
2
Constellation
3
The Wine Group
4
Bronco Wine Company
5
Fosters Wine Estates
6
Trinchero Family Estates
7
Brown Forman Wines
8
Diageo Chateau
9
Jackson Family Wines
St Michelle Wine Estates
Beam Wine Estates
F Korbel & Bros
Delicato Vineyards
1 million cases or more
Don Sebastiani & Sons
C Mondavi & Sons
Ironstone vineyards
J Lohr Vineyards & Wines
The Coppola Companies
Bogle Vineyards
Rodney Strong Vineyards
The Hess Collection
Precept Brands
San Antonio Winery
Top 30 US wine companies (2006)
Purple Wine Company
Domaine Chandon Winery
Rutherford Wine company
Castle Rock Winery
1 million – 285k cases
Wente Vineyards
Sebastiani Vineyards & Winery
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
585 Wine Partners
Wine Business Online Feb 2007

33. ACKNOWLEDGMENTS
• Ideas and thoughts tested on a range of patient
wine industry people and interested consumers
• Material and data acknowledged and sourced
mainly from web searches
• Images courtesy of web sites and more formal
open access material such as FLICKR and
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