Brand Flakes

06 May 2005 By db staff writer

d=”standfirst”>Elen Lewis explores brand value.

You know a brand has made it when it gets name checked in popular culture. So in 2002, when a character called Chardonnay Lane-Pascoe starred in Footballers’ Wives, the grape’s brand was sealed in society’s consciousness. Indeed, since then 52 babies have been named after this popular grape variety.

However, a wine brand has never appeared in the annual listing of the Top 100 global brands by Interbrand. There are plenty of alcohol brands there: Budweiser is ranked at 24, with a brand value of US$11.8m, though it’s a minnow compared to the most valuable brand, CocaCola, which is worth US$67.4bn. The only other drinks brands on the list are Smirnoff, Moe?t & Chandon and Heineken.

There is an opportunity for more branding in the fragmented wine market, with the world’s five biggest producers accounting for less than 8% of international sales. In the US, the world’s largest wine market, there are around 6,500 different wine brands. But this very fragmentation can appear intimidating to consumers. 

While most of the wine industry has laboured to satisfy the wine buff’s desire to know which side of the hill the grapes are grown on, the mass market simply seeks a recognisable brand name. That is why the top 11 wine brands in the UK, including Blossom Hill, Banrock Station and Jacob’s Creek, account for more than a quarter of the wine we drink.

Jeremy Bullmore, an advertising specialist, uses the following anecdote to describe the power of branding to non-believers. Imagine you are in a foreign country. You’ve got a sore throat and are desperately scanning shelves in a local pharmacy, looking for something familiar. There are endless alien packs, then your heart leaps. You spot a packet of Strepsils – all will be well.

For a bewildered consumer confronted with supermarket shelves of similar-looking wines, brands can be just  as comforting. Wine purchasing decisions are usually made at the point of sale, and this is why distinctive labelling and easy-to-understand information is crucial. 

Life has become too complicated for consumers, and good brands can serve as a beam of light to guide them through the clutter. Brands have a name so you can always identify them; they work. In addition, they are consistent, so you can always return to them. Brands allow us to delegate decisions to names we know and trust.

A vast choice of products is not restricted to the wine industry. A book called Complicated Lives discovered 22 types of dental floss in one UK pharmacy, 22 microwaves in a French supermarket and eight kinds of orange juice under the Tropicana brand alone. There is still room for many more brands in the wine sector.

Building brands is important, not least because they can make companies a lot of money. The McDonald’s brand accounts for 70% of shareholder value, while the Coca-Cola brand accounts for 51% of its owner’s stock market value. Niall Fitzgerald, the former CEO of Unilever which owns brands such as Dove, Persil and Flora margarine, explains the power of brands succinctly: “Brands mean that people will cheerfully and voluntarily pay a little more for Persil.” 

This is where wine brands are failing. Good branding enables products to break out of the unprofitable cycle of promotions. What sort of value are you placing on your brand if its price is permanently slashed? This strategy may be increasing wine sales, but it’s not growing your brand’s value.

Part of the problem with wine is its rich heritage, which only makes it more complicated. Ask someone, what their favourite wine brand is, and they’re likely to answer “Chardonnay” or “Rioja”. This is where the recognition lies. 

For those who care about the individuality of wine, this is bad news. Consider the exception of Champagne’s continuing success in the French wine market. Is this not partly because the Champagne sector is heavily branded and not weighed down with detailed product information on its labels?

There are still huge opportunities for brands in this market, and consumers are easily influenced.

It is easy to be scathing about the mass market, but brands such as Diageo’s Blossom Hill and Piat D’Or have demystified the category and made wine more accessible. Wine experts may not like it, but branded wines are providing an entry point to the sector for nervous consumers. And some of these people will move on from safe, easy options to the more interesting stuff.

Elen Lewis is editor of Brand Strategy. She has just written her first book, Great Ikea, A Brand for all the People