EMERGING BRANDS: Capturing the zeitgeist

What do consumers look for in a brand on the ever-changing shelves of our supermarkets and independents? Rupert Millar asks who are today’s most wanteds and why.

Tastes, like hairstyles or Mick Jagger’s girlfriends, come and go as fashions change. And, after years of being the New World’s junior partners, the fashion for Chile and Argentina seems to be bringing them out from behind the shadow of Australia and California, capitalising on their ability to produce good quality wines across every price category, particularly at entry level.

The latest Nielsen figures show that Chilean wine is now worth £457 million in the off-trade, up 4% in value, making it the fourth largest category in the UK market.

One brand in particular has shown staggering growth, jumping from 141st, in the top 100 MAT brands by value in the  off-trade last year, to second this year. Viña San Pedro Tarapacá is now the number one wine brand on the list and has recorded a year-on-year growth rate of 167%.

It is now thought to have a 0.7% market share in the UK multiple grocer sector, which has raised it into the top 20 supermarket wine brands.

Tim North, UK director of Les Grands Chais de France, says: “Chile is certainly doing well, as the wines offer such great value for money. The quality of San Pedro’s wines is superb. We have succeeded in placing them in the big retailers in such a way as to get people to try them. As a result of their quality, consumers choose to come back and buy them again and again.”

What is more, there are other Chilean brands that have been recording similar results. Viña Maipo and Concha y Toro have all climbed up the table, by seven places in one instance and 71 places in another.

Another success story from the other side of the Andes is Viñalba, a joint venture between Buckingham Schenk and Domaine Vistalba in Mendoza.

Since launching with Majestic in 2008 it has been consistently successful. Sales figures jumped from 3,000 six-bottle cases sold in 2008 to 24,000 last year and the forecast for 2010 is somewhere in the region of 52,000. Jon Pepper, commercial director at Buckingham Schenk, explains the wine’s appeal: “A lot of its success is down to Hervé Fabre’s winemaking style. He’s very good at harnessing the power and fruit Argentina is known for, coupled with his classic French winemaking background.”

While being approachable in style, Pepper also notes that its pricing, in the £7 to £9 category, places the brand in a good position for those consumers who are looking to trade up as their taste in New World wine evolves.

“It’s at that premium end of the mass market but it’s a more serious, elegant and complex wine that still appeals to New World wine drinkers,” he continues.

“As the New World matures and becomes less ‘new’, people will look to find more serious wines. There is a whole generation of wine drinkers who were brought in on the fruit and approachability of New World wine but whose palates and possibly wallets are maturing.”

Testament to South America’s ever-growing place in the market are the (perhaps grudging) acknowledgments from Australian and European producers regarding the continents’ achievements. One admits that Chile in particular, “is doing a fantastic job”.

Australia not down for the count

The Antipodes remain far from cowed by the Andean surge; McGuigan in particular continues to expand impressively. Its 68% growth in the last year made it the UK’s third fastest-growing wine brand.

Paul Schaafsma, general manager for Australian Vintage in the UK and Europe, says that cries of an Australian wine holocaust are “complete rubbish”. He argues that like many successful wine regions before, the time has come for Australia to raise its game.

“There has been a little bit of complacency as producers began to think they could just bang out the same stuff year after year. What we need to do again is  start asking ourselves ‘what is it UK consumers are looking for?’ The key to our stand-out performance is down to a number of factors,” he explains.

“We are continually evolving our wine styles, ensuring they are appropriate for the demands of the UK consumer. We’ve supported this approach by introducing innovative marketing initiatives, breaking new ground for the wine industry. In addition, we’ve developed long-term strategic partnerships with key customers and retailers, giving the brand a strong and diverse platform for growth.”

As ever it is at entry level that the fight is fiercest and Schaafsma states that trying to judge success solely on sales of high-end wines is an ultimately futile yardstick.

“You have to keep it all relevant, so what if you have a 5% increase in sales for wines over £8 if that category only accounts for 20% of your production.

“You need to get your bread and butter right. What we’ve tried to do is over deliver in the £5 to £6 category. That’s where it all happens and you need to deliver in that area and deliver the wines people want.”

In conclusion, he predicts continued success for both McGuigan and Australia in general: “We are working through the challenges and it’s clear that UK consumers still love Australian wine. The quality of the fruit is really starting to shine and I believe there’s a lot more exciting stuff to come out of Australia.”

Europe reloaded

With all the reports of plummeting sales and even the recent downfall of Chamarré, it seems odd that any French wine could be showing signs of upward growth at the moment. However, North suggests that when packaged and marketed effectively, it is very easy to get people to trade up to the classic French appellations.

“We’re seeing something of a resurgence for traditional French wines. They are coming back a little bit, especially when they’re promoted the right way,” he says.

“The important thing is to present appellation wine in a modern, branded way to consumers who have become accustomed to buying on promotion. Hence appellations such as those from the Languedoc and Burgundy, where there is an effective branded presence, are now showing growth.”

North singles out one brand in particular that is using these principles to its advantage: “The Calvet brand is growing at 77% year on year, and is the leading appellation brand in the UK,” he announces.

“Despite the growth of the New World, many consumers still appreciate traditional appellations. They are also prepared to pay a little more for such wines. Because France has a different appeal, you can actually use it to trade consumers up to a higher price.”
Two French regions in particular that are still buoyant are Languedoc Roussillon and South-west France, which have shown 20% and 64% growth in the last year respectively.

One company building on that interest is Gérard Bertrand. Alongside a range of classic southern French varietals, he is using the brand’s name and reputation to introduce people to the Languedoc’s appellations from Minervois to Corbières and Fitou via Saint Chinian to name a few.

Tim Smith, UK export manager for Gérard Bertrand, cautions against hopes of runaway success straightaway. Despite what appears to be a healthy consumer appetite for the region’s wines, they will take some explaining.

“The consumer is still buying on price first and on varietal second,” he says. “There is always a request (from retailers) for grape, varieties and percentages, never a word about terroir. The appellations of the Languedoc Roussillon need to be led by a serious, quality-minded market leader and this is the role that Gérard Bertrand is assuming – the consumer will buy into Gérard Bertrand first, the appellation second.”

Meanwhile, from a Spanish perspective Catherine Monahan, managing director of Clink! Wines, talks of the growing volumes of Spanish brand La Capilla being shipped and new listings won. Already this year the company has shipped over 50,000 nine-litre cases and forecast a total of 200,000 cases by the end of the year.

“Everyone seems to want Spain right now,” she says. “From La Mancha, we are finding that some of the Tempranillos rival that of Rioja, but at a better price. The name, packaging, story and wines seem to resonate with consumers and buyers.”

World Cup love-in

However, with a measured narrowing of the eyes we have to ask ourselves, “have these brands started to emerge at just the wrong moment?” Not merely because of the prospect of double-dip recessions or unsteady markets and poor on-trade performances but rather the whims of the consumer.

Will this summer’s World Cup drag enough people away from their television sets to make South Africa the next big thing, pulling the rug out from underneath South America’s feet at the last moment?

There are signs that consumers are more than just flirting with South Africa. Earlier this year, volume sales figures in the UK overtook those of France. Arniston Bay and First Cape have significantly grown their off-trade sales to make them the fourth and fifth largest wine brands behind the likes of McGuigan and Viña San Pedro Tarapacá.

Jo Wehring, UK market manager at Wines of South Africa, believes that while the exposure from the World Cup will be short, it’s a powerfully intense period in which South Africa can showcase its wines like no other.

“The uplift from the World Cup is relatively short lived and once its over that’s it, but what it has allowed South Africa to do is put its wine in front of people who don’t or wouldn’t normally drink South African wine. There is a long-term benefit to it and the exposure will be felt beyond the event.”

Wehring adds that another advantage is the chance to channel all the exposure into the energy that was brewing before the countdown to the competition. “It’s created an additional opportunity for South African wine and what we’ve seen are retailers looking to promote South Africa during the World Cup.

"It’s a huge opportunity for impact on sales of our wine in 2010. You have a chance to create a very visual story around South Africa and that’s equally important in terms of the long-term benefits for the wine. We’ve seen sales of South African wine grow right across the category and while the brands are crucial for reaching consumers we are very excited at seeing interest at what South Africa can do at such a premium level as well.”

In the wake of the greatest show on Earth it will be interesting to see if all the exposure translates into meaningful and lasting
sales figures or if it was all just a fleeting holiday romance.

In Monahan’s opinion: “Wine is not simply just about place and the winemaker, it’s about stories, about being memorable and about selling a product that people want to buy with their eyes and then come back and buy because it’s damn good for the money.”

It is a view that very probably explains European wine’s continued popularity and the ever-burgeoning popularity of New World wines over the years.

Ultimately, though, while price is undeniably important when choosing a wine, some will choose French when others will choose Chilean. Trends are always more than the sum of their parts, a holiday here or a friend from that country there influences our decisions even if only subconsciously. Varietals, countries, packaging, prices and style coupled with familiarity and marketing all play their part.  

The entry-level category is as competitive now as it ever was and will be, and what all those currently riding the tide of popularity need to remember is that what makes their brand appealing today will make someone else’s tomorrow if they appear to do it better.

Rupert Millar, July 2010