WSET: Learning power

The WSET’s Business and Commercial Knowledge Course provides an informative, up-to-date and challenging insight into the issues facing the trade today, discovers Alan Lodge.

Buying teams and sales professionals working in the UK wine industry are seated at a crossroads, somewhere between focusing on profits for their own business and generating a positive future for the embattled wine trade across the country.

It was against this polarised backdrop that up-and-coming wine industry professionals gathered in Maidenhead for the second Wine and Spirit Education Trust Business and Commercial Knowledge Course (BACK) in April, with industry big guns seeking to pass on their wisdom and inspire the next generation to look beyond the bottom line.

A stellar panel led the students – including db – on an intense, insightful and highly demanding three-day programme, which aimed to enhance their understanding of the major commercial issues facing the trade and ensure that any skills gaps that might exist among upcoming trade professionals were plugged.

With such a packed schedule of seminars, there was little time for students to take a breather and gather their thoughts – perhaps quite apt considering the nature of the modern business environment.

Top-notch teachers

The intensity of the course was matched by that of the teaching faculty, among them wine commentator Robert Joseph, Tesco category director of BWS Dan Jago, wine consultant Angela Mount, Lulie Halstead of Wine Intelligence, Constellation’s senior vice president of sales and marketing James Lousada, Spar’s Laura Jewell MW, industry consultant Mike Paul and Justin Howard-Sneyd MW, now of Direct Wines.

Halstead led students on an insightful branding exercise called The Chocolate Challenge. Groups were presented with a series of chocolate bars ranging from top-end to bottom-end products and were asked to order them according to how the groups believed they were priced, based upon our perceptions made from looking at the packaging.

The exercise served to not only make students rather hungry, but also to appreciate the raft of signifiers and cues present in the packaging of any product.

“The very same principles applied in this exercise can be applied to wine,” said Halstead. “We have thought about it from the point of view of the consumer rather than our own businesses and this helps us understand what factors influence them when picking a wine off the shelf.”

Marketing and media

The overriding message from the branding exercises was that everything aside from actually making and selling the wine is marketing, be it the car park out the front of your office or the attire of your sales people, everything is reflective of your brand – particularly the packaging.

Discussions followed on the importance of embracing 21st century media such as social networking sites to reach as many people as possible. However, attention was drawn to the fact that the “voice” on sites such as Twitter and Facebook must remain human rather than becoming corporate, as people are what social media is all about.

Lousada led the group on a discussion entitled “Why would you not choose the UK market – a global picture”, in which the complexities and difficulties wine companies encounter in the British market were laid bare.

“For brand owners and producers the UK retail scene and the power the major retailers have is depressing,” he told the students.

He compared the UK system to others around the world, picking out the example of the three-tier distribution system in operation in the US, whereby producers deal direct with the wholesalers rather than with the retailers, as being a far more desirable system to that which operates over here, as it serves to protect margins for producers.

He also spoke of the Canadian system which sees prices set by a Liquor Board, thus reducing the need for promotions and keeping margins stable.

Lousada warned over the future of Western Europe, highlighting how Holland, Denmark and Belgium are becoming more like the UK with each passing year, as continued retailer consolidation and thus increased retailer power is bringing declining returns and increased promotional activity to the region.

Refusing to end on a down note, however, Lousada reassured students that they were not necessarily heading for a future of toil and hardship in the UK market. “The UK is still a vibrant wine market and is showing growth,” he said. “We are still able to make money out of it if we do things right.”

Modernising the market

The closing discussion, featuring Jago, Howard-Sneyd, Joseph and Paul, saw the panel forthrightly express their views on the state of the market in the UK, and some might have been surprised by the openness of their opinions.

Jago led the way, declaring: “Tomorrow’s perfect storm is here. A whole bunch of people have decided alcohol is a bad thing, just like they did with tobacco, which is unfair because alcohol does not necessarily kill you if you drink responsibly. Health is one of the biggest items on the government’s agenda, though, and we can expect further pressures to be put on the industry as a result.

“Alcohol is a drug and a lot of people are telling us so. As an industry we must make sure we do not abuse our responsibility and help people to understand that responsible consumption is more important than consumption itself.”

He also went on to explain how the thinking of regular consumers does not match the ideals of those wishing to make money in the wine trade. “Customers have no reason to pay more money for a pricier bottle of wine when you are also offering them cheap ones.

"We need to find a way of explaining to consumers why they should pay more for a bottle of wine. It is frustrating to hear people say that in order to make more money all we need to do is put up the price of a bottle, because many customers would simply stop buying it.”

Joseph used the discussion to call for modernisation in the wine industry, both in the mindset of people operating within at and in the way business is conducted.

“150 years ago a piece of music could only be heard by standing there listening to someone playing it,” he said. “It then only existed in your memory. Then someone invented the record, then the LP, then the CD, then the MP3. The way we enjoy music has changed hugely in the last 150 years, while wine has stood still and we argue over issues such as whether screwcap is better than cork.

“The challenge for us is to think how we should present wine to consumers in a way that tells them the right message.”

Paul spoke of the vital role played by retailers, particularly in moving the industry forward in an eco-friendly manner. “Most innovation in wine is retailer-led,” he said. “There is no other industry where this can be deemed the case.

“The UK is way ahead with screwcaps, purely because the likes of Tesco and other retailers adopted them into their ranges. The glass bottle should be phased out over the next 10 years and is something we should all be working towards, but it will not happen without retailer support. If Tesco adopts PET, which in my opinion has 100 times the potential of Tetra, then the rest will probably follow.”

Howard-Sneyd, who recently left Waitrose to take up a new position with Direct Wines, spoke of the need to embrace technology to make the industry more relevant and accessible for the every-day consumer.

“What we need is product innovation, new stories to tell people,” he said. “What is exciting is how you communicate information to customers through interactive things like mobile phone Apps. Simply having a new variety in your range is no longer exciting, you have to make it so.”

The strain was visible on the faces of nearly all the students by the time we filled out of the conference centre for the final time.

With ideas, insight and enhanced understanding of the many complexities of the wine industry knocking around their heads, the only hope was that the three-day info-fest will be implemented once they returned to their respective offices.

Alan Lodge, June 2010