DB CONFERENCE 2011: The customer is always right

21 April 2011 By Rupert Millar

“standfirst”>Everyone talks about being “closer to the consumer”, but how can companies turn theory into practice? Rupert Millar reports.

After the introductions, the first panel of the morning, comprising commentator and author Robert Joseph, brand strategy director at Interbrand, Manfred Abraham, and Jillian MacLean, founder of the Drake & Morgan Group, looked at identifying who these new consumers are – and what they want.

Robert Joseph

Joseph, presenting the findings of his firm DoILikeIt?, gave a spirited presentation, which first of all laid out the broad consensus among the trade that consumers today are better educated, they’re more interested in production and provenance, they want to know more, they like dry wines and they want lower alcohol. Drawing on his team’s survey results, Joseph first of all debunked a great many of these views.

“People know a bit more about wine than they used to,” he announced. “They are mostly not very interested in where it came from. They say they like it to be dry (but they’re lying) and they say they want it to be lower in alcohol (but they’re often lying).”

Joseph then ran through the chief complaints often mooted as the reasons why the wine trade isn’t doing better – unfair levels of excise duty, supermarket discounting and broadcasters not giving wine enough space and time – and suggested what could be done.

Counter to the arguments he noted: “We could have a much worse duty regime: if we shifted to an ad valorem system (as they have in Australia), premium wines would be penalised. The UK is actually a very good place to buy premium wine.”

He described discounting as “mad, bad and fundamentally unhealthy”, but raised the point that “discounting is not restricted to wine. Britain is a nation of discount junkies. The jam, the chicken, the Pringles… They’re all discounted. The trouble with wine is that we haven’t built enough brand equity to protect ourselves”.

People buy on colour first and then often look at what is discounted, he noted. “Many Gallo buyers don’t know they’re drinking Californian wine. Brand recognition is also weak, with many supermarket own brands having greater consumer awareness than longer-established market leaders.”

As for the lack of broadcasting: “There is no evidence that they (the consumers) want it.” He added that often now people take recommendations from friends and family, with not just wine columns going, but movie columns too. The solution, according to Joseph, is “not to give people an excuse to trade down and build real brand equity for individual brands, regions and countries”.

The solutions he proposed included packaging. He described the packaging of £3-4 wines in glass bottles as “crazy”. Cheap wine should be packaged in bag-in-box or PET bottles to give finer wine a more aspirational edge that it currently lacks.

Discounts should be used to trade consumers up, not down. “When you buy a bottle of XXX for £5 you get the chance to try a bottle of XXX reserve (genuine price £8) for £5. Instead of selling more of the same, give consumers the chance to try something a little better,” he suggested.

In terms of media, the trade needs to listen to consumers and give them what they want, not simply try to teach them what they should like. In conclusion, he advised that the trade saw consumers as an audience that needs to be kept entertained.

The difference between commodity and premium wine has to be made to make the latter a better-value option and it provides the chance to rebuild margins. And the trade has to learn to “listen, as well as speak”.

Manfred Abraham

Following Joseph was Abraham, who gave a lesson on what the world’s leading brands can teach the drinks industry. His first point was that brands today “cannot hide anything from consumers”. They’re media-savvy and talk among themselves, globally, instantly and online. Companies have to remain relevant and innovate often to stay abreast of developments.

He listed 10 components of what makes a brand strong: among them were clarity, authenticity, consistency and differentiation. “Apple,” he suggested, “is an outstanding example of a brand that is responsive.

"When the iPad came out people were asking, ‘how did Apple know what I wanted before I did?’.” In a similar vein, BlackBerry has given businessmen what they need and want with its smart phones.

"On the other hand, BP has seen its authenticity message slip from its 1998 promises to invest in energy other than petroleum and have an environmental-led approach, to last year’s Gulf of Mexico spill, bad safety records and possible investment in the Canada tar sands."

Abraham concluded by saying that success is only achieved by companies and brands that believe what they’re doing, act on their beliefs and do what they say. “Only if you are what you say will consumers trust you today,” he said.

Jillian MacLean

The last speaker on the panel, MacLean, gave an on-trade perspective to what the consumers of today are after. She began by saying that when the D&M group started, “although gastropubs were often doing a great job, many were over-priced and not giving consumers what they wanted, and other bars like All Bar One weren’t moving things on for the consumer”.

Before embarking on opening any new site, MacLean said she makes sure the bar in question will cater for its demographic. What will the consumers want from a venue? Are they City workers? Is there a high proportion of women? Around 35% of women like to pre-book places online, so give them that option.

Not that the group dispenses with its own innovation. Whether it be offering low-calorie cocktails, tasting and mixology sessions, miniature sharing menus or Enomatic machines, being pro-active and looking at up-coming trends is all important.

The D&M group frequently sends employees over to the US and Australia looking for innovation in the bar scenes in cities such as New York, San Francisco and Melbourne. MacLean said that what was particularly important was to “innovate and chat to consumers to find out what they want and change things whenever possible”.

The most important things to pursue, she continued, were “provenance, sustainability and value”.

Rupert Millar, April 2011