Thursday, April 30, 2009

Choosing Wine & Sales

Brad Post:

After reading my brothers remarks on restaurant patron wine purchase choices I began to do some research to see how people go about selecting a wine and reviewed current sales trends. The source of my material comes from Wine Business Monthly (April & May issues).

Wine sales over the past year (and the past 13 weeks - ending 2/7/09), according to the Nielson Company, and reported by Rachel Nichols (WBM, p. 71, May, 2009) indicates overall wine sales are up by 5 percent.

Any guesses to the top selling varietals? The dollar volume for the past 52 weeks follow: #1 Chardonnay - $1.7 billion, #2 Cab Sauv. - $1.18 billion, #3 Merlot - $898 million, #4 Pinot Grigio/Gris - $649 million.

The fastest growing segment over the past year are: #1 Pinot Noir (13.2%), #2 Fume/Sauvignon Blanc (10.4%), and #3 Pinot Grigio/Gris (9.7%). It is interesting to note, despite such a large market share, that Chardonnay and Cabernet Sauvignon are still making headway reporting moderate growth over the same period: 4.1% and 7.7% respectively.

That is a lot of wine being purchased - Billions of dollars! So, how do winemakers go about marketing their product so it moves? What do potential customers key-in on before they buy that one bottle (or case)? Using experimental research, Larry Lockshin, professor of Wine Marketing at the University of South Australia (WBM, p. 64-67, Apr. 2009), reported two studies. The first being critical of traditional market research methodologies, which simply asks customers to pick their favorite attributes of a wine (e.g., bottle design, label, etc.), and in this study he created a simulation and manipulated the label colors and styles. He found label style and colors were predictive of purchase behavior - but varied by respondents.

Study 2. In this study, he experimental manipulated several independent variables (e.g., bottle size, label design, color, price, ratings, awards, alcohol level, and closure type) to understand their effect on the dependent variable: choice. Biggest purchase predictors? 1) ratings (0-5 stars), 2) brand, 3) price, 4) medals and trophies, 5) price discounts, 6) alcohol level, 7) region, and 8) closure type. For online purchases price seems to be even more important!

Take home message to us: get Robert Parker to highly evaluate our wines, build a strong brand image, and price it right!

Happy tastings!

1 comment:

  1. I have some thoughts regarding on-line purchasing and disagree, only slightly, with the thought that price is the most important variable.

    It is my opinion that TRUST in the on-line seller is the most important variable. If one buys from a vendor who fails to deliver the product, the price you pay is of little consequence.

    This explains why eBay tracks the customer rating of buyers and sellers: it provides insight as to the reliability of the vendor.

    Given that one trusts all of the on-line sales locations, then I agree that price is the most important variable.