I’ve been thinking a bit about wine branding recently, and specifically about Champagne brands.
The large Champagne houses are skilled brand managers. It has taken a lot of hard work to get Champagne positioned the way it is now, occupying an elevated space in the wine world, and much of the work has been done by the marketing departments of the Grand Marques.
This work has also created a brand equity around Champagne itself. The name Champagne has been keenly protected globally by the lawyers of the CIVC, and now it’s rare to see it misused to describe sparkling wines generically.
This brand equity is shared by all Champagne producers. Just having the name ‘Champagne’ on a bottle guarantees an elevated price for the wine. You can find perfectly serviceable sparkling wine for £6 in the supermarkets, but the cheapest of cheap Champagnes costs at least £13.
Even though this is a remarkable difference, £13 is probably too cheap, and the existence of inexpensive Champagnes is a problem for the region, eroding brand equity.
But what about brand equity in specific producer names? How would you manage a Champagne brand, in order for it to rise the ranking system and become more profitable?
Let’s draw up a notional top-ten league table of prestigious Champagne brands, in terms of how consumers see them. I think it would look something like this:
- Dom Perignon
- Moët et Chandon
- Veuve Clicquot
- Perrier Jouët
How might someone lower down the table raise their perceived level of prestige?
Marketing is key. For a prestige Champagne, marketing spend has to be huge. Image is everything. For sure, product quality must be good. But relatively few of your consumers will be any good at telling the difference between one Champagne and another, once a certain level of quality is reached.
Size therefore matters. If you are to achieve brand recognition you need a big enough marketing spend to make yourself visible. Smaller Champagne houses may develop a loyal following, but they won’t have the resources to build a proper consumer-facing brand identity.
It is important for Champagne brands to be associated with the right events, personalities and places. You need to be in the right restaurants and clubs. Distribution needs to be carefully controlled. More on that later.
There is nothing that can destroy a brand as quickly as discounting. What you need to avoid, at all costs, is allowing retailers to use your brand in a price war, or as a footfall generator. You need to discourage them from featuring your brand in promotions at all. If there’s one thing that is toxic to a luxury brand, it is discounting/price promotion.
Of course, you cannot tell a retailer what price to sell your Champagne for. This is price fixing, and is strictly illegal. But you can decline to supply retailers who behave in this way. There’s no law against that.
This is where allocation comes in. Whatever level of supply you have, you need to have your brand strictly allocated. This may mean sitting on unsold stock for a period while you try to achieve ideal placement. For Champagne, this is not necessarily a problem, other than creating cash flow issues. Short term pain for long term gain. Building a prestige brand requires investment, and part of that investment is removing the pressure to sell, which in the long term could result in bad decisions being made for the brand’s long-term future.
Ideally, you should target wholesalers who only supply high quality restaurants and clubs. Give them generous allocations.
Sometimes it is best to decide not to make a sale, in order to protect your brand. You don’t want your wine to be in the wrong places, or to be associated with the wrong events or people. There’s shades here of Abercrombie’s offer to pay the producers of TOWIE (which I gather is a TV program based on young people in Essex) not to have the cast wear their clothing.
At Christmas, there was a Taittinger price war in the supermarkets. Asda sold it for £25 a bottle. Other supermarkets joined in with their own offers. Taittinger will never become a Bollinger while this sort of thing goes on. Does Taittinger need Asda?
If Champagne is to maintain its privileged position in the wine world, these are the sorts of things producers and brand owners must do. Above all, Champagne needs to move away from discount led promotion. As I tweeted yesterday, price promotion is the graveyard of brand equity.