Montana/Brancott: what are they doing with this brand?

Popped in to Asda today, and saw the Brancott Estate/Montana Estate Sauvignon Blanc at half price, just £4.24.

Montana Sauvignon Blanc was one of the strongest wine brands. It was the archetypal Marlborough Sauvignon Blanc, and in my time I have drunk quite a bit of it.

But Pernod Ricard decided they wanted to have a uniform name for the brand globally. In the USA this wine has been sold as Brancott (Montana is, of course, a US state), and so the decision was made to discard Montana in favour of Brancott.

So, on the shelf we have the Montana Sauvignon Blanc 2009 (the previous vintage) and the Brancott Sauvignon Blanc 2010 (the current vintage). And both are selling at half price.

I have two problems here. (1) The name change. (2) The pricing strategy.

The name change: why was this necessary? There’s considerable brand equity in ‘Montana’. This has taken a long time to build up. Consumers are likely to be confused. The new label bears both names, presumably in a bid to ease this transition. But it seems a shame to bleed hard-won brand equity, unless there is a significant long term gain in store.

The pricing strategy: this seems nuts. How much of it is down to Asda, and how much to Pernod Ricard? The wine is listed at £8.98. This is a somewhat inflated price point. A powerful brand like this doesn’t need deep discounting to sell, surely? It actually risks severe damage from the practice. Anyway, I’d have thought this is a price point that allows some discounting

The half-price deal, though? That’s nuts. Once someone has bought this wine at £4.24, they will never be inclined to spend £8.98 on it ever again. They’ll lose trust in the brand, and without trust, a brand is nothing. Yes, the wine will shift, but who is going to make money on this sort of deal? It’s wrong of a retailer to trash someone’s brand in order to drive footfall. If it’s the brand owner sanctioning this sort of activity, well, that’s foolish.

Wouldn’t it be better to have the wine sensibly priced, say at £7.49 or £6.99, and then sell it at that price? Or to use a less dramatic discounting, of £1 or £1.50? Asda will argue that at £4.24 the customer is getting a cracking deal.

That is true. But is it sustainable? Is it ethical?

26 comments to Montana/Brancott: what are they doing with this brand?

  • Thanks for the heads-up, I must toddle over to ASDA. I saw this wine today in Waitrose at around £9

  • Ben

    If it is a good wine at £4.24 then it is good for customers. If the pricing policy ultimately means customers lose faith in the brand, they will buy something else at a similar price. Sometimes, maybe it is nice for people who can’t regularly afford to buy wine at plus £8 a bottle to be able to enjoy something good for a change.

  • Got to agree with you 100% – it’s a great deal for the customer and I was in Asda at the weekend stocking up. However the whole name change combined with this level of discount is a disaster for the brand.

  • The brand decisions are strange. But having recently tasted the 2009 and 2010, I will agree with their ultimate price at least – £4.24 seems about right for the quality in the bottle here. Crowd-pleasing party wine, but nothing more than that.

  • DJE

    Suspect the pricing is down to the retailer as it is not offered as a half price wine across other supermarkets where it has a similar standard rsp. This retailer will have probably decided that having the wine ‘sensibly priced’ will not drive footfall at Christmas and it should be pointed out that it is against the law for a brand owner to impose rsps which makes it more difficult for them to stop such activity if the supermarkets self fund it. As regards chris’s comment hasn’t Montana just won the IWC trophy as well as gold medal for the best NZ Sauvignon Blanc. Pretty good party wine!

  • Jeremy Wilkinson

    Brand change? That’ll be someone somewhere high up in the corporate hierarchy reducing the number of SKUs, and they won’t be held accountable for the dip in sales from confusion in the customers mind (they’ll get the credit for less labels,less entries on a computer etc!). I speak from first hand knowledge (as someone trying to get rid of a large number of SKUs from a portfolio – not wine – in a former life).

    I think the pricing is just the way the world is for such wines, we might feel it’s a bit of a con (and as ever you it’s the people paying twice the price you have to have sympathy) but I’m sure that those who buy them at £4.24 feel great about their savvy shopping. I just purchased a book on Amazon about Burgundy – the best one of the current crop on first reading – for less than half the cover price. I guess the difference is Amazon will not have offered it at full price first of all.

  • Alex Lake

    They do have previous on strange pricing. I seem to remember a couple of years ago you pointed out that the reserve was going for less than the regular…

  • @DJE supermarkets self-fund it? Shurely Shome Mishtake?

  • A classic loss leader surely?

    The same tactic is used with Oyster Bay Sauvignon Blanc here in Australia, where it is sold for under $AUD10 whilst the recommended retail price is circa $19.

    Still, there are plenty of producers struggling in NZ at the moment, and plenty of own brands to compete with Brancott on price…

  • DJE

    Lar Veale, nope, no mistake. Brand Owner signs up for say a £2 off promo and the supermakets decide to fund the rest. Nothing they can do as it is illegal to impose RSP’s. It must happen all the time across all branded categories, especially at Christmas on drinks though. If over half your volume is sold on promotion (and I reckon 95% of the volume on some deliberately positioned half price wines is sold on promotion) what is the brand owner going to do? If you don’t have this £2 off promotional plan you don’t get listed and if you are not listed in the big 4 supermarkets (who incidentally may all do this) you have no brand. It must be a real balancing act.

  • JS

    Short term their surplus allows them to do this and make some margin (c.3%). Long term: N. O.

    Going forward Pernod will see spiking volume sales as evidence of an effective brand transition and hope/convince themselves it’s indicative of positive future traction. It isn’t.

    Long term it will lead to greater customer confusion around relative product performance [within their own stable of “brands” (!)], as the linear relationship between price and quality in wine that customers historically have always fallen back continues to be smashed beyond short-term repair. It has wider implications for wine in that it further erodes overall customer perceptions around quality/”value”, ruining the marketplace for everyone else and encouraging customers that would spend more on better to trade down. This is where one might decide to have a pseudo-ethical debate, but as this is all taking place in the permanent “premium-wine-consumer” vacuum that is Asda, perhaps it’s somewhat disingenuous to target Pernod here without smashing into the real commoditization criminals at Tesco and Sainsburys.

    That said, whilst fundamentally it’s a moronic sales strategy [as it’s just a margin give away in a retailer they shouldn’t be dealing with in a category that has huge potential cash sales headroom and shouldn't be traded downwards] the efficacy of it or not has sod all to do with ethics – it’s business. Really really dim business.

  • Jamie, as always you have hit the nail squarely on the head. I completely agree with you. This is nuts. Great article.

  • This deep discounting is indicative of supermarket promotions at this time. It is a real shame especially for quality brands such as Montana. You hit the nail on the head with this article Jamie.

    What angers me more however is the mysterious St-Emilions that turn up at half price around Christmas time, in all supermarkets, which have never been seen before and will never be seen again. These almost always are never worth the seemingly high original price and are just supermarkets ripping off customers during Christmastime.

    I always feel that if the supermarkets did a better job at portraying the quality of the wines this would remove the need for such deep discounting on quality brands. If it is a quality product generally people will be willing to pay the normal price.

    On the name change I always thought with branding the phrase “if it’s not broke don’t fix it” is the best way to go about things. I have no idea why they would want to destroy a strong brand that people have very strong loyalty to.

  • Camilla

    Great article, and interesting comments contributed too. This kind of deep discounting won’t do the brand any favours in the long run, even if they do see a short term sales spike. Sales will fall to virtually zero when the wine goes back up to full price, and the next time Asda runs the same promo the customers won’t go into such a buying frenzy because they’ve seen it before and they know the deal will come around again. I just hope Montana / Brancott’s strategy doesn’t damage the whole NZ savvy sector.

  • Simon T

    Not sure how the stock is ordered, but let’s just say it’s FOB. In September, PR receive large orders from Asda. Pop Quiz (as Harvey Keitel would say), do you ;
    A – Just about legally and ever so politely decline the orders stating that you don’t have enough wine (difficult as the Kiwis are still just about swimming in this level of Sauv Blanc)
    B – Go for it ?

    Jacobs Creek and Montana have been struggling in the brand share tables of late (narcissistic remedy perhaps, but when you have wineries and staff to keep busy what are you going to do) as a result of short term opportunistic UK agents such as Brand Phoenix/PLB filling their boots with cheap NZ Sauv Blanc/Aussie excess and so PR need to stay relevant/engage with the retailers.

    You only have to see the Cheddar cheese commercial (Wyke Farms) that Asda are pushing on the telly to see they are pushing a more foodie agenda and trying to persuade the chattering classes/daily mail readers to visit their stores. In addition, Sainsburys and Tesco are both leading with Montana/Brancott in their NZ Xmas offer(good job PR but how much did they cough up for the pleasure) and so Asda like to wind the others up by pulling the pricing rug from beneath and targeting these middle class ‘lucrative shoppers’ – A trolley with Montana in it probably is worth £150 rather than £100 for one with Blossom Hill in it (simplistic but probably ball-park accurate)

    Can’t blame PR although lets hope that the NZ supply position returns to 2007 levels and that the category can wipe away the opportunists and get back to a branded sustainable focus at £7-£8.

  • I agree with the post on all counts. The advantages of a “global brand” that sacrifices local brand equity is questionable — especially in this environment.

    I live in the U.S. and I’m paying $8.99 for the Brancott Estate SB here. Other Marlborough SB have been seen at $5.99 down to (gasp) $2.99 at a hard discounter. A stunning collapse.

  • Well done Simon T on explaining the real pressures of the market. It’s simple mathematics; there is overproduction in the world and it’s a buyers’ market. Added to this supermarkets need to compete with one another – they don’t exist in a vacuum, or they lose customer share. If that happens shareholder confidence falls and they’re in trouble. It’s not always about the wine.

    The upside is that many folk are driven into the wine consumption category, and at least some of them will trade up over time, creating more sales at the higher end. There is no remedy, simply try to look at the positive side of the story.

  • Samuel

    DJE: “IWC trophy as well as gold medal for the best NZ Sauvignon Blanc. Pretty good party wine!”
    Come on, an IWC trophy does not make this NZ best Sauvignon Blanc, Chris is however spot on, it make it a great value party wine.

  • DJE

    Samuel, I don’t know whether it’s the best NZ Sauvignon Blanc or not. However if it’s recently won an IWC Gold as well as the NZ Trophy as well as being recommeded here by Jamie as being better than Cloudy Bay in 2009 then that indicates to me that maybe, just maybe, it is better than simply being a great value party wine. (On the other hand I have no idea what wines you serve at home so I may well be wrong in this instance.) Have a great Christmas whatever you are drinking.
    ps. Does anyone out there know of any other great wine bargains out there at present?

  • Pernod is focused on a global stategy across all wine brands, simply, if Diageo does it Pernod will follow with or with out a plan. The Brancott brand is broken in USA and only several NZ brands sell here anyway, Brancott not being one of them. The concern is the brand will be associated with the state of Montana and ex NFL quarterback owns rights to “Montana” name in US. Still why the change in the UK? As usual, one must question Pernods thinking once again proving they are not a long-term player in the wine business due to their own poor decision making.

  • michael dietrich

    I sell wine here in Oregon and we are still at a $10.99 retail for both the Sauvignon Blanc and Pinot Noir. The other surprize to me was when Clifford Bay came into our market at $9.99 for SB and $14.99 for PN. Bill Foley from California bought the wines of the New Zealand Wine Trust about a year ago. Our first 2010 SB that came in was Wither Hill and it was excellent for $11.99, probably the best vintage I have had yet. Here I sell about 30 New Zealand brands. I have had lots of fun doing it.

  • Jonathan Reeve

    I agree with Chris K here, and nice article Jamie. and ‘Ben’s point will be answered by this; the wine in the bottle is not the ‘something good for a change‘ it might seem. The point is that the brand is valued at 8 pounds, not the wine per se. In this kind of market the wine is a mere sideshow puppet in comparison to the brand. As everyone here is pointing out, the name change and discount have devalued the two things Montana had going for it.

  • Jonathan Reeve

    Reading that Clifford Bay has entered some US markets at 9.99 is more distressing. I helped make the 2007 Clifford Bay, and I know that the quality is all there in Villa Maria’s top end wines.

  • Samuel

    In answer to DJE: Chateau Léoville-Barton 2004.
    From memory, Jamie’s post on 2009 Cloudy Bay was highlighting that the brand ‘Cloudy Bay’ had become more important than the wine in the bottle and that Montana was better value, and I totally agree.
    IMO; Cloudy Bay has been trading off its reputation alone for the last five or six years. (something that Brancott may have foregone in this latest round of the mass market bun fight)
    One thing for sure, there are better examples of New Zealand Sauvignon Blanc than both Brancott and Cloudy Bay. When a company decides that investment in the brand, (Montana to Brancott) is more beneficial than investment in the vineyard, the wine ceases to be of any serious interest and becomes a commodity, held up against its peers in terms of market penetration. (or in festive terms a ‘party wine.’)
    DJE, The best bargains will be from you friendly local wine merchant.
    The cheapest wines you’ll find in the supermarkets. Just don’t pay £8.99 for Brancott again, wait until is sub £5.

  • michael dietrich

    I remember a couple of years ago tasting the Clifford Bay Sauvignon Blanc and Pinot Noir at a trade tasting in Seattle put on by the New Zealand Winegrowers. At that time it was showing a retail of $16 for SB and $24 for PN. They were one of the wineries looking for distribution. Here in Oregon you must be sold through a licensed state distributor. With the economy going south we have lost several NZ brands. We have picked up a few. Since Clifford Bay got bought by Bill Foley and his wine brands were already sold in our market, we then got Clifford Bay. I was very surprized at the prices.
    You will also notice that in the reviews by Wine Advocate that the pricing issue is mentioned as being well lower than prices in New Zealand. Another one that showed up in a price book was Kemblefield which I actually saw a few months ago in Phoenix for $6.99. These are the only 2 examples I am aware of here that dropped prices drastically. The quality of the 2 Clifford Bay wines is quite good.

  • Ralph

    I guess it is down to the producer, as we saw the same wine here in the Netherlands at Albert Heijn’s (largest supermarket chain) for € 4,99, normal shelf price € 6,99. Good party wine, but nothing exceptional. As you say, peo-ple who paid € 4,99 won’t be paying € 6,99 for the very same wine. Brand damage done, gentlemen. Oh well…

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