How to manage a Champagne brand, some thoughts

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How to manage a Champagne brand, some thoughts

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:

  1. Krug
  2. Dom Perignon
  3. Bollinger
  4. Roederer
  5. Taittinger
  6. Laurent-Perrier
  7. Moët et Chandon
  8. Veuve Clicquot
  9. Perrier Jouët
  10. Mumm

How might someone lower down the table raise their perceived level of prestige?

My thoughts?

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.

7 Comments on How to manage a Champagne brand, some thoughtsTagged
wine journalist and flavour obsessive

7 thoughts on “How to manage a Champagne brand, some thoughts

  1. Thanks Jamie, and an interesting post.

    Is it really about marketing or are there structural differences within the champagne industry versus light wine that have helped create brand equity? In my view there are structural differences and the CVIC has done a good job to protect the interests of the appellation and its growers/producers.

    But you also have to consider that branded champagnes have doen a better job at developing their equity compared to light wines, especially in the on trade. Look at a Parisien bar menu from c.100 years ago, many (ex) Grand Marques are featured….Distribution (and the right sort of distribution) is critical to developing a brand.

    Champagne works more like a branded spirit such as Hendrick’s Gin for me….seed it in the premim on trade, create the equity and then start to distribute on a more mainstream scale.

    Also NV champagne is a blended, consistent style….much more in keeping with other branded drinks compared to the vintage variation associated with wine.

    Interesting that Lanson (in quality terms at least as good as 50% of your top 10 enclosed having drunk it tonight) isn’t in your top 10….this brand under indexes in the on trade versus off trade – does this vindicate your theory? And what about the question of inherent wine quality? Does this matter in terms of the creation of brand equity for champagne? Also interesting that Pol Roger doesn’t appear in the top 10 also. Surely pretty much the highest quality ‘branded’ GM champagne?

    More generally why has the wine industry not use vintage shortages / long leadtimes to its advantage to leverage scarcity that seems to develop brand equity?

    More questions than answers I am afraid!

  2. “Taittinger will never become a Bollinger while this sort of thing goes on. Does Taittinger need Asda?”

    I don’t think that that is the only reason.

  3. Interesting article. While a top 10 list always is subjective, I would think not including Salon somewhere was an oversight. What I would add to the brand management discussion is to focus on place. Place of grape origin, that is. If I had a brand to promote in Champagne, I would talk about what classifcation my vineyard(s) had and where it was located. If I could not brag about thoses two aspects, I would leave the business. Wine-making talent is a secondary consideration in most regions, and in Champagne, place is paramount.

  4. Interesting discussion and erudite points all round.

    Your Top 10 seems pretty on the money for me too. Maybe Lanson ought to be there or maybe not. If the table is based purely on snob value then maybe not. If it’s a mix of snobbery and visibility on the wine aisle shelf then maybe it should.

    My trade is brand strategy. I second James Davis’ view that champagne brand management is like running a branded spirit. Each of the top brands “stands” for something or identifies with it. Bollinger, for example, is the ultimate family business/French atelier. Laurent-Perrier is all about art and the Belle Epoque. The top brands have moved their marketing from the pure advertising world of the 20th century to the curated, brand first world of the 21st. Sponsorships are incredibly important in this – being official champagne at sporting tournaments, Cowes Week, Glyndebourne etc etc gives the brand a positioning.

    But to answer your question to your readers: “How might a brand lower down the table raise its level of prestige?”

    My recommendation would be around age. The older brands have established loyalty from their customers. Upcoming houses need younger customers; the establishment of the future. Ideally, by careful trade merchandising and sponsorships, these houses come to be associated with the young professional elite.

    Grey Goose Vodka, for example, has become the sine qua non of the upmarket nightclub. I’d argue that champagne brands are a bit prissy about younger drinkers, seeing us as philistines. Grey Goose’s huge bottles make a huge impression. Turning drinking champagne into an “event” in itself is essential for its survival. The consumer must be thinking “I’m having a special occasion. It won’t be complete without X brand of champagne.” At the moment, I suspect younger drinkers could take it or leave it.

    Music sponsorship is incredibly valuable. Cowes Week, Wimbledon and Glyndebourne are done. The post-Britpop world of some more mature but incredibly talented, and still edgy, bands is largely untapped by champagne (or wine in general for that matter). Beer brands are quick to jump on music sponsorship opportunities and festivals. There’s plenty of smart, high-end stuff out there. IMO the champagne houses don’t want to get their hands dirty with all of that stuff. But if they followed the example of, say, Burberry and engaged with a younger luxury consumer they could experience huge growth and traction in the marketplace.

    As a postscript, I agree that Taittinger has been eroded from a brand equity POV by the supermarkets’ price war, but since it is one of my all-time favourite champagnes, I was delighted to pick up Christmas fizz on the cheap!

  5. “Grey Goose Vodka, for example, has become the sine qua non of the upmarket nightclub. […] Turning drinking champagne into an “event” in itself is essential for its survival. The consumer must be thinking “I’m having a special occasion. It won’t be complete without X brand of champagne.” At the moment, I suspect younger drinkers could take it or leave it.”

    And the trade wonders why people don’t take wine seriously…

    I left marketing for wine to get away from this kind of bullshit: positioning, equity, placement and all the things which make wine see like a luxury good rather than an agricultural product tied to the seasons. The growers in Champagne would be horrified at this kind of statement, as would most of their customers. I don’t want to sell drinking Champagne as an event; I want to sell it as a wine.

    I’m afraid my suggestion would be simpler, but probably more expensive than increasing the sponsorship buget: make better wine. When Tattinger makes wines as good as Bollinger and Krug, it will move up the list. Until them I’m no more likely to buy it over Bollinger than I am to buy a Rolex because it happens to be the backdrop to Rafael Nadal’s perfectly formed bicep every Wimbledon.

    There’s a reason that Salon and DRC don’t do sponsorship – they are exclusive. Plastering your logo over something doesn’t exactly scream cachet.

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