WINE VISION 2014: TAYLOR'S PORT CEO ALSO WARNS OF RACE TO BOTTOM

‘Beer, spirits have stolen our playbook: We need to build brand wine!’ Troy Christensen

By Ben BOUCKLEY contact

- Last updated on GMT

'The Big Debate' at Wine Vision 2014: Troy Christensen is pictured (center), with Adrian Bridge (far left)
'The Big Debate' at Wine Vision 2014: Troy Christensen is pictured (center), with Adrian Bridge (far left)

Related tags: Wine, Brand

Troy Christensen, CEO of Enotria Wine Cellars, warns the wine industry that spirits and beer have stolen its play book and says the industry needs to build ‘brand wine’ more effectively to attract consumers who can afford premium wines.

Christensen’s resume includes a stint as CEO of Accolade Wines, but he was previously president of Constellation Australia. He formed part of the panel for 'The Big Debate' at Wine Vision 2014 in London last month that discussed retailer-producer relations in the wine world.

In light of his career to date, and also a UK retail landscape where wine volume sales fell 2% overall in 2013, although value rose 1%, Christensen said: “I think there’s two different dynamics – when you have a shrinking pie, there’s a fight over who’s going to get the biggest slice. But that is a death spiral.

“When the pie is growing and there’s a coordinated effort to grow the pie, then I think those conversations with the retailers are much more productive,”​ he added.

“You look for innovation, you look for different ways to engage the consumers. And I think wine in particular, and particularly in the UK, we do a very poor job of building brand ‘wine’,”​ Christensen said.

'What are we doing to build brand wine?'

“Beer and spirits co-ordinate, they work together. They want to build their share of throat. In fact, we saw beer doing it by taking our playbook, we saw coffee doing it by taking our playbook – food, estate driven.

“What are we doing to build our brand wine? And even though we don’t build it, you see others building their brands on our backs,”​ he said.

Wine Vision 2
Wine Vision 2014 began with an evening event at Shangri-La at The Shard in London, on November 17

When you go into a nice restaurant, Christensen pointed out, the food is clearly very important. But then you talk about the wine list, and this is what restaurants need to bring in consumers.

Noting that a wine consumer’s basket was 145% more valuable, on average, than one without a bottle of wine, he said getting consumers “through the door”​ was incredibly important.

Wine has the power to build brand image of hotels, restaurants...

“In the States you go to Chicago, my old home town, and you stay in the Dana Hotel, it’s not a minibar you have in the room, it’s a full wine refrigerator,”​ Christensen said.

“You can buy a bottle of wine, and you can pay a reasonable price. And believe me, people go there and it builds the brand image of that hotel leveraging our product and category,” ​he added.

Surveying the global retail scene, Christensen cited Costco in the US as the perfect example of a chain selling “great premium wine at a very reasonable price, and accordingly bring in some very high socio-demographics”​.

“And I think that’s something that we as a category, speaking previously as a brand owner, and speaking now as one who represents brands – we need to do a lot better in working with the retailer, the distributor and the on-trade environment,” ​he said.

“Sadly, no-one’s making money in the UK anymore,except maybe the government. I think unfortunately, the tax and duty on wine has been way too substantial in this country. We’ve accepted and tolerated that as an industry. Last year beer got a reduction, spirits was flat, and we were thrilled we only got a CPI increase."​ (Troy Christensen, CEO, Enotria Wine Cellars)

“Letting them know that our product is going to sell more of their other products, and build their brand in value, much more than we have in the past. I think it’s a trick we’re missing as an industry.

While Christensen said he was enthused by the fact that people in the UK now talked about an £8/bottle price point, as opposed to £4 in the 2000s, he said the effect was muted by swingeing tax and duty rises.

“Sadly, no-one’s making money anymore,except maybe the government. I think unfortunately, the tax and duty on wine has been way too substantial in this country. We’ve accepted and tolerated that as an industry.

'We need brand investment to drag in premium consumers' - Troy Christensen

“Last year beer got a reduction, spirits was flat, and we were thrilled we only got a CPI increase. There’s wine where tax and duty is over 50% of the cost of the product,” ​Christensen said.

“What we need to do is find ways to invest and engage behind the brand proposition to engage some of the consumers. If we just use price in this country, then it’s difficult, and it is just a race to the bottom.

"We have to drag more premium consumers into the category and that’s going to take brand investment, so yes, let’s cut out those interim non value-added costs, but let’s find a way to invest behind the brands and behind brand wine to get the consumers engaged. I think that’s the only way we’re going to win in the UK.

Adrian Bridge

'Retailers are in a simple business - they rent space' - Adrian Bridge, CEO, Taylor's Port

Adrian Bridge, CEO from Taylor’s Port (pictured left) echoed Christensen’s thoughts on price: “Retailers are in a very simple business. They rent space. If they’re renting it to us in the wine industry, and they’re making money – they’ll continue to do it,”​ he told Wine Vision delegates.

“France, for example, used to be about a third of the world’s port market, but it’s been in decline. Partly that’s a consumer issue, because per capita consumption there is in decline…but as our industry the choice we took was to push away from brands and focus on private label,”​ Bridge said.

Everyone then competed on price, he added, which meant the retailers lost margin and duly shrunk the shelf space available to port.

“That turned what might have been a temporary issue into a structural issue – because to re-grow a category of two linear feet is harder than building one of, say, 20 linear feet you might have had 15 years ago,”​ he said.

To learn more about Wine Vision 2014, click here.

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