Wines & Vines Home
   
 
Welcome Guest
LOGIN |  CREATE ACCOUNT
 
ADVERTISEMENT
 
 
 
01.20.2011  
 

Wine Discounting Is Not the Problem

Marketing expert tells wineries that consumers have changed

 
by Jim Gordon
 
 
Pam Danziger Unity Marketing
 
Pam Danziger of Unity Marketing challenges wineries to raise their perceived value among the targer audience.
Santa Rosa, Calif.—A luxury-goods marketing expert told winery marketers Wednesday that while they may see discounting as the bane of their existence, “discounting is not really the problem, but a symptom of the problem.”

Pam Danziger is president of Unity Marketing, based in Pennsylvania, and the author of several books about marketing and consumer behavior. She told the winery sales and marketing professionals attending the Direct to Consumer Wine Symposium in Santa Rosa that what their customers value in luxury goods has changed.

Yes, Danziger said, in some cases, luxury goods makers including wineries may need to lower prices. When posh Coach bags passed the $300 mark in 2009, sales slowed, so the company reduced the price by about 10%. The change boosted volume sales enough to cover the reduced price per bag and raised profit, she said.

The task for wineries, however, is not solely about reducing prices, it’s about raising the perceived value of the wines they sell to appeal to an increasingly selective audience, according to Danziger. “The challenge is to convince customers that they’re getting a $30 bottle of wine for $20.”

Luxury spending declined
Unity marketing conducts quarterly surveys of 1,250 luxury consumers with household incomes of $100,000 and above. The surveys found that luxury spending has increased 45% since the first quarter of 2009. The jump from the second to third quarter of 2009 was the most dramatic since the recession began, she said. It was a release of pent-up demand, in her view, and explains why luxury goods spending declined somewhat through the third quarter of 2010.

Danziger perceives that consumers, and especially luxury goods consumers who tend to be college-educated and business-savvy, are using their brains to shop rather than just their purses as in the 1990s or mid-2000s. A roaring consumer marketplace is not immediately around the corner.

“Don’t buy it,” Danziger said. “We are in a different place, and we are not going back to that boom-boom time that we all remember, not until about 2020.”

Marketing advice to wineries
Danziger’s advice to wineries included keeping the message simple, and incorporating these suggestions:

• “Young affluents,” consumers from 35-44 with $100,000 household incomes rank significantly higher in long-term value to wineries than older or younger groups.

• Still, invest in and partner with the millennial generation. Use marketing strategies that have buzz, like Greyhound’s new Bolt Bus division that uses social media for marketing and offers $1 tickets from Washington, D.C., to Boston to the earliest customers to reserve.

• Develop a product line with good, better and best tiers. “It’s a good time to up your price at the best end, and find an improved good-better-best scale.”

• Find ways to make your brand memorable. Emphasize the authentic qualities of your wines if that provides differentiation.

• Try new packaging. For people who can’t remember milk in glass bottles, glass is a cool package for milk. Maybe box wines or other options are cool to consumers who’ve seen nothing but glass.

• Trade vertical integration for virtual integration. Maybe every wine company doesn’t need to own its vineyards and production facilities, she said. “Hermes and Louis Vuitton don’t raise their own alligators.”

Direct sales up 25%
American Express Business Insights conducted special research about wine buyer behavior for the symposium’s parent organization, the Coalition for Free Trade. As presented by Marc Andre Roy, the research used transactions with American Express cards to take a broad view of U.S. wineries’ direct sales.

Year-on-year growth in this category through October 2010 was about 25% in dollars spent, Roy said. (It was nearly the same result as the 26% growth that the Wines & Vines/ShipCompliant Shipment Model found for DtC shipments in November 2010.)

American Express tallied winery direct sales and online direct purchases, and compared them with three-tier sales at wine retailers. Interestingly, Roy said the study found that 12% of customers purchased from both direct and three-tier channels. “There is an overlap, there is a synergy that we have seen,” he said.

Biggest turnout yet
The Direct to Consumer Wine Symposium saw paid attendance increase from 260 last year to 375 this year, and hosted another sold-out trade show, according to Jeremy Benson of Benson Marketing, one of the  organizers.

Proceeds from the symposium go to the Coalition for Free Trade and Free The Grapes!, two organizations that work with local winery associations and industry representatives to increase the number of legal direct-shipping states.

To find out more about the symposium, go to dtcwinesymposium.com. Attendees will receive an e-mail with password that allows them to download speaker presentations.

SHARE »
Close
 
Currently no comments posted for this article.
 
CURRENT NEWS INDEX »


 
Wines & Vines Home
 
866.453.9701 | 415.453.9700 | Fax: 415.453.2517
65 Mitchell Blvd., Ste. A San Rafael, CA 94903
info@winesandvines.com
Wine Industry Metrics
 
Off-Premise Sales » Month   12 Months  
March 2013 $546 million
5%
$6,988 million
7%
March 2014 $572 million $7,451 million
     
Direct-to-Consumer Shipments » Month   12 Months  
March 2013 $177 million
20%
$1,483 million
10%
March 2014 $213 million $1,634 million
     
Winery Job Index » Month   12 Months  
March 2013 253
15%
166
27%
March 2014 292 210
     
 
MORE » Released on 04.14.2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Wines & Vines
Packaging Conference
 
Learn More »
 
 

Practical Winery & Vineyard Library
 
Search the PWV archive »
 
 

Direct To Consumer
Wine Shipping Report
2014
 
Download full report »
 
 

CALENDAR
  • April 23-26
     
    CABs of Distinction in Paso Robles
     
  • April 26
     
    Siera Pelona Valley wine festival
     
  • April 27
     
    TAPAS Grand Tasting
     
  • April 29
     
    Rendez-Vous Laffort
     
  • MORE »
 

READER COMMENTS
 
Article: Starbucks Expands Wine Sales to More Cities »
 
Pretty amazing that the 1st wines chosen are from Argentina, Italy, and New Zealand! I...
Reader: Jacques Brix
 
Article: Starbucks Expands Wine Sales to More Cities »
 
Given Starbucks commitment to sustainability and global responsibility, I expect this move could be a...
Reader: Guest
 
Article: What to Do About Red Blotch »
 
There is NO correlation with planting density. Also FPS is working on the problem. New...
Reader: Guest
 
Article: Premiere Wine Auction Nets $5.9 million »
 
Thanks for letting us know Janet, we've updated the story. Cheers
Reader: Andrew Adams
 
Article: Will Barrels Go the Way of Floppy Disks? »
 
Fun piece. Particularly enjoyed the three clearly superior attributes of standard barrels, including looking cool...
Reader: Tom Gable
 
 


Directory/Buyer's Guide — Your Wine Industry Marketplace
 
 
WINERY SEARCH
 
 
Advanced Search »
SUPPLIER SEARCH
   by Product
 by Company Name or Brand
 
Browse by Category »
2014 Directory/Buyer's Guide
The Wines & Vines Directory and Buyer's Guide
 
 
EXPANDED ONLINE SEARCH INCLUDED WITH PURCHASE
 
ORDER NOW »
 
LEARN MORE »
 
 
Wines & Vines Magazine
 
 
LEARN MORE »
 
SUBSCRIBE »
 
Digital Edition Now Available!
Wines & Vines Digital Edition Now Available
 
LEARN MORE »
 
ORDER NOW »
 
 
The Wines & Vines Online Marketing System
 
The Industry Standard winery marketing application
 
FREE LIVE DEMO »
 
VIEW VIDEO »
 
 
 
 
Latest Job Listings
 Estate Ambassador
 Napa, CA
DTC, Tasting Room and Retai
 Northern California Sa...
 Fresno, CA
Sales and Marketing
 Northern California Sa...
 Bakersfield, CA
Sales and Marketing
 Pt Tasting Room Help A...
 Napa, CA
DTC, Tasting Room and Retai
 Assistant Winemaker
 Lompoc, CA
Winemaking and Production
 Customer Service Repre...
 Fairfield, CA
General Administration and
 Tasting Room Sales Ass...
 Rutherford, CA
DTC, Tasting Room and Retai
 2014 Harvest Intern
 Sherwood, OR
Winemaking and Production
 Business Systems Analy...
 Lodi, CA
General Administration and
 On Premise Sales Repre...
 Chicago, IL
Sales and Marketing
 
More Job Listings >>
Follow Us On:
 
 





Home  |  About Us  |  Editors  |  Subscribe  |  Print Edition  |  Digital Edition

Advertise  |  Site Map  |  Contact Us  |  Privacy Policy
 
 
Copyright © 2001-2014 by Wine Communications Group, Inc. All Rights Reserved.
No material may be reproduced without written permission of the Publisher.
Wines&Vines does not assume any responsibility for any unsolicited manuscripts or materials.