The value of a brand: A wine retailers’ perspective

Authors
Masters Student: Anne-Marie Azzuro
Supervisors: Professor Larry Lockshin, Professor Byron Sharp, Dr Cathy Nguyen and Professor Svetlana Bogomolova

Research need
We know that Australia has a duopoly in the retail liquor market. Retailers have more power in negotiating and have reduced shelf space for branded wines in favour of their higher margin private labelled wines, even if these are not identified as such. It is increasingly more challenging for small and medium-sized enterprise (SME) wine brands to get listed and even more challenging to get listed with favourable terms in major retail wine stores.

Regional wine associations often suggest the solution is to invest further in marketing activities that drive regional awareness which will then translate into increased visitation and sales via cellar door as well as building overall awareness of the wine region. An SME winery might have to sacrifice the investing of marketing resources into building their own brand amongst retail consumers to help build their wine region brand. Consequently, wine producers get caught in this predicament of deciding whether to invest in building a well-known region or in building a better-known brand.

Along with this issue is the question of how SME wineries should approach retailers to gain a listing.

This research aimed to help wine producers understand better how wine retailers across corporate, independent and fine wine stores manage their category so brands can ultimately be more competitive in those channels. Specifically, the research focused on the role of a brand from a retailer’s perspective to guide wine producers about how best to prioritise their marketing resources.

What was done
Expert interviews were conducted with 32 buyers for wine retailers to understand the importance of a brand in wine retailer decision-making. The buyers were sourced from different wine retail companies with roughly one-third coming from fine wine retailers, just under half representing independent retailers and one-quarter representing the major corporate alcohol chains. The data was primarily collected in South Australia, but just over one-quarter of the interviews were conducted in NSW.

The interviews focused on category management and the stocking, replacement and delisting processes used by these retailers. The data was analysed to document the following:

1. The importance of a brand in wine retailer decision-making, compared to all other factors;
2. The processes (i.e. stocking, delisting and replacement) wine retailers follow;
3. The factors wine retailers consider in each process; and
4. If any of the factors or processes differ between store ownership types.

What was discovered
Expert interviews were conducted with 32 buyers for wine retailers to understand the importance of a brand in wine retailer decision-making. The buyers were sourced from different wine retail companies with roughly one-third coming from fine wine retailers, just under half representing independent retailers and one-quarter representing the major corporate alcohol chains. The data was primarily collected in South Australia, but just over one-quarter of the interviews were conducted in NSW.

The managerial implications
Investing in becoming a well-known brand is a key success retail factor for all wine brands but this is even more critical for brands from lesser-known wine regions. This is due to wine retailers of all types claiming that well-known brands attract all types of consumers. Well-known brands ultimately sell themselves, which is what a retailer is looking for. Well-known brands in their respective style are rarely delisted because of their reputation. Wine producers (small, large, local, new and existing) should focus on investing in their brand’s identity. Given the trend towards stocking more local wines, even small and newer brands should work on developing brand recognition at a local level particularly when working with the independents and fine wine retailers which tend to stock more local wines.

The research helped generate a summary diagram of typical wine retail stocking, delisting and replacement processes. This provides producers with a guide for retailer decision-making.

This figure demonstrates the criteria wine retailers follow in assessing wines for their ranges. Wine brands can use this figure to plan their strategy before they approach a retailer for listing. Brands should tailor their sales pitch to meet particular retailers’ demands by playing to their brand’s strengths.

Want to get involved in our research agenda?
Should you wish to learn more about the research that the Wolf Blass Foundation is generously supporting at the University of South Australia and get involved in future research please contact Dr Justin Cohen at justin.cohen@unisa.edu.au.

 

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