Greg Sherwood MW: Promoting wine in tough economic times

During recessionary times and economic downturns, or the ‘cost of living crisis’ as commentators prefer to call it nowadays, even consumers in the most entry level wine purchasing categories start to become more discerning. In a time when, ironically, the pressures of ensuring quality and excellence are greater than ever, yet more and more difficult to achieve due to cost cutting measures at source, together with limited budgets for investment in new winery plant, barrels and other materials, it is exactly this period in time when consumers will be the most aware of what they are spending their scarce disposable income on.

Tough times call for prioritising for winemakers and brand owners. Quality factors, and how they achieve them and maintain them, certainly become key with the general consumer perception of ‘value for money’, undoubtedly one of the most powerful prevailing mantras.

But it is precisely during these tough economic times, that brand owners often succumb to cautionary knee jerk reactions, instinctively turning off the marketing taps, leaving a few wineries to counter-intuitively increase marketing spend, sometimes out of desperation, sometimes out of necessity, which more often than not allows for a wine’s unique selling points (USPs) to be discovered or rediscovered by belt-tightening wine consumers.

Communicating USPs that differentiate your wine from your competitors, offered to the market with ideally streamlined logistical planning that removes any potential obstacles, can often be a very simple and forthright path to successfully reclaiming market share. While very few wine brands can escape the pressures of a recessionary bear market, if any at all, we certainly do see mid-market wines and certain less sought-after premium brands coming under some of the greatest pressure as witnessed over particular periods in Bordeaux such as the early 1990s, in 1997/8, in 2010/11 and now again in more recent years post the Covid-19 pandemic.

For basic entry level wine brands (a segment of production that has never been one of South Africa’s strongest suits) many are already being sold at historic EDLP (everyday low price) margins, with additional room to move further restricted by marketing cuts, leaving additional price reductions or blatant loss-leading discounting mechanisms as an unattractive final nuclear option available to brand owners to attract bargain-hunting customers in the short term.

Presumably, with rather more South African wineries selling and marketing a wider range of middle-market brands, all strategies to beat a depressed market must start at the winery with real tangible product quality and integrity, and in the marketing board room, by communicating the perceived quality and value.

Consumers demand value for money… and if the famous words of Sir Ken Morrison of the UK supermarket chain Morrisons are anything to go by, “offering the consumer a high quality product at a fair price with a friendly and helpful service guarantee,” you can sell any product in any economic market conditions.

Perceived and real wine quality are two different propositions of course. In recessionary times, communicating the message of quality, can serve to awaken the consumer to the benefits of your brand. Real advances in the actual winery are not always a necessity once your product has already reached a certain quality threshold. Communicating what you have been doing all along to ensure a well-made wine is often all that is necessary to reignite baseline marketing efforts. Stories sell wine and build engagement.

Once the broader message of wine quality, whether achieved stylistically through the use of new oak, more modern winemaking techniques, lower yields, old vines, or better eco-friendly regenerative vineyard practices, is put into motion, a brand ambassador or marketer can begin the construction and communication of a renewed strategy, founded on value for money within the products given price points, supported by emphasising some of the wines identifiable unique selling points.

Value for money can often be communicated as part of a brand’s USP, tempting consumers to test this proposition, which if perceived to be true, should in all likelihood result in repeat sales and potentially the all-important third-party endorsement to friends and family. Value for money then does become a tangible attribute of a wine’s promotion and not just part of the marketing pitch.

As no two wines or wineries are identical, well-made wines should always possess USPs other than simply their price point, and most Cape wineries are blessed with an excess of authentic, engaging stories. Some USPs that have been used in the past by various brands that have proven to resonate with middle-market consumers include better messaging regarding: the winery philosophy behind blending; the actual selection of source grapes; stricter barrel or tank selection for final blends; being prepared to declassify unsuitable components; and an elevated attention to detail in the winery across all processes from vineyard to bottle.

Differentiating products during promotions is another aspect that can be important. Consumers in recessionary times automatically become more selective, looking to buy products that stand out from their peers with an appealing proposition. While challenging, bear markets can foster new and long-lasting trends in buying behaviour, something that has helped the wider South African category in the past, equally, buying patterns can end long-standing trends if products are not marketed and communicated in an attractive and relevant message for the changing times.

While actioning the marketing essentials to captivate the consumer and keep their attention is a never-ending job, paying greater attention to all aspects of the logistic chain in offering a value-added service can also certainly help rather than hinder when it comes to selling wine with extremely tight margins. Any additional savings can then also be periodically passed on to consumers through eye-catching promotional activity.

Whether your marketing mix focuses on multi-buys to promote loyalty, price reductions to encourage first time trials, packaging innovations such as moving to screwcap, or value range extensions downwards to bring in new entry level consumers, wineries and brand owners need to proactively go about creating a strategy that resonates with their target consumers while never forgetting to segment the market as one shoe size does not fit all feet.

Recessionary times, with a real squeeze on consumers’ disposable income, as many marketing savvy people are now discovering, does not necessarily have to mean a drop in wine consumption, but it will almost always mark a change in buying patterns. Keeping a finger on the pulse of consumer sentiment both in the UK and at home in the local South African market is going to be crucially important for wineries and brand owners as we all start to put the abysmal trade environment of 2024 behind us and look towards brighter opportunities in 2025.

• Greg Sherwood was born in Pretoria, South Africa, and as the son of a career diplomat, spent his first 21 years traveling the globe with his parents. With a Business Management and Marketing degree from Webster University, St. Louis, Missouri, USA, Sherwood began his working career as a commodity trader. In 2000, he decided to make more of a long-held interest in wine taking a position at Handford Wines in South Kensington, London, working his way up to the position of Senior Wine Buyer. Earlier this year, he moved across to South African specialist merchant Museum Wines to become the Fine Wine Director. He qualified as a Master of Wine in 2007.