Global competition forces winemakers to up marketing

There was a time when the Canadian wine industry was defined by a vintage known as Baby Duck, a sickly-sweet fizz laced with alcohol that appeared to be aimed at a consumer only recently weaned from soda pop.
What a difference two decades makes. Undoubtedly, the domestic wine industry has grown up. But, the industry is currently grappling with the same set of problems it faced when the Baby Duck rage began to fade in the early 80s: How to ignite stagnating growth in a fiercely competitive, global market and raise the image of Canadian wines.

There was a time when the Canadian wine industry was defined by a vintage known as Baby Duck, a sickly-sweet fizz laced with alcohol that appeared to be aimed at a consumer only recently weaned from soda pop.

What a difference two decades makes. Undoubtedly, the domestic wine industry has grown up. But, the industry is currently grappling with the same set of problems it faced when the Baby Duck rage began to fade in the early 80s: How to ignite stagnating growth in a fiercely competitive, global market and raise the image of Canadian wines.

To that end, both the Wine Council of Ontario and the British Columbia Wine Institute have scrapped their existing marketing strategies. They have recently forged new alliances – working with heavyweight vintners in Ontario such as Vincor International and Andres Wines, as well as their respective provincial governments to market their wines as an umbrella brand – in a bid to build market share in the coming years.

The Wine Council of Ontario, for example, has developed a bullish plan with the goal of having the province recognized as one of the best wine-producing regions in the world, and achieving $1.5 billion in retail sales by 2020.

Kevin Nullmeyer, VP of marketing for the St. Catharines, Ont.-based organization, says that the Ontario industry has just received $10 million in funding from the Ministry of Agriculture over the next three years. It has also appointed Taxi as its AOR; the shop will gear up for a new campaign this summer.

‘I think the wine industry is going through a maturing process,’ says Thomas Pigeon, CEO of Pigeon Branding + Design, whose company has recently spearheaded a wine-labelling and design competition for Ontario wines in conjunction with the Ontario College of Art & Design, Applied Arts magazine, The Wine Establishment and Strategy.

‘There’s a lot to be proud of. But we haven’t yet been able to completely shirk our historic image of selling cheap, sparkling wine. We haven’t had sophisticated marketing…. The industry is really just starting to wake up.”

Indeed, following two decades of tinkering with recipes and practices designed to improve the quality of Canadian wines – a hugely successful effort resulting in a stunning array of international accolades and awards — many Canadian vintners are beginning to revamp their marketing efforts as a way of combating shrinking sales growth. Certainly, many agree that the industry is going through a major shift – one in which there will be a bigger push to richer and more elaborate marketing efforts.

After clocking strong yearly growth rates over the past decade, Canadian sales have been hit by a sluggish world economy and the aggressive expansion of wine production in Australia, Chile, South Africa and southern France.

Ontario wines currently account for about 75% of all domestic wine sales in Canada; wines from British Columbia make up the bulk of the remainder of sales.

Consider these figures: Between 1988 and 1998, sales of Ontario wines at the Liquor Control Board of Ontario grew by nearly 10% a year. For the fiscal year ended 1998, Ontario wines had captured 43.3% of the overall Ontario marketplace. That slipped to 40% in 2001, according to figures provided by the LCBO – one of the single largest purchasers of wine in the world.

Overall, the pie is growing. For example, the volume of Ontario wines sold in Ontario last year increased by 14% to $345 million, up from $297 million in the previous year. But Canadian wines are losing the battle to imports which are swelling at a much faster clip.

‘The wine industry around the world has seen more change in the last 10 years than in the last 200 years,’ explains John Peller, president of Andres Wines of Grimsby, Ont., which also owns the Hillebrand and Peller Estates labels. ‘The new world wines – like those from California, Australia, New Zealand and Canada – have transformed the industry. It’s become highly fragmented and very, very competitive.’

Those like Bill Ross, president of the Canadian Vintners Association in Ottawa, believe that new competitive pressures will force Canadian players to develop comprehensive marketing plans, or face having their market share gobbled even further by imported wines.

The problem, as Ross sees it, is perceptual: At the check-out counter, too many Canadians still turn up their noses as they bypass the domestic wine section. ‘The major thing we are struggling with is convincing Canadians that we do have good quality wines at good prices,’ says Ross. In many ways, it’s a complex marketing proposition, beset by pitfalls not faced by marketers in other categories. For example, a mass market campaign for wine has the potential to backfire. Television advertising in aspirational categories like wine can cheapen the overall brand image, Pigeon says. ‘It’s all about image and it’s very different than conventional packaged goods.’

However, by far the most pervasive reason that Canadian vintners don’t advertise on television is that there’s not enough in the marketing kitty to support such campaigns.

But at least one winemaker – the Canadian industry leviathan – has recently turned its attention to television as a way of boosting sales. Steve Bollinger, VP of marketing for Atlas Wine Merchants, the marketing arm of Vincor International, says his company has unfurled two TV marketing campaigns over the past two years to resounding success.

Last fall, the company launched a campaign for its Solã Nero brand with targeted spots on the Food Network. A year earlier, the company launched its first TV campaign with its new Ancient Coast brand. Those spots were carried on mainstream networks and both were developed in conjunction with the company’s advertising agency, Gee Jeffery & Partners.

‘We remembered some of the campaigns of the past – like Hochtoeller and wondered if we shouldn’t look at TV advertising again,’ Bollinger says. ‘We over-achieved our objectives for one year targets…. We’ll definitely think about doing it again.’

Bollinger admits that TV advertising in the wine industry has its own challenges. Foremost among them, he says, is that in the wine industry it’s important to be perceived as small. Otherwise, consumers assume your products are too mainstream. So any message delivered on TV must play up the quaint, artisan-like roots of the vineyard, he adds.

The company also tested radio spots last fall for its Sawmill Creek brand and is considering direct mail, bypassing the LCBO’s stranglehold on distribution, Bollinger says.

However, many Canadian players admit to facing the same vexing challenge: how to position Canadian wines as a unique proposition.

Traditionally, the Ontario wine industry has promoted its products through tourism – getting people to buy its wines after visiting its wineries – as well as through taste tests done at the LCBO and through newspaper inserts in the fall.

Andres’ Peller says that because the wine industry is so capital-intensive, Canadian vintners haven’t typically had large marketing budgets, including his own company, which is the second largest wine producer in Canada. In the past, his company has focused much of its advertising on print – placing ads in magazines like Maclean’s, Good Housekeeping and Bon Apetite. The purpose of the last major campaign – about two years ago – was to build an image of the brand by evoking the history of winemaking at the Andres vineyards with tag lines ‘deeply rooted in Niagara-on-the-Lake’ and ‘from the heart of Niagara-on-the-Lake.’

Peller says print ads work best – far better than television – for an aspirational and lifestyle product like wine. Print imparts much more information, which is essential because Canadian consumers are still largely under-educated when it comes to understanding the differences between a $40 bottle and a $10 bottle of wine.

Still, Peller believes that going forward, his company will try to leverage the brand building efforts currently being rolled out by the Ontario Wine Council.

What’s in the pipeline? Nullmeyer says much is still in the planning phase. ‘We’re still doing a lot more research,” he says. ”We do know from our studies that at least half of the purchasing decisions are made in the store, so labelling [which needs to be more distinctive to differentiate it from the pack and tell the story of Ontario wines] is going to be a significant part of our effort.”

Even smaller vintners like Hernder Estates Wines of St. Catharines, are getting into the marketing game like never before. Hernder, for example, last fall hired a person exclusively dedicated to marketing for the first time in the company’s history.

‘I was brought on to develop a complete marketing plan…to bring more awareness to Hernder Estates,” explains Karen DeRoche, Hernder’s director of marketing communications.

Late this past fall the company unleashed its first multi-media campaign to help build brand awareness. It ran ads in a plethora of media – including magazines such as Vines and Wine Access and newspapers such as the Toronto Sun, as well as spots on local radio and TV.

The ads were built around the theme of a winter adventure – luring people to the Hernder’s Estates to cross-country ski, go hiking and sample its wines.

The B.C. wine industry is carefully eyeing the experience of winemakers in Ontario believing that, as its own industry matures, it will face many of the same issues, explains Len Bykowski, president of the Vancouver-based B.C. Wine Institute.

While Ontario hopes to build its share of the global market – in step with the domestic market – the B.C. wine industry is looking first to continue its expansion in its own province and Alberta, Bykowski says.

However, like its Ontario counterpart, he says that much of the marketing efforts in the future will be focused on enhancing brand image and building on the mystique of winemaking. One of the major tag lines going forward will be ‘It’s what you bring to the table,’ which the institute believes will evoke the tradition, pride and story of winemaking in B.C.