By James Atkinson
The wine industry has a lot to learn from spirits companies about building brands that resonate with consumers, according to Treasury Wine Estates (TWE) CEO David Dearie, who addressed an industry breakfast in Melbourne this morning.
Dearie told the Drinks Association breakfast that wine suppliers only had to look at the "phenomenal success" Diageo has had with its Ciroc vodka brand in North America for lessons on what differentiates a luxury product in the eye of the consumer.
"As featured in Marketwatch's recent 'Hot Brands' edition, Ciroc has gone from 340,000 cases in 2009 to over 1.83 million cases in 2012, off the back of some great brand building and very clever marketing," he said.
"It is also worth considering the current dominance of spirits within the international showcase of global travel retail; think about the brand building and story-telling major spirit brands have embraced in order to profile their products; and ponder why certain spirits bottles are instantly recognisable in contrast to the 'wall of sameness' that exists in wine."
"Taking these factors in to account and you start to understand the significant price difference between yet another $20 private label vodka and a bottle of premium vodka sold at five times that price," Dearie said.
He said one example where TWE had gotten its positioning right was the Penfolds Ampoule.
"Some thought charging $168,000 for any wine was inherently wrong; others felt it was a gaudy and unsophisticated approach to seize the title of the world's most valuable wine; and most thought we would struggle to sell them," he said.
"Within six months all twelve ampoules were successfully allocated with several showcased at leading international airports and high-end retail stores. Consumer interest was also phenomenal with over seven million media impressions globally since launch."
Tough week for TWE
Dearie acknowledged it had been a difficult week for TWE, with Monday's revelation the company would take a $160 million hit as it took the "painful but necessary" move to destroy excess inventory in the US.
"After the week I've had it's better than ever to be surrounded by friends, customers and partners from the trade, rather than journalists!" he joked.
But he stood by the decision, which he said "demonstrates more clearly than ever, that quality comes at a price".