Friday, November 04, 2011

Grapes, Climate Change and Branding

Will barbera go with fish or pork?

Like formica, kleenex and duct tape another category of generic brands is under threat.  This time wine.

What is common about the following?
  • Cabernet Sauvingon
  • Merlot
  • Pinot Noir
  • Chardonay
  • Reisling
  • Sauvingon Blanc
They are a) the original six Noble Grapes - the basis of highest-quality French wine (although the politically correct term is now International Varieties which includes 3 others and isn't limited to France), b) brands - for over 100 years the New World has marketed by the combination of varietal and location, and c) like to grow in cool climates.

So what happens when climate change raises the temperature by say 2-degrees?  In California, that could reduce the growing area by 30-50% by the year 2040.   This creates a serious marketing challenge as noted in a piece on NPR.  

An enduring brand adapts to the changing times; it has to. But when the roots of your business are based literally in roots that have come from grafted/cloned grape vines there are substantial risks as the environment changes.   A wine designated a 'California Chardonnay' must come from chardonnay grapes grown in California - it is the law.  But what happens when demand goes up and supply goes down? What happens when the category itself shrinks?  

Maybe a lesson from [yellow tail] provides insight.  They became a successful brand in part by producing a wine that isn't very winey.   Wine is known for being tannic and acidic - two tastes that most people simply don't like.  So, they made wines that aren't tannic and acidic for the 85% of the US market that didn't drink wine.  They re-featured wine by not focusing on the nuances of terroir (where the grapes are grown) which is often the basis of wine debates but rather on the simplest of elements - the variety.  From a production point of view this brand strategy allows grapes from many locations to be used to create a consistent product; nobody is likely to do vertical tastings of this brand.   By simplifying the decision process and making a less stringent product they made it very easy for consumers to choose.  As a result they sell more wine in the US than all French producers combined. 

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