It was a brutally warm day in Melbourne. But the temperature was even hotter inside the city’s Exhibition Center where the Winemakers’ Federation of Australia was holding its annual Outlook conference. Kicking off the event, and boy do I mean kicking, was Tesco’s director of beer, wine and spirits, Dan Jago.
Jago didn’t pull any punches during his 30-minute session. First, he accused the Australian wine producers of complacency: ‘For too long you have been saying, “This is good because it is Australian”.’ Then he challenged the audience to alter its approach. ‘I would also urge you to make your wines lighter and more refreshing. Wines with 13% or 14% alcohol just aren’t exciting any more, and customers are looking to the Old World for more refreshing wines.’
Finally, he pointed out the urgent need for staying up to date. ‘If you don’t change, others will change faster,’ he said, and pointed to both South American and South African wineries as evidence of strengthening New World competition for the British market.
To say that the Australian winemakers in the room weren’t impressed with Jago’s presentation would be an understatement. Rick Burge, of the Burge Family Winemakers in the Barossa Valley, spoke for many in the room. ‘The British have a grocer’s mentality. They want Australian quality at Chilean prices. I don’t want to be dictated to about flavor by a British supermarket.’
Hunter Valley winemaker Bruce Tyrrell, who supplies Tesco with a number of wines, was more succinct. ‘He’s a wanker. He should go back to selling dog food. For years, the Australian wine industry has been supplying the British with technically correct wines that have good color and are full of flavor, compared with the Europeans, who have been supplying them with technically poor wines with no color and taste like cat’s piss.’
There are three good reasons why the Australian winemakers in the room were in the wrong. First, as a general rule of business, it makes no sense to mess with Tesco. It accounts for 25% of all the wine sold in the UK, which is the biggest single market for Aussie wines.
Second, Tesco knows wine consumption and is closer to British consumers than Australian winemakers. If Jago is certain that consumers will be looking for lighter wines, he is not expressing his own personal taste. It is almost a certainty that he speaks for the British market.
But third, and most troubling, Australian winemakers are in danger of suffering from a fatal case of strategic amnesia.
Only 17 years ago they were the beneficiary of French winemakers’ arrogance. In the face of a growing demand for simple wine and more reliable quality, French winemakers maintained their complex appellation system and claimed that quality issues were the fault of ill-developed English palettes. They also failed to recognize the threat posed by Australian winemakers because they could not conceive of their wine being in any way equivalent to their own.
But now it would appear that the Australian winemakers are in danger of repeating these mistakes. They seem intent on ignoring customers, arrogantly continuing to produce wines in their traditional fashion, and failing to recognize that new wine regions are emerging as well as designing their wines around unmet consumer tastes.
It is a classic story. An industry listens to consumers and grows into a titan, but then starts to believe its own publicity and falls into the deadly trap of assuming that it knows what the market wants. There are only two guarantees in marketing. First, that consumer tastes change constantly. Second, big, dumb organizations will always fail when they stop listening to the market and assume that what they make is what consumers want. Tesco was trying to do Australia a favor. Next time, it won’t be so polite.
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2 comments
C
May 4, 2009 at 9:29 am
From just these facts alone, having not been there myself, I’m not sure I can see drawing quite such a hard line against the Australian winemakers. You can supply some of the details, but from what I read above:
Tesco: “Brits want lighter wines”
Aus Wine prod: “Bugger off you pansies”
I guess I’d want to explore how much business the UK and Tesco means to the Australian wines. Maybe they are listening to their usual customers – just not the British customer, and maybe it doesn’t make sense from a branding perspective to change their core offering to suit a high volume lower margin business.
I think you rightly point out that this is a classic confrontation, one that can be lost many ways. While I completely agree that its dire for brands to listen to their customers – I’m not sure I can see above enough information to know that this is the right customer to be listening too.
If I can throw a maxim at you: “Can’t please everybody all of the time.” That strikes me as important in this classic confrontation. Innovation and staying current with your customers is essential, but maybe the industry simply shouldn’t be exporting to the UK. If there’s little demand for their product there, they could consider simply not distributing there.
Also strikes me that this might be a great time to consider the introduction of a new brand to fill the changing needs of one customer group.
Just a few thoughts – I agree with your post, but couldn’t help but wonder aloud if there’s a bit more to this story…
Steve Spalding
May 4, 2009 at 6:49 pm
I agree with the above commentator but I think you identify the core concern well. The one sure way to guarantee a most untimely death is to start believing in your own hype.
The second you decide that your own genius trumps entrepreneurial adaptation is the second that you start losing. Sometimes it takes a pretty long time to notice your loss but it always comes and it’s always catastrophic.
As for this particular situation, I think the jury is still out but I am much more concerned about the attitude that they are approaching this with than the resolution.
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