media update’s Adam Wakefield spoke to Hein Koegelenberg, CEO of La Motte Wine Estate and Leopard’s Leap wines, and Gerrie Heyneke, advertising and branding management at Hermanuspietersfontein Wine Cellar, about how the wine industry is about affirming the experience and brand positioning.

According to Koegelenberg, 14% to 17% of a bottle of wine sold for less than R100 is attributable to the production process of the wine.

“Then there are taxes, packaging, and logistics. Volume, of course, has a significant impact on production costs,” he says.

Price points are determined by categories, such as under R50, R80, and R100. The brand, label, and style of wine need to over deliver at the specific price point, with brand positioning more important for expensive wines and affecting their price.

Hermanuspietersfontein, a winery based in Hermanus, is a range comprising 14 premium price wines. According to Heyneke, it is impossible to typecast their market because they cannot control who buys their wine.

“The practical answer would be ‘we’re judged by the company that keeps us’. Our wines are available at Makro, fine wine shops, and chosen by sommeliers and restaurants who favour to list our wines,” he says.

Production in Hermanuspietersfontein’s case is a significant cost factor, starting from the cost of land to farming practices to the winemaking process. In particular, the cost of imported barrel components is high, with oak barrels generally written off in three-year cycles and cost of capital vested in maturation time and storage space.

“Brand positioning will include the cost of choice of packaging, and cork or screw cap packaging design. Marketing comes at a cost – from website to collateral, social media, on which we are very active, and local and international travel – it all adds up,” Heyneke says.

Perception drives wine sales

Much of how a brand is positioned, says Koegelenberg, comes down to perception, and this is what drives sales. It is about more than the wine itself.

“In today’s world it is about more than the product, it is about the experience, the aspiration, and the association. For example, if someone orders wine in a restaurant, they choose the one they know something about.”

Customers want to be able to say something about the wine. Not necessarily about the environment it was grown in, but about the ”wonderful experience” they had drinking it.

According to Koegenlenberg, retaining customers is about giving them more than the product. It is about giving them a story, a memory, and some emotion. Being reliable and over-delivering on expectations are also critical elements in retaining your customer base.

Compared to returning customers, encouraging new customers to consider wine means, in Koegelenberg’s view, making it more approachable. For the average consumer, one wine is not necessarily better than another, just different.

“The wine industry needs to change the way it communicates. Rather than wanting to educate and tell people about the wine, it should be inclusive and engage consumers. The wine experience is also very important,” he says.

“There should definitely be an element of storytelling and brand association. Wine brands need to focus on differentiation and a recognisable and consistent style.”

Heyneke says Hermanuspietersfontein aims to reach new customers through differentiation, being relevant, and gaining customer’s respect and trust. Key to this is communication, and constantly doing so to maintain momentum.

“Social media is a great tool to entertain and stay in touch with our ‘followers’, and to tell our story. The Hermanuspietersfontein story is fact, not fable, and was it not for the sheep, we wouldn’t have a story nor a brand name,” Heyneke says.

“Our family of wine names, on the other hand, is a creation, told by a sheep, and seems to have found favour with consumers.”

The effectiveness of a tangible product

A consumer being able to touch a product, as noted by the Harvard Business Review, creates a sense of psychological ownership, driving purchase decisions.

In the wine world, this plays out in Heyneke stating that if a consumer picks a bottle off the shelf to read the label, there is a 50% chance it will end up in the shopping basket.

“The fact of the matter is, the online landscape is as competitive as its brick-and-mortar competitors – and consumers won’t buy a wine ‘blind’ from the Internet; not until a clever young geek develops a scratch and sip functionality,” he suggests.

Wine must be tasted or experienced to be able to make a buying decision. This emphasises the importance of in-store tastings, wine shows, festivals, and events in what Heyeneke calls “the start of a beautiful relationship. The proof is in the pudding”.

According to Koegelenberg, wine’s tangibility is useful in creating brand value, through special editions, vintage wines, and so forth.

“Wine is a product with a story, so it does help, but at the same time there is a danger that we focus too much on the product and forget about the consumer, the experience, and the emotion,” he says.

Online and communication bring the customer closer

The online world of wine is, according to Koegelenberg, “the new way of selling and it is changing the traditional ways of marketing and selling”.

“Because everyone can now share their opinion or experience online, marketing, and selling are increasingly less about the product and expert opinion on quality,” he says.

“It is more about the experience. Even online sales require experience – it is a continuance of the actual experience around the product, via social media channels.”

Convenience goes hand-in-hand with the online offering, with Koegelenberg cautioning brands to stay up-to-date with technology, making sure their products can be purchased online, with the infrastructure in place to execute online sales.

Heyneke says digital platforms and social media, underlying Hermanuspietersfontein’s emphasis on communication, are ideal to guide potential customers and returning ones to the winery’s website and online shop. From there, it is up to the customer.

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Last year, at the Future of Media Conference, Nic Haralambous, co-founder of online socks store, Nic Harry, spoke about the value of products being tangible and, without a good product, “you’re not in the game”. Read more in our article, Future of Media Conference: Tech is not going to save your business.

Image courtesy of South African Tourism, under this license