An upgraded market model, plus some hard questions to ask yourself about where to allocate resources
At this year’s ProWein and Fenavin wine fairs, the Wine Intelligence team spent some time discussing our market classification model, and how it’s evolving. We talked a lot about the need for wine marketers to make a more informed decision about how they allocate limited resources.
Our model classifies more than 50 world markets according to their “life stage” and their attractiveness to the wine trade. How can you define something as subjective as “attractiveness”? We do this by considering more than 20 variables including economic development and trends, openness to new products, and the relationship of consumers with wine.
In a “Mature” market, volumes have reached their potential, the consumer is knowledgeable, but growth is hard to come by as the market is so saturated. At the other end of the spectrum, there are emerging markets where per capita consumption and consumer knowledge are currently very low, and routes to market and regulations can be challenging. But these markets are growing at a fast pace.
1. Distribute your bets wisely.
A healthy allocation of resources will include betting on markets at different life stages, to compensate for different degrees of risk.
2. Don’t spread resources too thinly.
Your hard work will evaporate quickly if you choose to “focus” on too many markets. Select the few where you really have the most growth potential.
3. Understand the consequences of saturation.
In a saturated market, whatever you sell must come at the expense of something else. Do you really have what it takes to displace an incumbent? Do you have something genuinely new or differentiated, or perhaps better quality for the same price? In either case, how do you make a convincing argument to a sceptical buyer?
4. Know your strengths.
Integrate our market model with data and insight specific to you (a lot of our strategy work is helping clients do this). Where are you growing? Where do you have the best distribution partners? Where is there a cultural affinity towards your products? Where do you have trade advantages?
5. Understand your target consumer.
Consider the variety of consumers within each country. How big is your actual target market? Who is your target consumer and what is important for them? Are your wines attractive to the target? Is your label and communication strategy appealing?