Ice Bucket - The look of lux

Wine is creating a reward ladder for its consumers through packaging cues. Is this a good thing?

The recent economic recovery has brought to the fore a consumer trend which has been growing for several years: the reward trade-up. Today’s consumers appear to be much more open to spending slightly more in order to obtain something a bit better than the norm: organic fruit and vegetables, specialty coffee, artisanal sourdough bread, craft beer and spirits (epitomized currently by the revolution in the gin category), or my own personal favourite and particularly fitting for the time of year, Heston Blumenthal’s mince pies.

Despite the fact that the word “Luxury” litters the names of these higher priced / assumed higher quality products, it’s debatable whether these products are actually luxurious. According to the Oxford English Dictionary, luxury denotes ‘an inessential, desirable item which is expensive or difficult to obtain.’ Heston’s mince pies may be flying off the shelves, but they are readily available. . and to my way of thinking, they are essential. Cristal, a Champagne created for Tsar Alexander II of Russia and retailing at over £100 a bottle, might be considered by most to be “inessential”. For those that do want it, yes it is expensive; however with a production run of between 300,000 and 400,000 bottles a year, it isn’t difficult to find.

In the real world, the reward trade-up isn’t about luxury. Real luxury is the wine Sine Qua Non ‘Queen of Spades’, which produced just 100 cases in 1994 and retails at around £7000 (per 750ml bottle). For most of us, luxury is trading in our £5 everyday wine for a £20 bottle of Champagne. Therefore brands such as Moet & Chandon, with an annual production of around 26 million bottles, counts as a luxury product despite its ubiquity: it is “difficult to obtain” because we find it hard to persuade ourselves to spend that much on wine on a regular basis. It’s desirability therefore is largely a function of its luxurious image (itself a function of packaging, advertising and long-run brand equity) and high price. It’s achievable luxury.

One of the fascinating developments of 2015 has been the way in which cheaper products have found ways to enter the reward trade-up space by adopting similar strategies to luxury brands around image and packaging, but disrupting the accepted norms by offering markedly lower prices than expected.  Whether or not the inherent quality of these new products justifies its luxurious packaging is often debatable; the point is that consumers are buying these products to meet a need which is more to do with symbolic self-reward than an appreciation of the finer points of ingredients.

 

 

Probably the best examples of this can be found on the shelves of Aldi, one of the new stars of UK grocery retail. Some of Aldi’s wines offer good value for money. Many of Aldi’s wines look fantastic, like they are worth a lot of money. Their Bordeaux Superieur is pushing all the buttons of a high quality product: sensible, prestigious-looking label, made in partnership with Bordeaux legend Jacques Lurton, winner of an IWC gong (admittedly only a bronze). And all this for just £4.99. Maybe some discerning drinkers will not appreciate it, but for a lot of people, it will be exactly what they need: desirable, luxurious feel, and affordable.

Some wine industry observers are wringing their hands at this development. It’s true to say that the UK wine trade has done itself no favours in its long-run effort to persuade consumers to spend a bit more on wine. Confidence in price as a proxy for value has already been undermined by years of (largely spurious) half price promotions, which are mercifully on the wane as they have lost their effectiveness. The packaging lever could similarly be corrupted if wines look luxurious and then don’t deliver once the bottle is open.

However our view is that, in the end, quality tends to win out, even in the trade-up reward space. Some of the most successful wine brands of the past 10 years – Casillero del Diablo, Campo Viejo, Tesco Finest, Sainsbury’s Taste the Difference, to pick a few examples – have grown because their astute packaging, marketing and pricing has been coherently supported, in the main, by fundamentally good product.

The other lesson from these examples is that success is built on solid, long-term thinking, planning and investment. Those brands which have tried to raid the reward trade-up space for quick profits tend not to have lasted. Is there a message in all this? Perhaps that a truly valuable brand is for life, not just for Christmas.

If you are a producer making great wine and want to know how to communicate quality to UK consumers, try out our UK Label Design Report. Or if you want to learn about what other trends are bursting into the global market, have a look at our Global Consumer Trends Report, the 2015 edition of which will be released in the new year.

Author: Eva Maitland

Email: eva@wineintelligence.com