Ep. 1578 Segmenting The Fine Wine Consumers | wine2wine Business Forum 2022

Since two thousand and seventeen, the Italian wine podcast has exploded. Recently hitting six million listens support us by buying a copy of Italian wine unplugged two point o or making a small donation. In return, we'll give you the chance to nominate a guest and even win lunch with Steven Kim and professor Atilio Shenza. Find out more at Italian One podcast dot com. Italian wine podcast is delighted to present a series of highlights from the twenty twenty two White wine business forum, focusing on wine communication and bringing together the most influential speakers and the sectors to discuss the hottest topics facing the wine industry today. Don't forget to tune in every Thursday at two pm Central European time or visit point wine dot net for more information. I'm ready to go. Super of time. So welcome to everyone. I'm Andreas Nardi, I'm a CEO of, Angelini Weinstein Estate and, next to achieve a a very important, place in the muscle of wine probably in the next few months. So we will see what's going on here. But, what is important today is not me. What is important today is that we are discovering a very special moment for the wine industry. And it seems that, top wines, fine wines, they they they will be very important for each one. It seems that it will be probably a category where there will be less space than what was in the past. For that reason, I think that it will be very important to analyze, discover, and study what's going on in this special segment of the market. In order of, explaining and analyzing what happened there. Today, we have invited Pauline Bicar. I met Pauline a few years ago, four years ago in Champagne in a lovely think tank that was very inspiring for all my life and for my career. But what is nice and what we will ask today to, to Berlin it will be to try to follow a flow in order to analyze correctly what is first fine wines, how we de differentiate fine wines versus, luxury wines, The second point will be to analyze the type of consumer that we will have in front of us, especially in terms of demographics. The third point, it will be to analyze the size of the market. So analyze, how much big is the the field where we we can play. The fourth element, it will be to analyze, if we need to develop a specific brand strategy in order to achieve in order to attack this, segment of the market, but also we need to analyze the reason why the consumer want to buy fine wines. And after that, the ending point, it will be try to analyze, how we can communicate about fine wines in a fine wine world that is changing quite a lot. So please, Pauline, go and enjoy Thank you. Thank you, Andrea. And and just as a it's it's a very ambitious program in thirty minutes. So we might run out of time and some of the points. So I've prepared a presentation that I'm sure I won't have the time to present half of it, but I kept the slides in there so I could share with you and you might find some of the stats that I don't have the time to present today still useful. And we also intended with Andrea to have a bit more of a conversation than just me presenting so that it can illustrate as an as a, like, fine wine estate, what I'm presenting, how it's relevant to him in terms of strategy and everything. To present myself a bit, so, Pauline Vigail, and I'm the CEO, well, the executive director of Arena Global. Which is a think tank dedicated to the future of fine lines. So basically what we do is we work with contributors from all around the world and form all position in the wine industry. So you can see Andrea here, but there are people from production, distribution, marketing, but also outside of the wine world because we want to understand how the world is changing and how those change are creating opportunity to be seized and risk to be to be managed. And we then produce six kind of format of insights. So we do have insight series, there are webinars and conference to talk about important topics. We do roundtables for, like, to assess practical topic about the future of fine wine. We have a podcast every other week. We've got a newsletter every other week as well. And eighty percent of what we do is free to everyone. So you can go and you can, you can already you know, explore loads of the of the research that we've done into what does the future has in store for fine wine and how the change in the world are likely to impact production and distribution of fine wine tomorrow. So for example, this is the latest publication that we did in in in last September that is free for everyone. You can scan the QR code if you want to have it, and it's just a, like, a global thinking what sustainability can mean and how we can maybe interpret it a bit differently, from the global perspective of what sustainable agriculture is. So but going back to the main question of today, which is segmenting final one consumer, just like Andrea said, Maybe we should start by defining what fine one is as, you know, master of white student. We always start by defining the topic. Then quantifying the market and then explaining a bit how we've done this. And then I'd like to finish on some of the trends that we see that might impact the way we communicate about fine wine in the near future. So this is going to be really quick because I'm gonna go there to the, like, the full definition because that's a topic for debate, and it's actually this definition is here to generate conversation. It's not a finished thing, and it's not an absolute one. It's a definition that we come up with after asking two hundred plus member of the trade and consumer what they thought fine wine was. And what we realized is fine wine has had three legs. And then in the recent years, we've had it a four leg that are all quite important to the definition of fine wine. The first one being the objective quality of fine wine. So harmony, quality, you know, capacity to age, all all of this. The second one is emotion. So the capacity to produce emotion and to stop the time, so the fact that you will remember that wine forever because it marked your memory as the drinker. And the last one which is well, last one that was from the original definition is very important is the intent. So actually, fine wine doesn't happen by mistake. It's a sort of expression of truth. It's house, a winemaker, a bit like an artist, how did he or she wanted to express the best they could do through their production of fine wine? And when you look at so so Andrea, to your point about what's the difference between fine wine and luxury wine, I'd say it's the place that's given to the consumer in some way, like, if you look at Peter's definition of of luxury wine out of the six attributes that they've defined with Lizats, two are around the privy the sense of privilege and pleasure that it gives to the consumer. So it's very consumer centric. When in fine wine, it's a bit more producer centric when it's division and the ethos of the producer that defines that helps them to achieve the status of fine wine. I don't know if that makes sense, and I don't know if it's important, but I think it's a it's relevant detail as well in communication. When you communicate about fine wine, and I think Erica mentioned that in her presentation as well this morning, the people that created the fine wine are the ones we want to hear about because that's really the vision that helps them getting there. And the last one, and I'm we've got loads of presentation about sustainability today. But the last one, in the recent years, when we've done the same interviews through collectors and trade people, the notion of sustainability was really, really more and more important. So the because fine wine only exists through time, and you need time to establish a fine wine brand, and you need time to prove everything in the wine world. Then it can't be something else that it can't be not sustainable because it's the antithesis of, you know, being able to survive through time, and sustainability me, meaning, you know, environmentally, socially and financially sustainable. And we can talk about of those three points for hours, but, you know, it's open to debate and question that actually at the end as well. Then we tried to quantify the market. So we've done this this research project in partnership with a, a fine wine negotiator in Bordeaux, and we've done it in two different ways. We've done it with quantitative data that we've run through wine intelligence, and then we've done qualitative, interviews as well to try to understand some some segment, some particular segment of the of the fine wine consumers. So as you've seen, there was no price point in the definition that we came up with, but when you do quantitative survey, you kind of have to put a price because otherwise you're comparing apples and oranges. So when we do quantitative, we actually came up with three tiers of price. And what it's interesting is that you can reach people through quantitative survey for the first year consumer. So people that buy wines that are between thirty and a hundred and fifty euros, those people would respond to a questionnaire. Then when you go to the second tier and the third tier, then because of the nature of the price, you also end up with a nature of consumer that is a high net worth individual. So you need to approach them differently in terms of survey, and that's when we did the the question and the face to face interview to actually understand what what was what was fine wine for them. So in that study, we've got two different approach, and we also got maybe two major segments in the fine wine consumer. The one that bite just the first year and the one that are able to buy regularly across the three tiers, and they may or may not be the same, you know, people. I don't know if you can see, but the first question that we ask, why intelligent is how big is the fine wine market? How many consumers are they? Within the wine consumers, how many are that that buys wines that are? So we've translated the thirty euros Xcelo into seventy five dollars retail price in the US. I think Peter's luxury definition starts at a hundred. So we, you know, same thing but different than fifty quid and fifty pounds in the UK. And then and then the equivalent in Hong Kong and and Chinese currency we're doing France and Japan this year in terms of study, and then one will have done those six countries. Well, every two years, we'll we'll run the barium zero again to actually see the idea is to have a track in time and see how it evolves. And so without any kind of surprise, it's a niche market. Right? So it's it's seven percent of the wine drinkers in the US buy fine wine that are over seventy five, seventy five dollars. So it's seven percent of the wine drinkers that are still a niche market compared to, you know, the drink market, for example. But it's still, you know, relatively an important number of consumer in the US. For example, it's still five million people, so it might be you know, worth talking to them. And then once we had this, we tried to qualify the market and see, like, maybe in terms of segment who they were and everything. So this is only a very small fragment of all the data that we've got in the study. But I chose that slide to illustrate how different markets can have a different segmentation. For example, not notably in terms of gender, so if you look at the US, final wine consumer, and the continental Chinese final wine consumer, you can see straight away that the US is still very male dominated, whereas the gender balance between man woman and man in Asia is is really more balanced. There's different reasons, there's different reason behind this. Because really in Asia, wealthy people came to wine altogether. There's not the history and the legacy that we've got, for example, in Europe, that, you know, fine wine is this thing for male, and then women have to battle themselves into that space. Like, in Asia, it was just either you wealthy or you're not, and either you want to aspire to Western culture or you're not, but the gender was less significant. Then in term of age, it's always interesting to see that, you know, I know that we hear a lot and and and the numbers shows that younger people are less and less interested in wine compared to other drinks. But when it comes to fine wine, it's interesting to know that, you know, younger people because, you know, forty four might not be super young But, younger, you know, we we haven't lost the demographic. There's still people across the board and across the age that still buy fine wine. So maybe consumers do behave differently in terms of demographic in the fine wine segment and in the rest of the segment. And the last thing that I wanted to show also in the US slide is that if you see if you look at how where they are in the US, usually, and it's more anecdotes. But when I talk to producer, they usually go either to the West Coast or to the East Coast of the US, but you can see quite clearly that the central part of the US is more than the third, of where the fine line consumers are located. So please don't ignore Central US when, you know, you think about the US market. And that's at this stage that I wanted to ask you, Andrea. So we see, you know, the market is slightly different between China and the US. And we look at different people, different, you know, demographics. How do you as a as a as a winery approach those market differently? And can you tell us a bit practically how you adapt that strategy to those different market? First of all, thank you for, for all this great information that we can have, because they are very important in order to analyze how we can attack a specific market. In especially in Bertani, but also in Vodysugah where we I work. It's something that fine wines. It's something that we started to discover a few years ago, especially. We started with Bertani. And we are really right now in a big process of, finding a specific way to sell our incredible library that we have in the seller bot. In terms of explaining, our strategy in different market, we'd like to start by three major pillars that are part of our strategy first. I feel that if you want to sell a fine wines, you need to have a wine in your hand that has a very strong sense of place. Because in order to develop a value, in order to add a value to a bottle, you need really to express a wine that has a capacity and identity. And it is strongly related to the place where the wine come from. The second thing is also related to the wine, and it is a wine that for me, you can drink now. You can drink tomorrow. You can hold for a while. And if you want, you can resell. So it means that you buy an asset that maybe you can sell in the future and make money. So you became as a consumer, a new person in the supply chain, and that is very unique in the fine wine business. The third element that is very important, and we need always to recognize, if you feel that you are a fine wine producer, to develop your strategy, you need a distribution for fine wines. So first of all, try to understand if you are a fine wine. If you are, you say, okay. Now I'm looking to somebody that can sell the wine. And selling fine wines is different. Is a different route to the market. You need people that they are talking with different wording. That is a key pillars to communicate to certain type of producers. And for that reason, you need importing distributing and retail companies that are focusing in this specific segment. And finally, I would like to give an example of what you do because this is the the last point. When you have realized that you have a fine wine that you are starting to have a distribution, that is related to the fine wine that you develop, that you produce, you need to have tools in your hands. And an example of a tool that we developed at Invertane is the library. The library is a book. It's not a book. It's a tool, where inside you can find the last forty eight vintages that we've produced. There is a specific explanation about each vintage. The book, it will be released every five years. So, you know, your wine that you are that you hold in your cell in which state it is, How much does it cost and how much you can keep for the future. So you need to trade the final wines with new element that was not part of our way of selling in the past. And that is very important to communicate, first of all, to your Salesforce to implement knowledges, culture, about fine wines, and, you know, to give you information about two service wine and about how to create the the value. If you have this element, there will be no different strategy across China or US. But is your main strategy that make the difference compared to the other producers? One of the slide that I wanted to show as well, and that would that would please, you know, Robert Joseph in this as well, because we have long discussion about people trading up and off, and that's actually what the data shows. So you look at the, you know, is it the minimum price that we've set, like, to continue to interview those people? Do you buy regularly wines that are more than seventy five dollars a bottle? And then we ask them do you trade up and do you trade down? And as you can see in all the markets, people trade up and down quite a lot. So they will buy less expensive wines and they would buy way more expensive wines and they will go tapping into the tier two and the tier three category of wine. So it also means that it's interesting. I mean, in terms of communication, working with a range could be interesting. And when I say working with a range that might be within your own winery, but that can also be associating yourself with a winery that has a different set of price, that you, you know, people could tread up and down in it. And that's that's across the market. There are neurons between, you know, the US and and and China. And also I need to say at that point that China was a slightly different sample because it the sample wasn't the totally full Chinese population. It was the population of nine cities. So urban middle class for those nine cent city centers that also buy imported wines. So the sample is again the niche of a niche of a niche, and that's why you've got higher, way higher percentage than other market because we didn't made it to the, you know, we didn't compare it to the full, Chinese population. Sorry, Pauline, but one of the very important element be also to analyze the reason why people are buying fine wines. And that's a really good point. So we've asked that question as well. I'm sorry. Don't have this slide up. So from the the the wine intelligence study again, when we ask people that usually buy the tier one, why would they buy the tier one fine wine? And when you look at the numbers, well, you can't look at the numbers, but I'm looking at the numbers. The first reason was for special events or celebration, and that's across the four countries the the the main, like, first reason why they buy those, those are more expensive wines that again above fifty five dollars or about fifty fifty pounds. Gifting is really important, more important in Asia than in the Western side of things. And then they also, you know, most of the time to casually drink with family or close friends. So the occasion for drinking can be very, very different. So you can buy the same bottle but use it in a different way. So people do go from one occasion to another. And I know that you're going to ask me that question also, but they also buy to invest. So it was a multiple choice question. So people didn't have to pick just one. So thirty percent of the respondent also buy fine wine to invest. It doesn't mean that thirty percent of fine wine I bought for investment. But thirty percent of the respondents do also admit or admit, well, actually say that they're buying fine wine to invest. So it's it's it's an important part. And it's across the four markets. It's thirty percent. It's just a it's it's a safe percentage across the four markets. So, yeah, Fineline is also by as as an investment. But to your point, I think it's a very interesting point because through this This I would say is the first year of consumer buying the first year of fine wine, but then we also deep dived, sorry, into the high net worth individuals. So the people that would buy regularly the four hundred and fifty plus bottle because we wanted to understand if they were behaving the same way as someone that buy, you know, seventy five dollar bottles, and they're the same people, do they do the same thing. And what actually what we've seen, and then and if Poly Hammond is in the room, she's also being, you know, battling this. But when it comes to final end consumers at that stage, intent is more important than demographic. So it's not about who they are, what nationality they are, how old they are. It's about why are they buying fine wine for because they actually share quite a lot of common traits across the boat. Across the board. They're all curious. They're all very price aware. They're very international, as you know, high net worth individual, and they've got like residents in different countries. They have different ways of accessing fine wine, depending on where they are, and depending on the routes to market. Mail dominated, changing in Asia, but still very male dominated. But when you look at the common profile, they usually have four different buying profiles for fine wine. And again, when we, like, be in the premium niche of premium knowing the the volume, but people are mostly buying either. And and they can be, you know, playing on those different profiles, but And does that to seek status. Wine to wine business forum. Everything you need to get ahead in the world of wine, supersize your business network. Share business ideas with the biggest voices in the industry. Join us in Verona on November thirteen to fourteen twenty twenty three. Tickets available now at point wine dot net. And that is it suggests a different strategy also in terms of production. Yes. Some example in Nelson sales. If you want to do some presales, if you want to do a special format, for a certain type of consumer for a special occasion, and also a special selection in order as champagne is, is explaining very well how to trade and how to play in in this in this segment. And and in terms of communicate, because the focus today is communication, but how do you communicate differently depending on intent? So on on the why people are buying your fine wine and your super premium wines, are they here for the status? So you want to convey a sense of privilege, and you want to convey a sense of uniqueness and and make people feel, you know, like they are unique because they can access your wines or are people buying because they're passionate and they like deep divers and they want to understand everything because suddenly like they want to understand every single climate in Burgundy and why it's different in all of that. We also forget about them. Well, I tend to get about them, but just the affluent, just people buying those price point because they can, and it's like the everyday wine, but the everyday wine is just three hundred dollars bottle of wine. When My everyday wine is not three hundred dollars bottle of wine. And then we've got the collector's drinkers. So people that main motivation is to build the collection and express themselves through the collection. And they also have part of investment because they want to keep on selling and to have more money to build that collection. So I think in terms of communication, because the intent might be so different, the the fine tuning of the communication might be different whether you're you're going for those those type of profiles. And, what about the relation between fine wines and some other element of the production? Like, do you see any connection between fine wines and specific great variety varieties or appalachian or winemakers, brands? How do you Did you study that part? So we had a question this year that was, is Fine wine a collective or an individual project, or in other words, can you be fine alone? And I think if you can, if you've got a lot of money, So if you if you want to position yourself as a fine wine or a luxury wine, whatsoever, a wine that commands a high price, but you're not within a region that commands high quality, or you're not working with a grape variety that commands high price because of the history of the reputation of that region of that grape variety. Then you can. I mean, Peter gave the example of Vicicilia. You can use maybe pen fold as well as an example as well, but it it's it's way harder. And and usually, there's there's always a collective effort being fine alone in your teeny tiny region working with a grape that maybe nobody has heard of before or there's no, like, be a benchmark with it it's harder. I mean, that that that's a question for you as well. I mean, amarone has history of quality, but how do you position yourself amongst the border in the burgundy and? And do you do you believe it's harder for you than it is for Vordeaux or Pinanoa cabinet producer, for example. I'm very honest to you. I don't think that, Amarona is yet in the category of Point wines. I'm very honest and transparent. I think that we discover how to bring Amaron in the fine wine category. For an example, while Bruno is already in the fine wine category. So there is some strong connection between grape varieties, Appalachian to the fine wine category. And there are some region that they're thinking about that they're producing fine wines, but they are not actually fine wines. So this is a big differentiation, and that is the reason because today in Bertani, we are very concerned about how we can bring this brand in the fine wine category. Because, there is always an holistic way of thinking what you do, but actually, there is a real pragmatic way of analyze what's happening in the market. And for that reason, so sorry as a vice president of the collection of of Apollo. But I don't think that we are yet in the fine wine category. We have some opportunities in the future to play in this category, but we need to be very attentive. Yeah. So we we've asked people also about the attributes. What do you need to have as an attribute to be considered fine for you and the first two ones where it has to come from a region that's recognized for quality? And Again, you can you can do it, but it's just super hard when you don't have that collective approach to quality, I think, or that collective reputation for quality. People will just go and buy burgundy because there's burgundy on the label. To some extent, just like just like, you know, Napa, for example, is a very high, like, collective reputation that allows them to have price that might not be possible elsewhere amongst other factors with the time. Oh, yeah. The last thing, sorry, that I wanted to before we go to before we go to questions, is, you know, fine wine revolves and evolves within a global context. And we wanted also to look. After the pandemic, we wanted to look at how the fine dining world has evolved and even has that notion of fineness has evolved. Is excelling excellence the same thing? Is greatness the same thing? So we've worked a lot with chef, and and restaurants to understand with what mindset they would reopen their restaurant and what can potentially be the impact for fine wine list. And there's there's just what I wanted to finish with, in a in a very short, amount, amount of time in terms of communication. They're one minute. I've got one minute, but basically chefs have been rethinking food quite a lot. They've they've really thought about it during the pandemic and what it meant to create fine dining and not just about pushing the boundary with molecular cuisine, but maybe rethinking good, rethinking healthy, and rethinking safe as well, in in terms of, of, in terms of food. And when we ask the sommeliers within their team, how's that shift changed them? I think in terms of communication, what we see happening is we could use more emotion. So you're saying, for example, find what needs to come has to have a very strong sense of place. Yet we communicate through knowledge and fact based and not through emotion. And I think we might want to go from intellectual knowledge to emotion when we communicate about fine wine in a retail or in an on trade space. Because also there's no more people working in the entree. There's a, like, there's a shortage of people working in the entree. And so you have to teach them very quickly, and it takes a lot of time to assimilate a lot of facts about wine as we know as MW student. But connecting through to the consumer's remotion might be easier, and I can give you an example. So instead of saying, alright, this is a a moroni from the vintage twenty fifteen, and this wine comes for those three grape variety, and it's been dried in like traditional straw or like modern ventilators or whatever to actually give it that flavor and it's been aged in blah, blah, oak, and then come to you and say, Andrea, you need to taste that wine because this is Italy in a bottle. This is the expression of it, Italy in it. And you connect through a different range of emotion that also brings the sense of place within that. Maybe the sense of place doesn't need to be conveyed through, technical knowledge, but through emotion that we can convey to the consumer. That was that was the final point that I wanted to. Right? Okay. So thank you, Pauline. Thank you to everybody. So from this, I hope that was a nice section, and you can really enjoy. Thank you. Listen to the Italian wine podcast wherever you get your podcasts. We're on SoundCloud, Apple Podcasts, Spotify, HimalIFM, and more. Don't forget to subscribe and rate the show. If you enjoy listening, please consider donating to italian wine podcast dot com. Any amount helps cover equipment, production, and publication costs. Until next time. Chichi.