Sunday, July 12, 2009

Transcendental Meditation

What is a Pringle? According to Procter & Gamble, its makers, a Pringle is a kind of food, to be categorised alongside cakes and biscuits. The UK tax authorities beg to differ. They reckon that its 42% potato content makes a Pringle a potato crisp (or “chip” if you prefer), an edible savoury luxury that’s subject to the 15% Value Added Tax from which other kinds of food in the UK are exempt. Sadly for P&G, the UK Appeals Court recently agreed with the taxman, but, and this is my point, the vast majority of people who eat these distinctively shaped savoury snacks really couldn’t care less what category they fall into. They simply enjoy them – and pay a relatively high price to do so.

Pringles, like iPods, Gilette Razors, Starbucks, Nike, Campari, Krispy Kremes, Baileys Irish Cream and Coca Cola, are in the happy state of transcending their class. People buy them for what they are rather than, or certainly more than, the category into which they fall. Stated simply, the buyers would rather have them than an alternative. Few Coke fans happily accept Pepsi – and far fewer would drink any other kind of Cola. How many Campari drinkers outside Italy are even aware of the vast range of Italian bitters most of whose colours and flavours would be hard to distinguish from the global brand leader? How many Guinness drinkers would be as happy to accept an alternative dark beer?

The wine world has a few players with this kind of strength. A top-of-my-head list – excluding Champagne - would include Cloudy Bay, Penfolds Grange, Vega Sicilia, Romanée-Conti, Screaming Eagle, Mas de Daumas Gassac, anything by Gaja, Guigal’s single vineyard wines, and the top super Tuscans. But these are the exceptions to the rule. Most wine producers – unlike their counterparts in the worlds of beers and spirits – have traditionally been far keener to shelter under the umbrella of their region, style or country. Even the most illustrious Médoc chateau is a lot more bothered about being classed as a Bordeaux than Bacardi is to be seen as as a rum or Baileys as a cream liqueur.

For those lucky enough to be in a region that carries a premium, the umbrella can, of course, work well. Exploiting the fact that it is situated in Margaux or Napa can be as useful to a minor wine estate as a St Paris address might be to a modest perfumier. When Tequila is in fashion, there can be a lot to be said for a small brand hitching a free ride on a bandwagon driven by the people with the deeper pockets. But some categories rings no quality bells with the potential audience. There is little international value in being Bulgaria’s best –selling cheese? Few New Yorkers set out specifically to buy wine from Cabardes, or Castilla la Mancha.

Of course, there can be a lot to be said for pioneering and championing a category or region, as Mondavi did with the Napa Valley, Rosemount did with the Hunter Valley and Cloudy Bay did with Marlborough. If your fellow pioneers share your quality aspirations your critical mass could build an international reputation for your collective brand that few individuals could ever dream of.

But what happens when others within your region intentionally or inadvertently damage its image? Sometimes, as happened in Austria in 1984, a few cheats can temporarily bring down an entire industry. The Californian firm Bronco threatened the premium character of the Napa Valley when it marketed a cheap brand called Napa Ridge that was not made from that region’s grapes. Legal action eventually restored Napa Ridge’s authenticity, but there are plenty of Australians who fear the impact on their industry of Bronco’s imminent launch in the US of a $3 Aussie brand called Down Under to stand alongside its Californian Two Buck Chuck. The New Zealanders who sold Dan Jago of Tesco two million bottles of surplus Marlborough Sauvignon Blanc at a fire-sale price may be interested to hear what he Tesco had to say about the deal. If they cared about the long term value of their wine, Jago said, the producers should have poured every drop down the drain.

If you have already created a genuinely strong brand like Cloudy Bay, you should be able to survive some very hefty dents to your category or region. But if you haven’t, these are the times to focus your effort on building an identity sets your brand apart from its peers. Take a look at the label of a bottle of Bonterra, unarguably the world’s biggest and best organic brand. The reference to its organic credentials has shrunk over the years, for the simple reason that consumer’ unhappy experiences with organic wines has deterred many from buying them. So, Bonterra’s image is as a good, reliable wine that just happens to be organic.

Somebody once gave me a brutal but useful bit of advice: “Know where you are going. And who you are going with. And in that order”. Or to put it another way, when in doubt, emulate the Pringle.

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