Monday, July 14, 2014

No brands please, we're wine lovers. Why the Chinese are cleverer than us. Part 4

Putting your name above the title

Where's the brand?


"Where are the brands?" I was walking an Australian around Vinexpo. He had just got the job as CEO of a big wine business after experience in other fields, and wanted to get a quick fix on the industry in which he was about to immerse himself. We were walking past the umpteenth stand packed with interchangeably labelled Sancerre or Côtes du Rhône, or Rioja or Soave and he was shaking his head in confusion. Why, he wanted to know, were all the producers of these wines so happy to hide their identity behind a regional brand or grape variety over which they have no ownership or control? Even where the producers had taken the trouble to do more than print their names in small print at the foot of the label, there was little effective effort to behave like a brand: to burn their identity into the psyche of the potential or actual consumer. Over the last few weeks, I'll bet that, unless you don't do much wine drinking outside your home, or you're unusually observant or assiduous, you've consumed several wines whose producers you can't recall. If we were talking about beers or spirits, the proportion would be smaller. Over the same period, you've consciously or unconsciously noticed that people around you use a Samsung rather than an iPhone or drive an Audi rather than a VW.

But we're used to wine - apart from sparkling or fortified wine and efforts from a score or so big companies - being relatively lightly branded, and we don't see anything wrong with that. The Chinese, however, are coming fresh to the subject. They like - really like - brands and understand their value. A few years ago, even the most unobservant visitor to Beijing or Shanghai will have been struck by the volume of western big-brand advertising. Today, there are even more posters and electronic billboards; the only difference is the unfamiliarity of many of the brands. Like the Japanese four decades ago, China is creating its own brands. And it's doing so very, very quickly.

One of China's successful new fashion brands

The problem for westerners trying to sell anything there is that this passion for brands affects them too. Castel, the most dynamic French exporter to China, is embroiled in a very expensive trademark dispute with a man called Li Daozhi who registered the Chinese version of its name, sued Castel for trademark infringement, and won - 33.73m RMB, or around £3m. According to the Australian Financial Review, Mr Daozhi - a 'notorious trademark squatter' who also goes by the name of Daniel Li, has also registered three versions of a brand called Ben Fu, along with an associate called Li Shen. In the west, this name would have no value; in China, it not only means “dashing towards wealth”, but more importantly it sounds like Penfolds. So, now Treasury Wine Estates, is having to fight a battle of its own to protect its brand. Under a Chinese law - amended in May 2014 - the first person or company to file a brand name has the right to use and protect it, possibly using the word 'protection' in ways that would not be unfamiliar to certain Italian family organisations. In 2012 it is said to have cost Apple $60m to retrieve the Chinese name for iPad.

If your reaction to the preceding paragraph is simply to resolve not to do business in China, maybe you should think again. The trademark squatters are obviously bad guys, but they're usefully exposing weaknesses that shouldn't be there - like a personal trainer revealing your underused muscles. For every ten ripped-off Apples, Castels and Penfolds, there is a clever big brand owner that has taken the trouble to protect itself, just as LVMH protects Veuve Clicquot against anyone who has the temerity to use its particular shade of yellow. Even if you don't have any interest in selling your wine outside your own country and have little fear of anybody squatting on your trademark - because you haven't really got one - maybe you should still think about protecting your brand. Against apathy. Against consumers mindlessly picking up another producer's Sancerre, Côtes du Rhône, Rioja or Soave rather than yours, simply because it's cheaper, or closer to hand.

I write this with a certain measure of personal knowledge. A decade ago, we launched a Languedoc wine called Mouton Noir, with a black sheep on its label. After receiving a note from a particular chateau in Pauillac, we renamed the brand le Grand Noir, but managed to retain the sheep. More recently, we discovered that our importer in China had registered the Chinese version of the wine's name. Subsequent discussions have resolved the issue amicably, but we've learned our lesson. In this respect at least, the Chinese behave rather like German holidaymakers: they understand that the only way to be sure of getting a good bit of the beach is to get up early and spread your towel. The choice is clear: either you need to get up even earlier than them and take an even bigger towel, or accept that you're always going to stand a high risk of being stuck on the pebbles next to the latrines.




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