Posts
"ROSS BROWN, the former boss of the 120-year-old winery Brown Brothers, has attacked [Australia's] leading retailers for flooding their stores with private-label wines, that he said were hollow, copycats and masquerading as real brands..."
Sydney Morning Herald, June 7, 2012
Dear Ross,We've known each other for a long time - since 1984 I think, when Brown Brothers and Rosemount effectively led the Aussie charge into the UK wine market. Over the years, I've always thought of you as one of the canniest members of the Australian wine industry. You've managed to steer your family company through some pretty choppy waters, you have pioneered wine tourism with an extraordinarily popular destination that's well off most visitors' beaten track, and following in your father's footsteps you've headed a varietal innovation program that is arguably unequalled by any similarly-sized company in the world. And, of course. you helped to launch Australia's First Families of Wine, at whose event you raised the issue of the private-label brands.
You called the private labels "hollow logs", because, in your words "they masquerade as brands but in fact they are just a label which has none of the values that traditional family wine companies bring to the market''. According to the news report, you went on to say that if private labels were allowed to dominate, traditional wine companies would be disenfranchised, and the future of the Australian industry as a whole would be under threat.
I've been interested in the subject for a while - though not in the context of the domestic Australian market; they are a growing trend across the globe. When we first met, I was a consumer wine writer - for the London Sunday Telegraph - and co-chairman of the then embryonic International Wine Challenge. In those days, like my colleagues, I was obsessed with finding great new wines and especially ones that offered value for money. Some came from companies like yours; some from corporately-owned businesses and some bore supermarket own-labels, though not what we now know of as private labels. Back then, we were more likely to be looking at "Sainsbury's Claret". While, I'm pretty sure that the long-term thinking implied by family ownership is far more ideal for a wine business than anything that involves shareholders obsessed with latest quarterly results, I'm afraid I can't subscribe to it being an absolute good. There are several Bordeaux chateaux I can think of that profitably make much better wine now they are owned by insurance companies, and plenty of family-owned wineries whose quality is annually compromised by concerns over cash flow. So, while it is obviously important to you at Brown brothers, I'm going to leave the family or corporate question for another day.
Far more important is the issue of whether private labels are or are not really brands and whether they threaten your industry. As you know, Ross, in recent years, I've stopped writing for consumers and running competitions, and moved into producing wine myself - with two partners and a great team of winemakers in southern France - and into a research consultancy called DoILikeIt?, also in partnership, with your old friend Hazel Murphy and Judy Kendrick. This has given me a rather different view of the world from the one I had a decade ago. As a producer, I know what it is like to discuss prices and marketing contributions with big retailers and to see my bottles on shelves at ludicrously high off-promotion and ludicrously low on-promotion prices - and been able to do nothing about it, other than to seek other routes to market. As a researcher, I've also spent time learning about what ordinary consumers actually know and think about wine.
Wearing my producer hat, I agree that competing against private labels is what I'd term asymmetric warfare, like a modern soldier fighting against a suicide bomber. The nicely labelled bottle of Prilab (my just-invented Private Label) goes through none of the hoops to get on the shelf that your wine or mine might, and there's every chance that the contents are a copy of something we went to a lot of trouble and risk to launch ourselves. But, as I regularly have to remind my five-year-old daughter, life isn't fair. Asymmetric warfare goes back to the earliest conflicts when one tribe had bigger clubs than the other: more recently, the Brits had no defence against German V2 rockets; the Japanese had no atom bombs. In the wine business, you at Brown Bros have to compete internationally against the muscle of bigger companies like Gallo and Constellation, but smaller, ill-funded wineries have to match up against you and the distribution strengths you have built up over the years. Back in the 1990s, when everybody loved the UK retail chain Oddbins, any Champagne brand wanting to sell its wine there did so in the knowledge that the staff were incentivized to push Mumm and Perrier-Jouet which both belonged to Seagrams, Oddbins' then owners. Indeed the very survival of Oddbins as the company it was, depended on its success at distributing Seagrams products.
Of course Mumm and Perrier Jouet were not private labels, but nor, in the minds of UK consumers at least, are brands like Ogio and Etienne Dumont. I can't talk about any private labels Coles and Woolworths may be selling in Australia, but we did some research in Britain in which we discovered that more regular wine drinkers recognised an Ogio label from which the name and other text had been removed than could identify labels from Guigal, Louis Jadot and Cloudy Bay that had had similar treatment. Ogio, a Tesco-exclusive, is currently the 16th best-selling brand in the UK. Etienne Dumont, Sainsbury's private label Champagne is either the best or second-best-selling Champagne in the UK, depending when you're counting. Some private labels may be hastily-knocked up, short-lived shelf-fillers; others develop lives of their own and grow into "proper" brands, at least in the eyes of the consumers who buy them
If it looks, quacks and flies like a duck, I'm afraid it probably isn't an owl. Ogio may have begun life as a private label but I can think of a least one big wine company that would rather have it in its portfolio than some of the turkeys (sorry about all these birds) it's struggling to distribute profitably.
Ross, we live in a very changed world. Family ownership and heritage have value, but so does branding and, even more crucially, distribution. Once, companies that owned clothing brands manufactured clothes; Tommy Hilfiger changed all that. One of the youngest brands on the market and without a factory of any kind, it was more valuable (based on its sale for $3bn in 2010 to the owner of Calvin Klein) than long-established French fashion houses.
One reason why some wine private labels have been so successful is the relative feebleness of the real ones. It would be far, far more difficult to launch a strong private label gin or ale; proper spirits and beer brands are just too strong. So, Ross, I'd humbly (well, not too humbly) suggest that, rather than complain about something that is not going to go away (supermarkets will do what suits them when all is said and done), you'd be better advised to focus on building your own fan base. The nearly 20,000 Facebook Brown Bros followers is not bad, but Gallo's Barefoot Cellars' 350,000 "likes" gives you a slightly higher target to aspire to. Similarly, Brown Brothers deserves more than 2,500 followers on Twitter. Your story - including the family-ownership - deserves to be told, and heard by a far wider number of people. We recently proved the power of social media when we launched WINESTARS, with almost no time and very little budget. I recently learned of a US (non family-owned) company that has built sales of over 1m cases across two new brands, exclusively through social media ("we do everything we can to keep them out of the hands of the traditional critics and media" was the comment).
The wonderful thing about social media, when properly and cannily used, is that it can reverse the balance of power: David's catapult versus Goliath's size.
With my very best wishes
Robert
