1. Branding New Zealand Wine: From Global Allocator to Global Marketing Professor Roderick J. Brodie, University of Auckland Business School New Zealand

2. Agenda 1.Introduction 2. From Global Allocator to Global Marketing 3. Foundations for a National Branding Strategy 4. Creating Value with Brand NZ Wine

3. 1. Introduction Historically, wine has been very much a European product –More than three quarters of the world’s wine production, consumption and trade still involved the European Union (EU). –France, Italy and Spain >50% of global wine production. –New Zealand, 0.2% of global production Recently wine traded internationally had increased to more than 25% of global production –Driven by increased production in the “New World” wine producing nations of Australia, Argentina, Chile, New Zealand, South Africa and the United States Global wine industry was extremely fragmented –Gallo, the world's largest supplier and brand for wine, accounting for less than 1% of world supply Static global demand for wine but huge increases in plantings, principally in New World counties, –Industry analysts predict over-supplies of wine esp. in non-premium categories

4. NZ Wine Production nzwine.com New Zealand’s wine established itself in the global market with its unique Marlborough Sauvignon Blanc –New Zealand wines premium positioning was established at time when trends showed high-end, premium wine brands growing –Considerable optimism with increased plantings

5. Source: NZW Statistical Annual various

6. New Zealand Wine Exports nzwine.com –Exports grater than $1NZ billion – Domestic market is expected to grow to $0.5NZ billion.

7. The Emergence of an Export-dependent Quality Industry Source: NZ Winegrowers Annual Reports ↑↑↑↑↑ Indicator19902010Change Number of wineries131672413%↑ Producing area (hectares)488033,428585%↑ Average yield (tonnes per hectare)14.48-44% ↓ Grape tonnage crushed70,000266,000280%↑ Wine exports (million litres)41423,450% ↑ Wine exports ($million)18.41,0415,558% ↑

9. New Zealand Wine Growers (NZWG) Established 2002 –Merger of Grape Growers and Wine Institute National organisation for NZ’s grape and wine sector –Goal “Building a Great NZ Wine Industry” Conducts wide range of tasks –Advocacy and local and international levels –Provides global marketing platform for NZ wines –Facilitates research (production & marketing) –Provides industry with timely strategic information –Organises sector wide events (conferences, awards) Funded by –Levies on sale of grapes and wine sales

10. 2. From Global Allocator to Global Marketing NZ Wine Growers (2009 Annual Report) “The …industry is emerging from a period when the major challenge was to produce enough wine to meet the world demand, to one where the major challenge will be to sell the available wine in an increasingly competitive world market.” To meet this challenge, –both demand and supply-side initiatives are necessary. –marketing is more important to us than ever before. –equally, effective management of supply is fundamental. The New Zealand wine industry does not have a “wine lake”; that is not something that happens with one or two large harvests. However, the signs for the industry are clear and unmistakable

11. Driving Growth in Market Returns (NZ Winegrowers Annual Report 2010 )

12. Key Aspects of Strategy Reputation – the greatest asset –Reputation is what the industry is selling. Every bottle that bears the words “New Zealand wine” should add to that reputation, not free-ride on it. –Bulk wine sales may be a vital safety valve for cash-strapped wineries. However sale of unbranded, below cost bulk wines threaten to undermine the reputation that the industry has worked so hard and so long to create. Backing the New Zealand brand –New Zealand Winegrowers’ Marketing Programme provides a highly effective platform for each exporting wine business to build its own brand while contributing to the national and regional brands producers share in common.

13. Sustainability – part of the national brand New Zealand is recognised as a leader in wine industry sustainability –Sustainability is now an integral part of our access to international markets and distribution channels as well as our positioning with consumers and retailers. Bold policy of 100% participation in an accredited sustainability scheme by 2012, membership of Sustainable Winegrowing New Zealand (SWNZ) –now covers 93% of producing vineyard area and 85% of wine production. –new developments are happening all the time, including the roll- out of the new scorecard, the Grape Futures project, the Greenlight spray diary tool and the completion of a revised Winery Waste Code of Practice. New Zealand Winegrowers also entered into a landmark memorandum of understanding with Organic Winegrowers New Zealand to develop common goals.

14. 3. Foundations for a National Branding Strategy Geographic & Production perspective –The filière based on an agribusiness/rural/lifestyle –Innovation & quality based sustainable production Legal & Socio-political-economic perspective –Government and national interest –Politically sustainable Marketing/ Finance –Branding and reputation play a central role Resource, asset or capability that creates value (equity) –Financially sustainability/ market (customer ) orientation

15. Integrating the 3 Logics of Branding To Market ( channels & regulations Brand Identity) Market With & Among (collaborate with customers & partners to produce & sustain value Brand Relationships ) Market To (management of customers & Markets Brand Image & Logo ) 1900s > 1950s > 1990s >

16. Three Stages of Brand Building Objective Logic Learning Building Brand Image & Logo +Consistent experience +Distinctive positioning based on image and personality +Internalization of brand personality +Communication focusing on differentiation Trademark “Identity” Familiarity Identity Building Recall Mass communication Service Brand “Co-creator of Meaning” +Co-Creating meaning +Dynamic engaging offerings Customers interactive experiences +Dimensioning – ideas in an experience space +Beyond purchase Authenticating experiences

17. A Broader Network Relational Perspective brand awareness & recall still necessary BUT brand meaning & experience are increasingly becoming the sources of differential advantage this is linked with the experiences with the company, the channel, employees and … thus managing brand equity becomes strongly associated with managing a network of relationship experiences delivery and enabling of the promises in this complex network play important roles in determining value

18. Re-launching NZWG branding strategy (2007) Major brand audit which included international research with key markets –research revealed a strongly positive perception of New Zealand wine –not only did it have an image of high quality but it also had feelings of adventure or discovery Re-styled national brand image was developed “the riches of a clean green land” replaced new tagline, New Zealand wine - pure discovery New strategy focuses on: excitement and clarity of flavour that New Zealand wines offer summarises the journey the industry has embarked upon, as it continues to discover, innovate, improve and diversify from the dominant focus on Marlborough Sauvignon Blanc.

19. 4. Creating Value With Brand NZ Wine Management of brands at the heart of any successful marketing strategy For wine this is complicated by the hierarchical character of the brand identity –Rather than there being a single identity there is a brand architecture involving multiple identities. –Traditionally this has included: Country of origin, region and/or appellation, domaine/bodega/estate, Producer (and commonly also distributor) labels, and retailer labels. –New World producers: Country and region have had a particular significance, Variety has also played a major role. Wine tourism and hospitality place a new emphasis on developing broader identities of the various wine regions Brand “New Zealand Wine” has worked well in these contexts.

20. Challenges Though NZWG enjoying considerable success, the industry faces many challenges to sustain its high value positioning Understanding the nature of the successful elements of the current strategy and ensuring the future resourcing of the initiative: –Complications occur in accommodating distinctive regional identities and coordinating these with national messages –Determining protocols of use and ownership –Protecting the brand against free-loaders and those who would damage it for short term gain –Ensuring that generic activities add value relatively proportionally to the vast range of different wine company identities.

21. Wine Industry Value Constellation

22. Value Chain for Wine

23. Brand “New Zealand Wine” Comprised of a number of elements: –its core is a discourse of quality, promoted by industry participants, local wine media and the industry’s representative organisations –discourse is sustained by continued attention to quality from winemakers, effective programmes of collective marketing and careful cultivation of key gatekeepers – supermarket buyers and international wine media. Brand is supported by: –effective information exchange in production, commitments from winemakers, collation and dissemination of industry information made available through the industry website, –over fifty trade shows and tastings around the world annually, –new logo of “pure discovery” which is underpinned with the theme of the previous logo of “the riches of a clean green land”.

24. NZ Wine Brand as an Umbrella Brand Winery Brands Event Brands Varietal Brands Regional & Sub Regional Brands Allied Brands

25. Understanding How Brand NZ Wine Creates Value Brands are intangible (relational) assets –a brand’s role in a marketing system is much more than end consumer associations with a name or logo –brands facilitate processes within value systems multiple networks Brand “Wine New Zealand” is an umbrella brand within a complex network –Complex interactions between national & regional terroir identities and other elements in value networks Other National Brands e.g. NZ Tourism Places linked to the brand Things linked to the brand People and organisations.

26. Region versus nation - challenges of sustaining synergies in Brand New Zealand Wine Varietal specialisation and regional opportunities Pressure to enhance regional identity Terroirisme (provenance) and the creation of value –regional distinctiveness: varieties, history, climate, imagery, soils Regionalism of wine tourism Competition in marketing spend Regional companies vs. multinational beverage companies –enterprise form: size, ownership, functions

27. 5. Conclusions “Brand NZ wine” plays a valuable integrating function and is central to the business of wine and long term strategy for NZ wine companies involves the integration of creative & strategic thinking with financial investment & accountability that is politically acceptable image/ logo awareness with end consumers is necessary BUT brand meaning & experience are increasingly the sources of differential advantage that create value meaning & experiences are derived from network of relationships & interactions with producers, channels, retailers, and many other stakeholders as well as consumers everyone in the marketing system needs to be a part-time marketer & the passion of the people in the organisation that make the brand live Sustainability (production, political, financial) is a key aspect of the brand meaning within this network vital to protect & integrate national, regional quality/innovative positioning

28. Characteristics shared by the worlds strongest brands: Brand NZ WINE? Necessary to have: distinctive positioning, delivery of customer benefits & value, relevance, consistency, a sensible portfolio integration of marketing activities, management involvement, understanding and support Most critical characteristics are: Clarity distinctive values are understood and lived and loved by those who deliver them Consistency in what (who) they are) Leading the market with delivery ability and exceed customer expectations and create delight

29. Thank you! Any questions or comments?