Wine Economist World Tour Update: Italy, Napa, Moldova, Romania

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The Wine Economist returns to the road in a few weeks. Here are some of the stops we plan during the summer months.

June 2018

  • I’ll be speaking about “Around the World in Eighty Wines” and leading a wine tasting as part of the University of Puget Sound’s Summer Reunion Weekend Alumni College. June 8-9, 2018. The good folks at Carpenè Malvolti, the famous Conegliano Prosecco house, have kindly donated some of their fine wine for a tasting. Lucky alumni students!

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  • Sue and I will be in Forte dei Marmi, Italy on June 18 for VinoVIP. I will talk about money and wine in the global market context. I am very excited to join a group of Italian wine luminaries on the program and to meet everyone at this great event at the famous Italian seaside resort. We will stop briefly in Bologna on our way to VinoVIP to see old friends (I taught at the Johns Hopkins/SAIS Center in Bologna many years ago) and to visit Eataly World.

Here is the VinoVIP program:

Money & Wine: A Global Perspective (Mike Veseth),

“Italian challenges” (Angelo Gaja),

“how to manage a wine company: the basics” (Ettore Nicoletto, CEO Gruppo Santa Margherita),

“routes of wine – main markets: what are they buying?” (Denis Pantini from Nomisma wine research unit),

“SWOT of Italian wine industry” (Piero Mastroberardino).  Quite an all-star lineup!

July 2018

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  • I’m happy to speak at a private program featuring “Around the World in Eighty Wines” to support the  Northwest Sinfonietta music organization on July 29.

September 2018unwto

  • Sue and I are tentatively planning to participate in the 3rd global wine tourism conference sponsored by the United Nations World Tourism Organization (UNWTO) The conference will be held on September 6-7 in Chisinau, Moldova.

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Outlaw Wine? 19 Crimes Succeeds by Breaking All the Wine Marketing Rules

25162619 Crimes, the popular brand from Treasury Wine Estates, does everything wrong. It breaks all the “conventional wisdom” rules. It is everything that shouldn’t sell in the U.S. market. And yet it flies off the shelves. What’s going on?

19 Crimes is an Australian wine brand, which is the first problem. Sales of Aussie wines have been in decline here in the U.S. for years. The Australian section of my local upscale supermarket’s wine wall has shrunk to a shadow of its former self.

Sad and Doubly Cursed

Although 19 Crimes has evolved into a lineup of 7 different wines,  including Cabernet Sauvignon and Chardonnay, the core grape variety is Shiraz, and that’s the second problem. American consumers drink plenty of Syrah and Shiraz in red blends, but they don’t seem to want to buy it as a varietal wine. Sales of Shiraz have been sinking right along with Australian wine in general — a double curse!

And then there is the branding. 19 Crimes — outlaw wine! The name comes Australian history (history wine — oh no!). Great Britain once expelled its most hardened criminals to Australia. Any of 19 crimes could get you sentenced to transportation to Australia — banished to the end of the earth. Who wants to buy a criminal wine?

And, each label, of the core brand features a photo of a sad man — the mug shot of a convicted criminal. Who wants to buy a sad man wine? Who wants to associate themselves with a loser? How in the world can a wine like this get on the shelf, much less sell more than a million cases?

 

Wine by Design

Well, the answer is that 19 Crimes seems to have been rather precisely engineered to appeal to an important demographic — millennial men, especially those who see themselves as a bit of a rogue. Outlaws, if you know what I mean, who identify with others who defy convention.  Outlaw wine for self-styled renegades? Now you are beginning to see the 19 Crimes logic.

I bought a bottle of the red blend and, after I stared at the sad man for a while, I tasted it. Sweet and tannic, that was my reaction, and better chilled sangria-style than straight up. Not to my taste, but I am not the target audience.

Some of the most popular brands on the market today totally succeed with tannic sweet red blends pitched at a particular market segment. A friend who seems to have some inside information told me that the 19 Crimes flavor profile is no accident but rather the result of lots of careful research and consumer testing. No surprise there!

Every bit of the package is carefully linked to the brand identity and I’d encourage you to take a close look the next time you buy wine. But you will have to purchase and open the bottle to see my favorite part of the branding system — the cork!

The cork? Well, that breaks another stereotype, of course, since we sometimes think of Australia and New Zealand wines being topped by screwcaps. But there are many reasons why cork is so popular today and 19 Crimes cleverly adds a new advantage to the list: collectibility!

You see each cork is printed with one of the 19 crimes — my cork is #11: stealing roots, trees or plants or destroying them. That seems like a pretty petty crime to get my sad guy shipped to Australia, but it might be just the thing to start someone more into it to buy bottles and pull corks relentlessly until all 19 crime corks are captured.

Virtual Story-telling

19 Crimes is a story wine designed to appeal to a particular consumer category and Treasury has taken the next logical step by creating a virtual reality app that animates the sad men (and the sad woman on the Chardonnay label), so that they can tell their own sad stories.

Bringing the inanimate to life is a feat with a long artistic tradition — think Pygmalion, Pinocchio, or — especially relevant in this context — the scene in Gilbert and Sullivan’s comic opera “Ruddygore” where painted figures step out of their frames to deliver a stern warning.

The 19 Crimes figures tell their stories, humanizing their identities, and then step back onto the label. Art may be served by this, but marketing in the form of consumer engagement is the clear intent. If you want to hear all the stories, I suppose, you need to collect all seven wines in the lineup. It must work — I’ve heard that Treasury has  expanded its virtual reality program.

19 Crimes provides many lessons for anyone trying to understand today’s wine market, but perhaps the most important is that it is dangerous to generalize about generations when it comes to specific products such as wine. Many have written that millennials seek authenticity in products and experiences — and this is an important trend. But one size doesn’t necessarily fit all and some millennials (and probably consumers in other generational categories, too) obviously see themselves in a different light.

Identity trumps authenticity. Outlaw! You don’t need no stinking badges. And now there is a wine for you.

Congratulations to Treasury and 19 Crimes for their remarkable success. What’s next? Arrr, Matey. I’m thinkin’ Pirate wine is a pretty good bet!

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Here is that scene from Ruddygore. Enjoy!

Wine Tourism Grows Up: A Visit to Washington’s Chateau Ste Michelle

chateau-ste-michelleI am in Kennewick, Washington today and tomorrow to speak at the Washington Winegrowers Association 2018 Convention & Trade Show.  Tomorrow I’ll share some thoughts about wine premiumization in the “State of the Industry” session, but today’s focus is wine tourism. I’ll give a global perspective on wine tourism as part of a program on  “The Business Side of Your Tasting Room.”

Grape Expectations?

Increasingly the tasting room’s business is not just pouring samples, selling wine, and promoting wine club memberships. Although winery visitors clearly expect to taste wines and perhaps tour the winery or walk vineyard paths, they often come expecting (or hoping for) something more.  That’s because sophisticated winery visitors don’t only visit wineries. They have many interests and develop expectations based upon their broader experiences. Wineries that want to attract these visitors need to step up to meet rising expectations.

Wine tourists and their rising standards have always been a priority at Chateau Ste Michelle, Washington state’s largest wine producer. When the current Woodinville production facility was constructed in 1976 the choice was made to locate it close to the Seattle population center, a few hours’ drive from the vineyards on the other side of the Cascade Mountains. The winery was built on the grounds of Hollywood Farm, the old Stimson Estate, and the main building was designed to closely resemble an iconic French chateau.

“The Chateau,” as we call it hereabouts, celebrated its 50th anniversary in 2017 and used that opportunity to give its visitor center a major renovation. Sue and I first visited this facility shortly after it opened in the late 1970s, when it was one of the most welcoming wine tourism destinations we found. But as the years have flown by a lot has changed. The number of visitors has increased and they have become more numerous, more diverse in terms of their wine knowledge  and also more sophisticated in terms of their expectations for a tourism experience. Inevitably, the tasting room itself had to change, too. And it has.

When I say that the wine tourism experience here has “grown up” I mean more than that it has matured and is now able to accommodate more visitors. One element of the growing up is to accommodate more diversity of tourist expectations and experiences.  The result is a textured program with many layers of opportunities.

For first time visitors, for example, the free (free!) tour and tasting is available as it has been here for as long as I can remember.  Visitors can upgrade their experience at the tasting room bar, where a variety of elevated tasting options are available for $10 to $15 per person — a bargain by Napa Valley standards.r-919411-1320418583-jpeg

Are You Experienced?

Winery visits in the old days were focused on tasting (and hopefully buying the wines) — a transactions approach. Now the state of the art is about relationships and creating opportunities to draw visitors more closely into the winery and its story so that they become both long term patrons and active brand ambassadors. I wrote in Around the World in Eighty Wines about the huge variety of experiences on offer at the Napa’s Robert Mondavi Winery and Chateau Ste Michelle has programs to match.

The Chateau Ste Michelle wine experience menu includes the above mentioned tours and tastings and moves on to a special small group single-vineyard and limited release tasting ($30 per person or $25 for winery club members), Cabernet-themed food and wine pairing experience ($100/$85), a”Sensory Sojourn” workshop ($65/$55), and a wine blending experience ($125/$95).

Small groups can also arrange to attend a sparkling wine seminar and tasting with food pairings ($55/$45), an opportunity to taste older vintage of Washington Bordeaux blends and Riesling wines ($55/$45), or grab a chance to learn how to blind taste like a Master Sommelier ($125/$95).

It is also possible to schedule visits to the Col Solare Bottega, where Red Mountain wines  produced in partnership with Tuscany’s Antinori family can be sampled, or a visit to the Enoteca, which highlights wines from Ste Michelle Wine Estate’s wineries and partners in Washington, Oregon, California, and around the world. I was pleased to see some famous Torres wines from Spain on the shelves when we visited. SMWE imports and distributes Torres wines in the U.S. as it does for Antinori, New Zealand’s Villa Maria, and French Champagne house Nicholas Feuillatte among others.

Bottom line: visitors cannot help but be impressed by the beautiful, welcoming grounds and imposing chateau facility and the delightful array of programs on offer. No wonder about 300,000 of them come each year both to visit the winery and to attend outdoor concerts on the big lawn behind the visitor center. Chateau Ste Michelle was conceived as a destination winery that’s what it is today.

The recent remodel has made it possible to expand the offerings to wine tourists so that they can custom-tailor a visit to get the experience that they seek.  Is this a model for the wine industry generally? No … and yes.

The No is easy. Most wineries don’t have the scale of production, volume of visitors, and the financial resources to make the sort of investment we see at Chateau Se Michelle possible. Only a few wineries around the globe can provide this level of service. In the last year of our travels, for example, I think only four wineries in Spain were at the same level: Freixenet, Codorníu, Torres, and Marqués Riscal.

But, Yes, this model is important for the industry to consider. Smaller wineries can offer a smaller range of experiences that are closely linked with locale, their history, and identity. Many visitors will appreciate the taste of authentic engagement as much as they do the wine itself.

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Congratulations to Chateau Ste Michelle on their 50th anniversary and wonderful new visitor center. Special thanks to Lynda Eller and Linda Chauncey for their hospitality during or visit and to Hermes Navarro del Valle for his insights.

Mother Nature Strikes Back: The Big Wine Market Squeeze of 2018

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I’m busy getting ready for the Unified Wine & Grape Symposium, which takes place in Sacramento later this month. It is the biggest wine industry meeting and trade show in North America, with over 14,000 attendees expected for the event’s three-day run from January 23 to 25.

Sacramento Dreaming

There’s a lot to see and do at the Unified. The trade show itself is fantastic, with the full range of wine industry goods and services — from tractors to raptors to bottles and corks to finance and insurance — on display. The seminars are especially interesting this year. Gina Gallo will kick off the program with a much-anticipated keynote address at the luncheon on Tuesday.

Other sessions will look closely at wine-growing and wine-making issues, including a special program on Cabernet Sauvignon, which is the hottest thing there is in California wine these days. There are several parallel programs in English and Spanish, A very timely addition to the program this year is a series of seminars on preparing for and dealing with emergency conditions. Lots to see, hear, and learn.

I will be speaking at and moderating the “State of the Industry” general session on Wednesday morning. This will be a very intense session, featuring analysis by Danny Brager (The Nielsen Company), Steve Fredricks (Turrentine Brokerage), merger and acquisition expert Mario Zepponi (Zepponi & Company), and Allied Grape Growers’ Jeff Bitter. You really don’t want to miss this session — or any of the others.

Mother Nature Strikes Back

What’s ahead for the U.S. and global wine industries in 2018? Looking back at my notes from previous “State of the Industry” sessions, I see that in 2016 I suggested that the wine market looked very good … if the economic clouds on the horizon stayed away. They did and it was a good year for wine. In 2017 I proposed that the issue was more political than economic – lots of political uncertainty with the Brexit vote, Donald Trump’s new administration, and upcoming elections in France, Germany and elsewhere. If the political system can hold together, I speculated, it could be a good year for wine.

I might have been right at the time to focus on politics, but in retrospect it is clear that the real threat to the wine industry wasn’t economic or political … it was Mother Nature herself. 2017 (now extending into the 2018 harvest in the Southern Hemisphere) will be the smallest global wine grape harvest in a generation and, in some areas, the smallest since at least 1945.

Wildfires, both in California and in Portugal and Spain, are the iconic image of the year, but they are not the only or even the principal cause of the global grape squeeze. 2017 produced a perfect storm of different challenges in different places. Heat here, drought there, frost, freeze, hail. Sometimes it seemed like everything that could go wrong did. The impact on the global market will be significant. In fact, as I will explain next week, it could be game-changing.

Winegrowers are no strangers to bad weather or unfavorable conditions. What makes 2017 different is the fact that so many regions were affected during the same growing season – that’s what is causing the Big Squeeze. Typically small harvests in one region of the world are offset at least to some extent by abundant harvests elsewhere. This time was different – most of the world’s important wine growing regions were hit at once, albeit by different factors.oiv

The Biggest Losers

The biggest wine producers were also the biggest losers. OIV harvest estimates released on October showed a global reduction in wine production of about 8 percent compared with 2016 (see pdf here). Italy, France, and Spain – the three largest producers accounting for about half of global wine production – were down 23 percent, 19 percent, and 15 percent respectively.

There were only a few bright notes among major producers. Argentina’s 2017 harvest, for example, was 25 percent greater than in 2016. But the 2016 harvest, while good in terms of quality, was very small and not a really good point of comparison. In fact, Argentina’s 2017 crop was much lower than harvests in 2013, 2014, and 2015.

South Africa’s 2017 harvest was relatively good, up 2 percent from 2016, putting South Africa just ahead of Chile and behind Australia and China in the OIV wine league table. But the good news has not lasted. The 2018 harvest that will begin in just a few weeks looks to be the smallest in years due to very dry conditions through the growing cycle.

If you add the small 2018 southern hemisphere harvest to the northern hemisphere’s weak 2017, you get a dramatic shock to the global wine market environment – a sharp decline of 10 percent or more in global wine grape production.

What are the implications of this Big Squeeze? Your Econ 101 professor taught you that shortages cause prices to rise and that certainly in in the cards. But the wine economy is complicated, so it should be no surprise that the Big Squeeze will have complicated impacts. Come back next week for analysis.

50, 83, 41, 44: There’s a Lot to Celebrate This Year at Chateau Ste Michelle

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Washington State’s Chateau Ste Michelle is celebrating its birthday this year and there is a lot to celebrate, as I will explain below, even if the exact number of candles on the cake is open to debate.

Happy Birthday to The Chateau

The Chateau, as we call Chateau Ste Michelle in these parts, goes for 50 candles — and I think that’s fine. It was 50 years ago, in 1967, that the first varietal wines were released by a little-bitty operation called Ste Michelle Vineyards. The Chateau has released special edition wines that pay tribute to that first label.

The wines, sourced from Yakima vineyards according to the original label, were apparently very good. Howard Simon made them with help from California wine legend André Tchelistcheff, an early proponent of Washington’s wine potential.

Fifty is a good round number, but there are other birthdays we might also celebrate, as I learned by consulting 51na5ps55pl-_sx312_bo1204203200_The Wine Project: Washington State’s Winemaking History by Ronald Irvine with Walter J. Clore (Sketch Publications, 1977).

A Lot of Candles!

Eighty-three candles are hard to blow out in one breath, but that’s the number you would need if you go all the way back to 1934. The end of Prohibition in the United States encouraged the National Wine Company (Nawico) and Pommerelle winery to start up in Washington State. They made mainly sweet wines, as was common in the United States on up into the 1960s.

The two companies merged in 1954 to form the American Wine Company, which eventually created the Ste Michelle Vineyards label for varietal wines as a supplement to the main sweet wine business.

Woodinville Wine Cluster

A Seattle financial executive named Wally Opdycke became very interested in the opportunities that dry wines presented in Washington State and eventually Opdycke and his partners purchased American Wine Company in 1972 and set out to take wine in a new path (even, according to Irvine, as they worked to sell off the sweet wine inventory that they had inherited from the previous owners).

ste-michelle-vineyards-50th-anniversary-columbia-cabernet__31896-1307476275-1280-1280Opdycke and company needed capital for the vineyards and winery facilities they envisioned and in due course two interested parties appeared. The first was Labatt’s Brewery from Toronto, who recognized the potential that the region’s wines presented. The second was a U.S. company — U.S. Tobacco of Connecticut.

The offers were much the same financially, according to Irvine, but Opdycke and partners opted for the UST deal (Altria subsequently acquired UST and is now The Chateau’s owner).

U.S. Tobacco provided the investment capital that was needed and in the process attracted talented viticulturalists and noteworthy winemakers who eventually left The Chateau to work on their own projects. Local farmers planted vineyards to help fill the tanks of The Chateau and then the many other wineries that followed. Thus was the Washington wine industry that we know today born and The Chateau played a leading role.

One of the biggest investments came online 41 years ago — the imposing winery in Woodinville, Washington just a short drive from Seattle. The winery, styled after a French chateau, sits on the beautiful grounds of the Stimson estate and draws so many visitors to the neighborhood that dozens of other wineries and tasting rooms have joined it in Woodinville, creating a dynamic wine cluster.

Where Are the Grapes?

This is a bit of a puzzle to some visitors because the only grape vines they see are mainly for atmosphere, not production.  The gapes come from the east side of the Cascades several hours away. The Chateau’s strategy was to locate the show winery near to the market, not the vines (white wines are made in Woodinville, but red wines are made in Eastern Washington).

The separation works and you can see tanker trucks full of freshly pressed juice arrive at The Chateau during crush along with refrigerated trucks hauling bins of fresh-picked fruit to some of the dozens of other wineries in the neighborhood.

Whichever birthday you choose, The Chateau is worth celebrating.  Under the leadership of Allen Shoup and now Ted Baseler it grew from modest origins to become by far the largest winery in Washington State and an important force in national and even international markets.

But Wait … There’s More

Chateau Michelle Wine Estates is the umbrella organization that brings together The Chateau and the wineries and partnerships that have grown from it. So here’s a final number to celebrate: 44 (and counting). That’s what you get when you add together 18 brands that Chateau Michelle Wine Estates currently operates in the Pacific Northwest, seven more in California, and 19 international partnerships (CMSE is the exclusive importer of Antinori wines, Torres wines from both Spain and Chile, Nicholas Feuillatte Champagne and Villa Maria among others).

The Chateau and the Antinori family are partners in two notable ventures: Col Solare on Red Mountain in Washington and Stag’s Leap Wine Cellars in Napa Valley. And I cannot forget Eroica, the partnership between The Chateau and Ernest Loosen of the famous Mosel Valley wine family.

The Chateau as it has evolved has somehow managed to be both big and small. Taken together these wineries form the eight largest wine company in the U.S. according to Wine Business Monthly’s annual survey. Yet the individual producers retain a good deal of autonomy, part of the company’s “string of pearls” philosophy.

There is another dichotomy that The Chateau has somehow managed to navigate. Although it has corporate ownership and necessarily is influenced by that, it seems to behave in many ways more like a family winery. This accounts in part for its ability to partner with famous wine families like Antinori, Torres, and family-owned Villa Maria.

The Chateau deserves a lot of credit and respect for what it has done to build its own business, to build a Washington wine industry, and to promote American wine at home and abroad.

Happy Birthday to The Chateau and everyone who contributed to its remarkable rise!

Coming Up: Second UNWTO Global Conference on Wine Tourism in Mendoza

unwtoThe second United Nations World Tourism Organization (UNWTO) Global Conference on Wine Tourism is coming to Mendoza, Argentina on September 28-30, 2017. You can view the preliminary program here).

Sue and I had the pleasure to participate in the first UNWTO global wine tourism conference in the Republic of Georgia in 2016 and are excited to take part in the Mendoza conference. I am scheduled to give one of the keynote speeches. My topic will be “Wine Tourism for Sustainable Development: Opportunities, Strategies, Pitfalls.”

The UNWTO has declared 2017 “The Year of Sustainable Tourism for Development,” explicitly linking tourism to the United Nations’ 17 sustainable development goals.  Tourism is a big global business with great potential to contribute to sustainable development if thoughtfully approached and carefully managed. Wine tourism can and does play a role, here, too.

2017

The UNWTO explains it this way:

Tourism is an important driver of economic growth, inclusive development  and environmental sustainability. It can make a huge contribution to the global efforts to deliver on the 17 Sustainable Development Goals agreed upon by 193 nations to reduce poverty and foster sustainable development worldwide.

2017 is the International Year of Sustainable Tourism for Development (IYSTD), an invaluable opportunity to broadcast to a global, high-level audience the potential of our sector to deliver on these universal Goals.

I am looking forward to the opportunity to discuss wine tourism as a path to sustainable development with the elite group who will gather in Mendoza. Mendoza offers fantastic opportunities for wine tourism, of course, but it is important that its benefits are broadly shared to contribute to economic and social development.

One problem with sustainability is that it can be approached in a way that is so vague that everyone agrees that it is important but no one does much to actually achieve it. I think the conference will present an opportunity to drill down into useful specifics and to share concrete examples of success and failure.

Hope to see some of you in Mendoza next month!

Try It, You’ll Like It: What Can Wine Learn from the Cruise Ship Industry?

cruiseI keep finding cruise brochures folded into the weekend newspapers that arrive here at Wine Economist world headquarters. Ads of various sorts for wine clubs associated with those same papers show up frequently, too. That got me thinking, which is usually a mistake. What do ocean or river cruises and those wine clubs have in common? Intrigued? Read on.

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They come in the mail and stuffed in weekend papers — brochures for ocean and river cruises and barge-and-bike tours. It is hard to resist the temptation to thumb through them and imagine visiting all these far-away places. You’ve done it, haven’t you?

Thousands and thousands of full-color printed brochures — this seems like a pretty expensive way to solicit customers. There must be something about having those pages and pictures in your hands that is especially important. Or maybe it is that the demographic that still reads a physical weekend paper and can afford to pay for it is a juicy target.

Experience Deficit Disorder

Several things about the tours strike me as important and relevant to wine. The first is that tours are “experience goods” — you cannot really know if you will like river touring, for example, until you actually try it. And then, if your experience is a good one, the odds of a second trip go way up (and the cost of customer acquisition way down).

The most important thing in marketing an experience good is to get people to try it the first time. The cruise industry seems to be good at this, so perhaps there is something to be learned by studying their strategies.

Wine is obviously also an experience good. Hard to know if you will enjoy a wine (or how much) before you pay the bill and open the bottle. If you like it, you are likely to come back for more. No wonder winemakers go to so much effort and expense to hold tastings of their wines.

The Olive Garden restaurant chain has a very successful wine program that is built around their practice of offering free tastes (as allowed by local law). One taste makes a customer more often than not.

Those colorful cruise brochures and television videos (think  PBS’s “Masterpiece Theater” sponsorship) try do the same — they give potential customers a “taste” of what cruise life is like. But for the most part neither wine now cruise ships can entirely overcome the obvious experience deficit disorder. So they need a strategy around it to give buyers confidence to take the plunge.

A Little of What You Fancy

Since cruise lines and independent “professionally curated” wine clubs of the sort that are often associated with newspapers and airline mileage programs cannot give all their potential customers actual samples of their products, they both seem to sell the glamour and exotic nature of the experience and hedge their bets in an interesting way.

Cruise tours seldom spend more than a few hours in any single port of call. If you love today’s stop, you can always come return on your own, but if you find you hate Venice (is this even possible?), don’t worry. You’ll be back on the boat and headed for another destination before you know it.

Some of the wine clubs that advertise in the weekend papers seem to work in the same way. Don’t worry about getting a case of even a six-pack of a particular wine you don’t like. Each case has at least six and sometimes twelve different wines. Don’t like this wine — don’t worry, because it is gone just like that. But you can order more of anything you fall in love with.

The fact that the details of the experience — the particular wines, the particular travel route — are made by experts, not the buyer, seems important, too. You buy the package and leave the rest to the experts. The modest commitment comes with relatively modest effort and emotional investment.

The low commitment strategy doesn’t appeal to everyone (see my personal note below) among either tourists or wine buyers, but its persistence in both spaces suggests that there is a market for it. Especially when there is a big discount involved.

Affordable Luxury

Nice wine and ocean and river cruises are luxuries from an economic point of view. No one has to buy them and there are always cheaper alternatives. The trick to getting the weekend newspaper-reading public to try them seems to be to make them simultaneously very luxurious and a tremendous bargain.

Thus the cruise lines advertise stratospheric rack rates for their services, which are then deeply discounted. The “full brochure fare” for the cheapest stateroom on a 10-day Mediterranean cruise in the flyer that arrived a few weeks ago is $9,999 (including economy airfare from certain gateway US airports). Wow, that’s a lot of money. Must be quite a cruise.

But wait, if you act now this wonderful experience can be yours for just $2,999 (airfare included) or $1,999 if you book your own flight. Lifestyles of the rich and famous at a fraction of the list price. Who can resist?

For the record the full brochure price of the most expensive cabin for this 10-day cruise is … wait for it … $33,998! But your price is just $14,999 or $13,999 if you pay your own airfare. Needless to say, this top-of-the-line listing makes the $2,999 of that bottom-tier inside stateroom seem an even better deal than before. Or maybe you would like to upgrade to the $4,599 veranda stateroom?

Wine club ads (and most supermarkets) adopt a similar strategies. Wine club ads seem to stress both the high retail value of the wines and the low low price that you will pay. Sometimes the introductory offer prices are so low that they must be intended solely to entice buyers into the first “experience” purchase, counting on repeat order for profits.

Foot in the Door?

I don’t see anything wrong with how cruise lines and wine clubs market their services. If this low-commitment affordable luxury strategy is successful in introducing people to wine and travel — and if they enjoy themselves — then that’s a plus.

Remember this. Most consumers don’t drink wine (here in the U.S. about 40% of adults don’t consume any alcohol at all). And most of those who do drink wine do it only a couple of times each month. There is much work to be done to introduce these consumers to the pleasures of wine and if thinking about wine as if it were a luxury river cruise can help, I am all for it.

The point of this that sometimes those of us in the wine space think that wine is so special that we fail to see how it relates to other products and experiences. It’s a good idea to pay attention to how other  experience goods present themselves to consumers and to note how those consumers react.

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For the record, Sue and I don’t seem to fit the wine club/cruise ship profile. We signed up for one of those wine clubs years ago and never ordered again. The wines were fine, we just wanted to make the choices ourselves. We’ve taken just one cruise: a Holland America Inside Passage cruise to Alaska. We had a great time and met many nice people, but were never were tempted to repeat.  Chacun a son gôut, I guess.

At least we had good experiences, unlike the diner in this vintage television commercial.