Building a market leader without advertising


What does it take to build a brand? Brand definitions are innumerable, and almost every author in the field has his or her own. Although they can be useful, definitions tell us very little about how to build a brand. Definitions are static: they take the brand for granted. Building the brand is dynamic.

In general, in our executive seminars, when we ask attendees how to build a marketleading brand, typical answers include advertise, create an image, and develop awareness. They are mostly answers that focus on communication.

Instead of answering that question frontally, we shall look at an interesting case: how did an unknown Australian company, Orlando Wyndham, build the UK’s leading bottled wine brand, Jacob’s Creek? This brand is now the leader in volume and the leader in spontaneous brand awareness, with a very strong image. All that was achieved without mass-market advertising before 2000. It is most interesting also to note that between 1984 and 2000, the UK wine market doubled in size. What then was needed to create a successful wine brand in the UK mass market?:

  • The first condition is to have enough volume. Addressing the mass market means being able to fulfil trade expectations.
  • Multiple retailers hate to deal with companies that cannot provide sufficient supply if a product is a success. For a wine maker this means being able to rely on a very large supply source.
  • The second condition is to secure a stable quality. The first role of any brand is to reduce perceived risk: the consumer experience must be the same whenever and wherever the product is bought. (This is why branding services is tougher than branding tangible products: human variability works against this stability.) For a wine maker, it means mastering the art of blending, to make sure consumer expectations are not betrayed. Once consumers discover they like a specific wine taste, their repurchase indicates a willingness to reduce risk and re-find the same taste, the same pleasure.
  • For a mass-market brand, price is key: it must be mainstream. Everything must be done, at the back office level, to ensure higher productivity, and hence a lower production cost, while not altering the quality and taste.
  • It is essential to be end-user driven, and find the right taste for the particular market. Many UK consumers are not longpractised wine drinkers. Their tastes have been shaped by cold soft drinks and beer. This means that they prefer wines with a specific taste and in-mouth profile. In addition, if an organisation hits the right local expectations it can expect to obtain good publicity, medals and press coverage, thus reinforcing the trade support.
  • Another requirement is a national sales force. Wine is mostly chosen at the point of purchase. On-shelf visibility and point-ofpurchase advertising are success factors. It is important to draw up national agreements with the major multiple retailers (in this case Sainsbury, Asda, Tesco and a few others) to achieve this, but even when these are in place a day-to-day check needs to be carried out, store by store, to make sure everything is in place. Only a national sales force can achieve this. In addition, an intensive wet trial phase is needed, to encourage customers to pause in wandering up and down the store aisles and taste the product. This too requires a national sales force.

These five steps to build a brand in the market may seem straightforward and easy to follow. Actually they are not. French wines could not meet the conditions, while New World wines, and Australian wines in particular, could. Let us examine why, for each condition.

Old World wines are based on one principle. The quality of the wine is totally dependent on natural factors: the specific type of soil, the sun, the climate, the air. As a consequence, hundreds of wines have been created, differentiated by the wine-growing area, or even specific vineyard, from which they come, and its unique characteristics. Each vineyard claims its soil is better than that of competitors, for example. As a consequence, the product is fragmented. For example, behind each of the 5,000 marques of Bordeaux wine there is a different grower, usually rather small. This prevents suppliers from responding to the first condition for building a brand: enough volume.

Old World wines have tried to secure their market leadership by transforming their wineproducing practices into laws. Producing a Burgundy or a Bordeaux wine means obeying these laws. What was intended as a quality control system has become a major block against innovating to address the competition from emerging growing areas.

If a wine is to be called a Pauillac, a Graves or whatever (these are subregions within Bordeaux), its producers are not permitted to mix the grapes from this region with grapes grown anywhere else, or only at a very small level. If one season is dry they cannot irrigate; nor can they add chemicals to moderate the differences in quality caused by differences in climate from year to year. Because they respect these laws, Old World wines have an inherent variability: they are the true produce of nature, more than the produce of man. There is much more variety of soils and variance in climate from year to year in Europe than in Australia, California or Argentina, and this too leads to differences between one Old World wine and another.

Branding means suppressing this variability: to secure the same taste from year to
year, one must master the art of blending grapes coming from very different soils – and regions, if one of them is underproducing. Australia, as a relatively newly settled country without a long wine-growing tradition, had few laws governing wine producing; it could do it. It was not so for wine makers from Bordeaux or Burgundy.

The same holds true for getting the right quality at low production costs. French wine makers are not allowed to use mechanized harvesting: they are required to harvest by hand. They cannot irrigate, and so radically increase the productivity of their soils; they cannot make use of chemical additives. In France too, wine is stored in barrels as a rule. In Australia wine is kept in huge aluminium tanks, and wood cuttings are put in the wine: there is more wood surface in contact with the wine, which accelerates the process of giving the wine the right ‘woody’ taste. Time being money, this reduces production costs.

Point four concerns getting the right taste to appeal to the target market. New World wines have no tradition to respect: they started from the customer. They adapted their product to the taste of customers in emerging markets, used to drinking soft drinks and beer. Their wine had to be fruit-driven, very soft, very smooth, easy to drink for all occasions. Some varietals (types of grape) such as Chardonnay and Semillon Chardonnay could deliver such a taste. These were not the varieties that made the reputation of Bordeaux or Burgundy wines.

One other dimension of being client-driven is language. Marketing research showed that the English were still broadly an ‘island race’: many of them are not well versed in European languages and the cultural traditions of Continental Europe. Unlike the maze of thousands of hard-to-pronounce wine names from Europe, Jacob’s Creek is an English name, and the wording on the wine labels is written in English. Until recently French wines rarely provided any labelling information in English. Furthermore, Australia is part of the Commonwealth, and some English people identify more closely with it than with France.

In addition, each New World country has become associated with a small number of grape varieties. This means that consumers find it easier to forecast the taste of an Australian wine than of a French wine. The country of origin adds its own risk-reducing role to the brand.

Last but not least, the industry’s organization in the Old World is too fragmented. Individual growers cannot afford a dedicated sales force even in their homeland. Even when the wine is produced by cooperatives of growers, the coops tend to want to remain independent and refuse to join larger organisations, the only viable path to reaching the critical size to create a brand.

As a result, in the 16 years to 2001, Australian wines, led by Jacob’s Creek, went from zero to a 16.9 per cent share by volume and a 20.1 per cent share by value of the British market.

Meanwhile the market doubled in size. Interestingly, as is shown by the value share being higher than the volume share, price is not the main reason consumers choose Australian wines. The New World growers have succeeded in persuading customers to trade up, by offering higher quality brand extensions designed to appeal to former novice wine drinkers who are now willing to explore more complex wines.

Can Old World wines come back and stop their sharp decline? As long as they do not suppress their internally based regulations, their production laws, and do not encourage supplier concentration, they will not be able to fulfill the five conditions for building brands. Bordeaux and Burgundy cannot do it.

However, the Languedoc wine-growing region is the biggest in the world. As such it fulfils the first condition. In this region, which historically produced lower-status wine than Bordeaux and Burgundy, there are very few production rules to obey. The future is in the hands of Languedoc’s growers if they can concentrate and meet customers’ requirements, not only in the UK but also in Japan, Korea and other countries with a growing market for wine.

They might also export their know-how and build brands where the future market is: China. This is why so many players are signing joint ventures with Chinese companies and authorities, to grow grapes in China and develop brands that have none of the Old World wine industry’s self-imposed limitations.

What lessons can be drawn and generalised? New World wine brands have succeeded because they innovated, breaking with the competition’s conventions for consumer profit. They have not stopped innovating and disrupting conventions. In Australia, Jacob’s Creek recently introduced screw cap closures on its Riesling varieties, abandoning a sacred cow: cork closure. Riesling is more likely than wines from some other grape varieties to be affected by problems of cork quality, and half-bottles are especially vulnerable. Both consumers and the trade reacted favourably to this small but revolutionary innovation.

A second lesson is that a part of Jacob’s Creek appeal was based on one enduring weakness of competition: it was not an elitist brand, and it had no snob value. It was approachable for everybody.

The product’s quality–price ratio was excellent, attracting praise from experts and taste makers. This is an endless race: each year the brand continues to improve the quality, thus winning continuous publicity. Since it was the first of the major Australian wine exporters, Jacob’s Creek benefited from the ‘pioneer advantage’, and became the symbol of Australian wine. Interestingly, Orlando Wyndham, the company that owns the brand, is far smaller than some of its Australian competitors such as Hardy’s, but all its energy and efforts were focused on this one single brand.

Many brands have developed by contact and retail without advertising: Google, Zara, Amazon. This is not the only brand-building model. Yellow Tail became the number one wine brand in the United States thanks to a huge advertising campaign, a fun personality and a price which strongly motivated its main distributor. In addition it was aimed at the wide field of non-experts in wine.

« Previous Topics
Are Brands For All Companies?
Obstacles To The Implications Of Branding
Brands And Other Signs Of Quality
Next Topics »
Brand Building: From Product To Values, And Vice Versa
Are Leading Brands The Best Products Or The Best Value?
Understanding The Value Curve Of The Target

Strategic Brand Management Related Practice Tests

Strategic Management Practice Tests
Brand Equity In Question What Is A Brand? Differentiating Between Brandassets, Strength And Value Tracking Brand Equity Goodwill: The Convergence Of Finance And Marketing How Brands Create Value For The Customer How Brands Create Value For The Company Corporate Reputation And The Corporate Brand Strategic Implications Of Branding What Does Branding Really Mean? Permanently Nurturing The Difference Brands Act As A Genetic Programme Respect The Brand ‘contract’ The Product And The Brand Each Brand Needs A Flagship Product Advertising Products Through The Brand Prism Brands And Other Signs Of Quality Obstacles To The Implications Of Branding Brand And Business Building Are Brands For All Companies? Building a market leader without advertising Brand Building: From Product To Values, And Vice Versa Are Leading Brands The Best Products Or The Best Value? Understanding The Value Curve Of The Target Breaking The Rule And Acting Fast Comparing Brand And Business Models: Cola Drinks From Private Labels To Store Brands Evolution Of The Distributor’s Brand Are They Brands Like The Others? Why Have Distributor's Brands? The Financial Equation Of The Distributor’s Brand The Three Stages Of The Distributor’s Brand The Case Of Decathlon Factors In The Success Of Distributor's Brands Optimising The Dob Marketing Mix The Real Brand Issue For Distributors Competing Against Distributor's Brands Facing The Low-cost Revolution Should Manufacturers Produce Goods For Dob's? Brand Diversity: The Types Of Brands Luxury, Brand And Griffe Service Brands Brand And Nature: Fresh Produce Pharmaceutical Brands The Business-to-business Brand The Internet Brand Country Brands Thinking Of Towns As Brands Universities And Business Schools Are Brands Thinking Of Celebrities As Brands The New Rules Of Brand Management The Limits Of A Certain Type Of Marketing About Brand Equity The New Brand Realities We Have Entered The B To B To C Phase Brand Or Business Model Power? Building The Brand In Reverse? The Power Of Passions Beginning With The Strong 360° Experience Beginning With The Shop The Company Must Be More Human, More Open Experimenting For More Efficiency The Enlarged Scope Of Brand Management Licensing: A Strategic Lever How Co-branding Grows The Business Brand Identity And Positioning Brand Identity: A Necessary Concept Identity And Positioning Why Brands Need Identity And Positioning The Six Facets Of Brand Identity Sources Of Identity: Brand Dna Brand Essence Launching The Brand Launching A Brand And Launching A Product Are Not The Same Defining The Brand’s Platform The Process Of Brand Positioning Determining The Flagship Product Brand Campaign Or Product Campaign? Brand Language And Territory Of Communication Choosing A Name For A Strong Brand Making Creative 360° Communications Work For The Brand Building Brand Foundations Through Opinion Leaders And Communities The Challenge Of Growth In Mature Markets Growth Through Existing Customers Line Extensions: Necessity And Limits Growth Through Innovation Disrupting Markets Through Value Innovation Managing Fragmented Markets Growth Through Cross-selling Between Brands Growth Through Internationalisation Sustaining A Brand Long Term Is There A Brand Life Cycle? Nurturing A Perceived Difference Investing In Communication No One Is Free From Price Comparisons Branding Is An Art At Retail Creating Entry Barriers Defending Against Brand Counterfeiting Brand Equity Versus Customer Equity: One Needs The Other Sustaining Proximity With Influencers Should All Brands Follow Their Customers? Reinventing The Brand: Salomon Adapting To The Market: Identity And Change Bigger Or Better Brands? From Reassurance To Stimulation Consistency Is Not Mere Repetition Brand And Products: Integration And Differentiation Specialist Brands And Generalist Brands Building The Brand Through Coherence Defining The Core Identity Of The Brand Confirming The Presence Of Brand Core Facets In Each Product Identifying The Role Of Each Product Line In The Construction Of The Brand Graphically Representing The Overall System Of The Brand Checking The Coherence Worldwide The Three Layers Of A Brand: Kernel, Codes And Promises Respecting The Brand Dna Managing Two Levels Of Branding Growth Through Brand Extensions What Is New About Brand Extensions? Brand Or Line Extensions? The Limits Of The Classical Conception Of A Brand Why Are Brand Extensions Necessary? Building The Brand Through Systematic Extensions: Nivea Extending The Brand To Internationalize It Identifying Potential Extensions The Economics Of Brand Extension What Research Tells Us About Brand Extensions Avoiding The Risk Of Dilution Balancing Identity And Adaptation To The Extension Market Segments Assessing What Should Not Change: The Brand Kernel Preparing The Brand For Remote Extensions Keys To Successful Brand Extensions Is The Market Really Attractive? An Extension-based Business Model: Virgin How Execution Kills A Good Idea: Easycar Brand Architecture The Key Questions Of Brand Architecture Type And Role Of Brands The Main Types Of Brand Architecture The Flexible Umbrella Brand The Aligning Umbrella Brand (masterbrand) Choosing The Appropriate Branding Strategy New Trends In Branding Strategies Internationalising The Architecture Of The Brand Some Classic Dysfunctions What Name For New Products? Group And Corporate Brands Corporate Brands And Product Brands Multi-brand Portfolios Inherited Complex Portfolios From Single To Multiple Brands: Michelin The Benefits Of Multiple Entries Linking The Portfolio To Segmentation Global Portfolio Strategy The Case Of Industrial Brand Portfolios Linking The Brand Portfolio To The Corporate Strategy Key Rules To Manage A Multibrand Portfolio The Growing Role Of Design In Portfolio Management Does The Corporate Organization Match The Brand Portfolio? Auditing The Portfolio Strategically A Local And Global Portfolio – Nestlé Handling Name Changes And Brand Transfers Brand Transfers Are More Than A Name Change Reasons For Brand Transfers The Challenge Of Brand Transfers When One Should Not Switch Analysing Best Practices Transferring A Service Brand How Soon After An Acquisition Should Transfer Take Place? Managing Resistance To Change Factors Of Successful Brand Transfers Brand Turnaround And Rejuvenation The Decay Of Brand Equity The Factors Of Decline Distribution Factors When The Brand Becomes Generic Preventing The Brand From Ageing Rejuvenating A Brand Growing Older But Not Ageing Managing Global Brands The Latest On Globalisation Patterns Of Brand Globalisation Why Globalise? The Benefits Of A Global Image Conditions Favouring Global Brands The Excess Of Globalisation Barriers To Globalisation Coping With Local Diversity Building The Brand In Emerging Countries Naming Problems Achieving The Delicate Local–global Balance Being Perceived As Local: The New Ideal Of Global Brands? Local Brands Can Strike Back The Process Of Brand Globalisation Globalising Communications: Processes And Problems Making Local Brands Converge Financial Valuation And Accounting For Brands Accounting For Brands: The Debate What Is Financial Brand Equity? Evaluating Brand Valuation Methods Brand Valuation In Practice The Evaluation Of Complex Cases What About The Brand Values Published Annually In The Press? Strategic Brand Management Interview Questions