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Spain's Wine Marketing Gap

Heavy dependence on bulk wine sales, as shown by export statistics, points to a misunderstanding among Spanish winegrowers about the benefits of marketing.

(Article published on LinkedIn, May 2018)

Both Spain and Italy are wine export powerhouses, producing an abundant supply of highly drinkable value-wine offerings, with reliable availability, consistent commercial quality and low everyday price. Each country can also point to a solid range of elite luxury wines, which showcase the world-class quality potential of their regions and provide a halo effect for the entire category. And each boasts its fair share of niche appellations as well: diverse regional wines prized by wine critics and adventurous consumers for their unique terroirs, and supported by thousands of years of cultural and culinary history.

“Many Spanish wine growers see marketing as a cosmetic—something worn at times to mitigate problems, or simply to show off, but otherwise discretionary.”

So, why is the dependence on bulk wine sales so much greater for Spain than for Italy? The obvious answer is market history. Because of trade policies enforced under the Franco regime until his death in 1975, Spain ceded what was in effect a 20-year head start to Italy during the 1980’s and 1990’s. These were critical decades in the evolution of the modern global wine marketplace, with many new consumers entering the wine category for the very first time, eager to discover interesting wines from both the Old World and the New.

While the Spanish wine industry was forced to spend years restructuring its production and marketing dynamics from the volume-driven, isolationist economic strategies of Franco to a more progressive model, Italy was busy developing its global distribution and image. Italian producers fostered trade relationships, gained commercial know-how and built consumer recognition to the benefit of Italy’s leading wine categories, Pinot Grigio and Chianti. As a result, like Coke vs. Pepsi, Italy continues to enjoy a first-to-market advantage vs. Spain in the minds of consumers in the United States and other markets, only exceeded by #3 exporter France whose iconic status is based on centuries of market recognition.

However, the critical issues for today’s Spanish wine industry run deeper than any temporary competitive disadvantage caused by past economic issues. A profound difference between these two heavyweight wine producing countries stems from their respective attitudes regarding the value of professional brand marketing.

Through the benefit of first-hand experience, Italian wine growers learned years ago what the Spanish wine industry is only slowly coming to grips with today: that professional brand building and strategic planning are vital ingredients in driving sustainable bottom-line growth. Consequently, Italian wineries tend to be far less resistant to the idea of marketing as an essential rather than discretionary investment in their business. They've seen on their own balance sheets how building strong brands results in healthier cash flow and more sustainable profitability, the opposite of what low-margin bulk sales generate.

After many years working in the American wine industry with imported brands from Italy, Spain and elsewhere, about a year ago I decided to move to Spain for personal reasons related to my wife’s family. It did not take long to realize that a majority of winery owners and general managers here are still on a learning curve with respect to the importance and efficacy of brand marketing. Many Spanish wine growers see marketing as a cosmetic—something worn at times to mitigate problems, or simply to show off, but otherwise discretionary.

To some degree these conservative attitudes reflect a lingering hangover from the Franco era, when Spain was encouraged to think of itself as different from the rest of the world and economically self-sufficient. But to an even greater extent, they reflect the growing pains of an emerging wine region still figuring out what it can and should be: an ironic situation for a country where people have been making and exporting wine since the time of the Phoenicians, more than two and a half millennia ago.

Wine growing communities tend to go through an educational process as they evolve from grape farmers to wine producers, and from wine producers to wine marketers. Grape farmers and cooperatives sell their products as commodities in the bulk marketplace, which is solely driven by price. By contrast, the most progressive Spanish wineries have embraced their role as brand-marketers, focusing as much on the quality of their brands as on the quality of their wines.

Spain’s evolution from commodity sales to brand building is certainly well underway. Even in less well-known wine regions beyond Rioja, Ribera del Duero and Priorat, Spanish winegrowers are recognizing the opportunities now available to all wine appellations. Appreciation is on the rise in markets around the world for the value, quality and storytelling richness that wines from Spain offer. Consequently, the commercial outlook for Spanish wine seems far from gloomy as the country grows into its new, more assertive and self-confident role as an elite producer on the global stage.

However, for Spain to reach the next level of international demand as a global player, more Spanish wineries need to recognize the need to move beyond imbedded reactionary attitudes. Based on what I’ve learned to date from client work and discussions with people in the wine community, a few counter-productive tendencies are prevalent throughout the country, in large part caused by misunderstandings about the role of marketing. These problem areas contribute to Spain's marketing gap vs. Italy and other more profitable wine exporting countries.



I'm Joseph

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