Tomorrow we'll talk on emerging markets for the wine industry. I happen to find a rather interesting article by one of my colleagues, Uché Okwonko, author of Luxury Fashion Branding on luxury and emerging markets.
On her website, Uché created an online magazine on luxury. Her latest article, "Separating the Facts from the Fiction of the Emerging Luxury Markets", is related to emerging markets and I do think that a lot of her ideas are quite pertinent for the wine market:
"Before looking at the main features of each of the emerging markets, it is important to note that the emerging markets have unique characteristics that make it unrealistic for them to act as benchmarks for one another. For example, the socio-cultural attributes of China and Russia are so starkly different that it would be impossible to use the same parameters in their measurement. One thing the emerging markets have in common however is their current robust economies and the future promises this holds for luxury companies."
After she presented the main differences between the four emerging markets (Brazil, Russia, India and China), she concludes:
"The emerging luxury markets collectively hold promising futures for the luxury business but entry and successful business in each of these markets remains challenging as it ought to be approached through a sound set of strategies developed following an evaluation of the market’s specificities."
Showing posts with label Russia. Show all posts
Showing posts with label Russia. Show all posts
Monday, April 28, 2008
Thursday, April 24, 2008
Emerging countries in the wine world
Our next live radio show will be on the emerging markets in the wine business. From a European stand point of view, the emerging countries are: China, India and Russia. We already went over some issues related to China and India. Russia is a far more difficult market to reach and understand.
In spite of a reputation for hard drinking, Russians are way behind French, Irish and Czechs in alcohol consumption, with only 9.3 liters a year per capita. Russian traditions in wine and food explain this bad reputation, and the current situation. "Russian cuisine," explains the author of the Wikipedia article on “Russian cuisine”, derives its rich and varied character from the vast and multicultural expanse of Russia. Its foundations were laid by the peasant food of the rural population in an often harsh climate, with a combination of plentiful fish, poultry, game, mushrooms, berries, and honey. Crops of rye, wheat, barley, and millet provided the ingredients for a plethora of breads, pancakes, cereals, kvass, beer, and vodka. Flavorful soups and stews centered on seasonal or storable produce, fish, and meats. This wholly native food remained the staples for the vast majority of Russians well into the 20th century. Lying on the northern reaches of the ancient Silk Road, as well as Russia's close proximity to the Caucasus, Persia, and the Ottoman Empire has provided an inescapable Eastern character to its cooking methods (not so much in European Russia but distinguishable in the North Caucasus).”
Later on, from the 16th to the 18th century, Russians imported smoked meats and fish, pastry cooking, salads and green vegetables, chocolate, ice cream, wines, and liquor. This created, for the rich and mighty aristocrats, the various sources of refined and elegant dishes. This trend was confirmed and extended in the 19th century, when the Russian court and aristocracy imported not only the ingredients but also the French and Austrian personnel able to cook the new dishes. That is why, concludes our anonymous author of the Wikipedia article, “Many of the foods that are considered in the West to be traditionally Russian actually come from the Franco-Russian cuisine of the 18th and 19th centuries, and include such widespread dishes as Veal Orloff, Beef Stroganoff, and Sharlotka (Charlotte Russe).”
It was customary for the traditional Russian to drink mostly vodka with his meals. 30 years ago, Russians were drinking 17 liters of wine per capita a year. The rest of their alcoholic consumption was dedicated to beer and vodka. By the mid 1990s, their wine consumption had plummeted to 2.5 liters, but went back up to 5.1 liters in 1998. The main core of their consumption is still vodka and beer.
This difficult history between wine, spirits and food in Russia does not influence so much the newRussia wine consumer whose profile is rather similar to the Indian or Chinese wine consumer. Drinking wine is a sign of status and social success. There are now a few hundred millionaires in Russia: their fortune is estimated at around $3.4 billion dollars. The richest of all those successful businessmen is Roman Abramovich, whose fortune is estimated at $19.2 billion. The income of the average citizen has also increased. The average income of the middle class is now $7,000 (around 4.800 euros) a year, while the national average is around $2,610 (about 1.800 euros) a year. 20 million people are now above the poverty level.
In this relatively prosperous economy, more and more people have a little disposable income. Wine is a good way to spend some money; it is new and trendy as well as a sign of success. Russians drink mostly red wine (70%); white wine accounts for about 25% and rosé wines for the rest. Russians – a little like their American counterparts – have a sweet tooth. They love off-dry and semi-sweet flavors, even in red wines.
Dry wines reflect mostly the more sophisticated drinking habits of the wealthy consumers. Young entrepreneurs and high executives of international corporations are the main clients of the fine wine business. The wealthier wine consumers thrive on First Growth Bordeaux and cult wines from the New World.
The average wine drinker will mostly buy imported wines from Moldova (before the ban), Bulgaria, Georgia and France, with Italy now getting into the picture. The price of a bottle will be in the 3 euros range, but the situation is different in the major cities, like Moscow, St. Petersburg or Kiev. In those cities drinkers have a much higher disposable income and spend more on premium wines.
More traveled, highly educated, with a high income, these new wine drinkers have the time and the will to learn more about wine. They want to have access to the status symbols of the Western world. Wine, like luxury products, is highly desirable for these new consumers.
In spite of a reputation for hard drinking, Russians are way behind French, Irish and Czechs in alcohol consumption, with only 9.3 liters a year per capita. Russian traditions in wine and food explain this bad reputation, and the current situation. "Russian cuisine," explains the author of the Wikipedia article on “Russian cuisine”, derives its rich and varied character from the vast and multicultural expanse of Russia. Its foundations were laid by the peasant food of the rural population in an often harsh climate, with a combination of plentiful fish, poultry, game, mushrooms, berries, and honey. Crops of rye, wheat, barley, and millet provided the ingredients for a plethora of breads, pancakes, cereals, kvass, beer, and vodka. Flavorful soups and stews centered on seasonal or storable produce, fish, and meats. This wholly native food remained the staples for the vast majority of Russians well into the 20th century. Lying on the northern reaches of the ancient Silk Road, as well as Russia's close proximity to the Caucasus, Persia, and the Ottoman Empire has provided an inescapable Eastern character to its cooking methods (not so much in European Russia but distinguishable in the North Caucasus).”
Later on, from the 16th to the 18th century, Russians imported smoked meats and fish, pastry cooking, salads and green vegetables, chocolate, ice cream, wines, and liquor. This created, for the rich and mighty aristocrats, the various sources of refined and elegant dishes. This trend was confirmed and extended in the 19th century, when the Russian court and aristocracy imported not only the ingredients but also the French and Austrian personnel able to cook the new dishes. That is why, concludes our anonymous author of the Wikipedia article, “Many of the foods that are considered in the West to be traditionally Russian actually come from the Franco-Russian cuisine of the 18th and 19th centuries, and include such widespread dishes as Veal Orloff, Beef Stroganoff, and Sharlotka (Charlotte Russe).”
It was customary for the traditional Russian to drink mostly vodka with his meals. 30 years ago, Russians were drinking 17 liters of wine per capita a year. The rest of their alcoholic consumption was dedicated to beer and vodka. By the mid 1990s, their wine consumption had plummeted to 2.5 liters, but went back up to 5.1 liters in 1998. The main core of their consumption is still vodka and beer.
This difficult history between wine, spirits and food in Russia does not influence so much the newRussia wine consumer whose profile is rather similar to the Indian or Chinese wine consumer. Drinking wine is a sign of status and social success. There are now a few hundred millionaires in Russia: their fortune is estimated at around $3.4 billion dollars. The richest of all those successful businessmen is Roman Abramovich, whose fortune is estimated at $19.2 billion. The income of the average citizen has also increased. The average income of the middle class is now $7,000 (around 4.800 euros) a year, while the national average is around $2,610 (about 1.800 euros) a year. 20 million people are now above the poverty level.
In this relatively prosperous economy, more and more people have a little disposable income. Wine is a good way to spend some money; it is new and trendy as well as a sign of success. Russians drink mostly red wine (70%); white wine accounts for about 25% and rosé wines for the rest. Russians – a little like their American counterparts – have a sweet tooth. They love off-dry and semi-sweet flavors, even in red wines.
Dry wines reflect mostly the more sophisticated drinking habits of the wealthy consumers. Young entrepreneurs and high executives of international corporations are the main clients of the fine wine business. The wealthier wine consumers thrive on First Growth Bordeaux and cult wines from the New World.
The average wine drinker will mostly buy imported wines from Moldova (before the ban), Bulgaria, Georgia and France, with Italy now getting into the picture. The price of a bottle will be in the 3 euros range, but the situation is different in the major cities, like Moscow, St. Petersburg or Kiev. In those cities drinkers have a much higher disposable income and spend more on premium wines.
More traveled, highly educated, with a high income, these new wine drinkers have the time and the will to learn more about wine. They want to have access to the status symbols of the Western world. Wine, like luxury products, is highly desirable for these new consumers.
Thursday, March 6, 2008
Generation Y and Branding
Also called "Millennials" or "Generation Why", this group is widely represented in a lot of countries and constitutes a major target for local and global brands. In the US, there are 70 million people under 30; in Vietnam, they represent 50% of the 90 million people; in China, they are 200 million strong and there are 367 million people under the age of 18, a huge potential market for this growing economy. In South Africa, they account for 35% of the population.
In countries where their number is not as significant, they are different from the Baby Boomers: in East European countries, the Millennials are the first post-communist generation and in Southern Europe, the first post-dictatorship generation. In emerging countries (South Korea, Russia), they are the first generation growing in a stabilized social environment.
The generation Y was born with Internet and finds it easy to interact with each other and then with the world. Forums, blogs, Facebook, iTunes and many other community sites are their favorite places to express themselves, share their ideas, tastes and distastes. Those young people think they can make life fit their specific needs and wants. Brands have to get used to engage in a two-way conversation with those potential consumers. Their favorite US brands, Trader Joe's, Ben and Jerry's and Whole Foods (to take into account only the brands connected to the wine and food business) communicate to their customers in a very personal and socially aware style. It's not so much what they communicate that how they do: Millennials like style, a real voice, and a bit of attitude. They love to blend personal and professional life: their workplace, the marketplace and the lifestyle have to stay connected in a meaningful way.
What does it mean for wine brands? In the US, the percentage of Millennials who consume wine has increased from 10% in 2004 to 17% in 2006. Even more interesting, Millennials and GenXers are more inclined to drink wine than beer.
How did they become interested in wine? For some of them, their parents drank wine and they grew up with wine on the table. “My parents are both big into wine”, said 22-year-old Jennifer Hammons to journalist Deborah Pankey, Daily Herald Food Editor on November 30, 2005. ”At first I didn’t like it, but then it grew on me.”
There is much the same scenario for young people in France: wine is a food always on the family table. Young children are encouraged to taste a drop of champagne or wine during family gatherings. Later in their teens, they are given a third of a glass of wine or champagne with their meal. Why do they then reject wine to go on to beer, cocktails or liquors? Very often, as sociologist Céline Simonnet-Toussaint explains in her book Le Vin sur le Divan, young people under 25 reject wine because it is the symbol of the family. Young people want to experiment with their freedom, but they come back to wine at around 25, when they get their first job, their first “real” apartment and start settling into their new life.
Others discover wine by themselves – during a trip to a wine country, like Napa in the USA, Burgundy in France, Tuscany in Italy, Priorato in Spain or Porto in Portugal. They get interested, go to wine classes or tastings, join a wine club and explore wine stores to get good advice. Mostly, like the women, they listen to their peers, surf the Internet to read about wine and discuss their new passion in forums.
The wine industry is aware of the need of young people for more knowledge. At the same time, this new generation of wine drinkers is very different from preceding generations. It is the “coca cola generation": they have a much sweeter tooth, they are “zappers”, having known TV and the Internet all their lives, and they are used to getting what they want and paying a high price for it. After all, they pay $3.50 for their daily Starbucks cappuccino and download their songs for $1 or their movies for $5 every day on their iPod or MP3. They know that everything has a price and usually a high price.
Taking these parameters into account, some wine makers considered designing wines specifically targeted at Millennials and GenXers: fun labels, fruity forward wines and a high price. Millennials do not hesitate to pay up to $20 for a bottle of wine! Indeed, they do not yet have any big financial burdens: no children, often a two-income household, no parents to take care of, a good salary and a large disposable income. Unfortunately for the wine industry, they rarely buy the same bottle twice, because there is such a huge choice of brands. They want to be the first to discover a new brand or a new trend, the first to try them and share them with their peers.
Nonetheless, major groups have designed brands for Millennials as they have for women. Constellation designed 3 Blind Moose, Four Emus, Monkey Bay and other “fun” brands. There is no talk of terroir or winemaking on the packaging. The label does not tell a wine story, but a story of having a good time and fun with your friends. Those brands sell well. Gary Glass, former Vice-President of Marketing for Constellation’s Centerra Wine Company, estimates that 3 Blind Moose sold 175,000 cases in 18 months on the market.
At the same time, young people are not as comfortable as their elders when they buy wine. They can be adventurous, but they also seek quality and certainty. Whether they are American, European or Japanese, they will rely on a classic wine from Europe or a well known luxury brand from the New World. Wine is still a little intimidating for Millennials. It is the wine industry's responsibility to help the young generation to appreciate wine.
In countries where their number is not as significant, they are different from the Baby Boomers: in East European countries, the Millennials are the first post-communist generation and in Southern Europe, the first post-dictatorship generation. In emerging countries (South Korea, Russia), they are the first generation growing in a stabilized social environment.
The generation Y was born with Internet and finds it easy to interact with each other and then with the world. Forums, blogs, Facebook, iTunes and many other community sites are their favorite places to express themselves, share their ideas, tastes and distastes. Those young people think they can make life fit their specific needs and wants. Brands have to get used to engage in a two-way conversation with those potential consumers. Their favorite US brands, Trader Joe's, Ben and Jerry's and Whole Foods (to take into account only the brands connected to the wine and food business) communicate to their customers in a very personal and socially aware style. It's not so much what they communicate that how they do: Millennials like style, a real voice, and a bit of attitude. They love to blend personal and professional life: their workplace, the marketplace and the lifestyle have to stay connected in a meaningful way.
What does it mean for wine brands? In the US, the percentage of Millennials who consume wine has increased from 10% in 2004 to 17% in 2006. Even more interesting, Millennials and GenXers are more inclined to drink wine than beer.
How did they become interested in wine? For some of them, their parents drank wine and they grew up with wine on the table. “My parents are both big into wine”, said 22-year-old Jennifer Hammons to journalist Deborah Pankey, Daily Herald Food Editor on November 30, 2005. ”At first I didn’t like it, but then it grew on me.”
There is much the same scenario for young people in France: wine is a food always on the family table. Young children are encouraged to taste a drop of champagne or wine during family gatherings. Later in their teens, they are given a third of a glass of wine or champagne with their meal. Why do they then reject wine to go on to beer, cocktails or liquors? Very often, as sociologist Céline Simonnet-Toussaint explains in her book Le Vin sur le Divan, young people under 25 reject wine because it is the symbol of the family. Young people want to experiment with their freedom, but they come back to wine at around 25, when they get their first job, their first “real” apartment and start settling into their new life.
Others discover wine by themselves – during a trip to a wine country, like Napa in the USA, Burgundy in France, Tuscany in Italy, Priorato in Spain or Porto in Portugal. They get interested, go to wine classes or tastings, join a wine club and explore wine stores to get good advice. Mostly, like the women, they listen to their peers, surf the Internet to read about wine and discuss their new passion in forums.
The wine industry is aware of the need of young people for more knowledge. At the same time, this new generation of wine drinkers is very different from preceding generations. It is the “coca cola generation": they have a much sweeter tooth, they are “zappers”, having known TV and the Internet all their lives, and they are used to getting what they want and paying a high price for it. After all, they pay $3.50 for their daily Starbucks cappuccino and download their songs for $1 or their movies for $5 every day on their iPod or MP3. They know that everything has a price and usually a high price.
Taking these parameters into account, some wine makers considered designing wines specifically targeted at Millennials and GenXers: fun labels, fruity forward wines and a high price. Millennials do not hesitate to pay up to $20 for a bottle of wine! Indeed, they do not yet have any big financial burdens: no children, often a two-income household, no parents to take care of, a good salary and a large disposable income. Unfortunately for the wine industry, they rarely buy the same bottle twice, because there is such a huge choice of brands. They want to be the first to discover a new brand or a new trend, the first to try them and share them with their peers.
Nonetheless, major groups have designed brands for Millennials as they have for women. Constellation designed 3 Blind Moose, Four Emus, Monkey Bay and other “fun” brands. There is no talk of terroir or winemaking on the packaging. The label does not tell a wine story, but a story of having a good time and fun with your friends. Those brands sell well. Gary Glass, former Vice-President of Marketing for Constellation’s Centerra Wine Company, estimates that 3 Blind Moose sold 175,000 cases in 18 months on the market.
At the same time, young people are not as comfortable as their elders when they buy wine. They can be adventurous, but they also seek quality and certainty. Whether they are American, European or Japanese, they will rely on a classic wine from Europe or a well known luxury brand from the New World. Wine is still a little intimidating for Millennials. It is the wine industry's responsibility to help the young generation to appreciate wine.
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