Driving the strategic growth of Australian wines in the US export market

Abstract

This project identified the barriers to selling Australian premium wines at USD 12 retail and above in the US market. These barriers have been translated into communication ads, which were tested with both US consumers and trade operators. Results showed that the content of communication ads don’t have a direct impact on wine choices, but we identified three distinct segments of these populations, who think alike when choosing a bottle of wine. A simple Decision Support System was then developed to aid Australian exporters to match their offerings with the right wine trade and consumer segment in the US market.

Summary

The overall objective of the Wine Australia funded project titled “Driving the strategic growth of Australian wines in the US export market” (USA-1501), is to increase the sales of Australian premium wines USD 12 retail and above in the US market. In order to reach this objective, the project developed strategies to help break down the barriers that trade and opinion leaders have about stocking and supporting Australian wines in the US market. The project comprised four stages:

1. A Discovery stage where Australian wine exporters and US trade operators were interviewed about the main factors hindering the growth of Australian wine in the US market;

2. A Vennli® stage, where US retail operators were asked to compare performance on the key factors identified in the Discovery Stage between Australia and its competitors using the Vennli® platform;

3. A Communication Testing stage, where a series of communication messages derived from the results of the Vennli® stage were tested with both consumers and trade operators, in order to identify which communication message and trade activities could lead to the selection of more Australian wines at higher price points. The best ad was used to measure the preferences among the US wine trade and US wine consumers for different combinations of Australian wine attributes (e.g., grape varieties, regions, medals, prices, etc.), which then led to stage 4.

4. A Decision Support System stage, where a simple tool was developed to help Australian wine exporters focus on the best-matched trade and consumer groups to their offering along with the best fitting communication strategy for each.

The results of the first stage showed the top 3 barriers for Australian wine exporters were a lack of knowledge of the various Australian wine regions, Australian wines are perceived as low-priced by consumers, and wines from other countries are easier to sell. The most important aspects for US wine trade were that the wines are easy to sell, the wines have a good reputation among wine media, the wine brands are committed to the US market, the wines have enough shelf space at retail, and the wine producers know how to find the right importer.

These factors have been tested via a cloud-based software platform for strategic growth intelligence, analytics, and visualization: the Vennli® software. The results of the Vennli® stage revealed that the three key factors for the for the growth of premium wines USD 12 retail and above in the US market are: a) having easy to sell wines, b) having wines with a good reputation among the media, and c) having producers who are committed to the US market. In addition, trade operators don’t believe consumers care much about regionality. However, contrary to what trade operators say, regionality is one the elements consumers seem to care about, so we decided to carry this factor over. The other main finding is that Australia doesn’t exclusively own any factor, either the important or the unimportant ones. The issue doesn’t seem to be that importers, distributors, and retailers believe Australia is performing poorly, but more a problem of distinctiveness: what can we do to make Australia stand out?

These factors were translated into communication ads, which we showed to a representative sample of US wine consumers and trade-operators. After seeing one of these ads, respondents were asked to answer a Discrete Choice Experiment (DCE), which allowed us to understand what product features (e.g. country-of-origin, region-of-origin, grape variety, price, etc.) consumers and trade operators value the most when choosing a bottle of wine. The first key result is that we couldn’t see any difference in DCE responses between respondents exposed to different communication ads. This is a positive result, because it means that we can communicate the message we prefer in the US market, without running the risk that one message may jeopardise consumers and trade operators’ choices towards Australian wines. Secondly, the aggregate responses to the DCE showed that price is the key choice driver for both consumers and trade operators. Consumers are then driven by expert ratings, grape variety and country-of-origin, whilst trade operators are mainly driven by country-of-origin and expert ratings. However, the subsequent segmentation we conducted via a Latent Class Analysis (LCA) revealed a more varied picture, where price is the key choice driver for a smaller segment of the populations, and where we found the existence of three comparable groups of wine consumers and trade operators, who think alike when choosing a bottle of wine.

In stage 4, a Decision Support System, which we called The US Wine Marketing Tool, was developed to match the kinds of wines and the aspects communicated by Australian wine exporters to the preferences of different trade and consumer groups. The Tool can be used to suggest which trade and consumer groups would most likely be receptive to a winery’s offering; or given the trade and consumer profile, which wines and which communication aspects are best to communicate. The tool is available on the Wine Australia website.