A fine wine strategy that works: Austria

Tuesday, 17. July 2018 - 11:45

Willi Klinger by WK Zinner/ÖWM

Generic marketing, says Willi Klinger, is like “a race horse with a plough”. That might be true, but Klinger – the managing director of the Austrian Wine Marketing board – presides over one of the most effective generic marketing bodies in the world. One of its great achievements has been to raise the export value of Austria’s wines to almost three times what it was a decade ago – even though volumes have declined (see chart below).

In short, Austria has achieved what many regions are seeking to do – to get out of the entry level segment and climb into fine wine territory. How did they do it?

The strategy

At a recent meeting in Vienna, Klinger outlined Austria’s approach.  First, he says, his goal was to move Austrian wine out of the bottom price segment. “We definitely need to have a decent presence in Austrian and German (and, to some extent also, Dutch, Belgian and British) supermarkets, but not at the very entry level.”

There are, however, consequences to moving upwards, and it’s important to be willing to accept them. German consumers were used to seeing cheap Austrian wines in their supermarkets and the only way to change their perception of Austria as an entry-level supplier, was to take those cheap wines away. Klinger says that Austria made a concerted effort to leave that segment. “Germany is the biggest importer in the world by volume, and the average price of a litre is €1.65,” he explains. “We are now at €2.56 in Germany.” But that price tag has come at a price – Austria has lost market share.

Just as important as leaving the bottom is being seen at the top. “I want to be in Shanghai in the best ten restaurants,” says Klinger. “This is where we belong, the globe over.”

He also says it’s important to be present in many markets. “When somebody tells me, ‘Willi, concentrate on three markets’, I say, ‘you are crazy’. We need many markets. All the smart people around the world must know that there are Austrian wines.”

How the wines are marketed is also critical when seeking to raise prices, and for Klinger, the answer lies in leading with regional identity. “I have a very important theoretical basis for this,” he says. “Fine wine marketing is different from all the marketing philosophies of the old school.” He then produces a quote from Gerry Glasgow, vice president of marketing from E&J Gallo, to demonstrate ‘old school’ thinking:  “We’re trying to give the consumer what they’re looking for in a wine, to understand what taste profiles they seem interested in and what selling concepts them interest them.”

If fine wine followed that strategy, says Klinger, “you would lose all your character”. He thinks Steve Job’s famous quote about “customers don’t know what they want until we’ve shown them” is the way forward for fine wine.

“We have to explain that we don’t do what people want,” he says. “This is totally different from consumer marketing. Of course we have to go to the fairs and work, and be good in delivery and so on, but the principle is completely different. You must be crazy enough to believe you can sell your wine that nobody wants.”

Klinger is not only fine with presenting wine as a complex subject – he thinks it offers a competitive advantage. “Style is an important part of the identity of a wine,” explains Klinger. “Consumers sometimes only understand grape variety.” That, of course, is a trap because grape varieties can be interchangeable. If consumers want Pinot Grigio first and foremost, then where it comes from becomes irrelevant. The answer to this conundrum that many producers give is the brand. “Often people construct an artificial construct between origin and brand. We are told that origin doesn’t count.” Actually, he says, the secret to success is to make the origin the brand, and he quotes from Austria’s dairy industry: “Origin focused agricultural marketing is politically desirable, because it enhances social economical and ecological sustainability much more than a marketing of only brands and production recipes.”

Focusing on regional identity, he says, provides a long list of benefits, from a fair income for farmers, through to boosting local tourism and cultural identity. “Regional identities are not only heritage, but cultural achievements,” he says. They become collective assets.

Another benefit to focusing on regional identity is it avoids the trap common to generic marketing, where the bigger producers can dominate the conversation, because they’re contributing more funds than smaller producers.

It takes time

Austria’s strategic direction has been nearly 20 years in the making. The country embarked on its new marketing strategy after 1999, focusing on style, grape variety, brand and origin. One of the key components of the strategy was to create a number of interprofessional industry associations. These included a national wine committee with regional committees, and defined procedure rules, to ensure that everybody was on board and informed.

An appellation system was also created:  The DAC (Districtus Austriae Controllatus)  (“Controllatus is a made up word,” Klinger cheerfully announces). The first DAC region was Weinviertel, approved in 2003. But the rules don’t prevent experimentation. “Everybody has a big flexibility in production,” says Klinger.

There have now been 10 DACs defined, with a further seven to nine in the pipeline, all involving plenty of consultation. “We want the regions to tell us – what are your strengths? What do you stand for?”

A wine hierarchy has also been established, with a pyramid that starts with the generic region at the bottom, moves to a specific region, then to the village and then to the Cru. (Single vineyard wines are called Ried under the Austrian system.)

The next step is the mapping of all of Austria’s vineyards, commune by commune. “We want to create maps,” says Klinger. “By the time we have finished, we will have interactive maps. We need to know where the vineyards are in order to label correctly.”

It’s been a lot of work – but the results speak for themselves.

The job isn’t done, though, as there are still smaller things to tidy up.

 “We founded the Austrian Sekt Committee in 2014 and elaborated a quality sekt pyramid,” says Klinger. “We have to start convincing our gastronomes to pour Austrian sekt – at the ski cabins, they pour Prosecco! You cannot have a traditional Austrian guest house serving Prosecco.”

That, as he might have also said, is ‘like a race horse with a plough’.
Felicity Carter