Flow of presentation: Section 1

1
Flow of presentation Section 1

• Section 1 where are we now?
• 1.1 - Market overview
• 1.2 - Channels to market
• Section 2 whats important when shopping for
  wine?
• 2.1 - Consumer wine buying process
• 2.2 - The role of wine
• 2.3 - Trade perceptions
• Section 3 who is drinking California wine?
• 3.1 Profile segmentation
• 3.2 - Behavioural attitudinal analysis
• Section 4 perceptions of California wine
• 4.1 - Consumer perceptions
• 4.2 - Trade perceptions

2
Section 1.1 Market overview

• Section 1 where are we now?
• 1.1 Market overview
• The key facts market size growth
• 1.2 Channels to market
• Off-trade
• Key facts
• Pricing
• Branding
• Multiple Grocers
• On-trade
• Key facts
• Pricing

3
UK wine market Key facts

• Worlds largest and most dynamic market for
  imported wine
• Worth over 9 billion ( 3 on previous year)
• Wine share of all alcoholic drinks is now nearly
  30 by value
• and is growing faster than other categories
• 2nd biggest opportunity to USA for most producer
  countries
• But growth in consumer spend on wine is only
  65 of overall growth in total consumer spend
• UK average bottle (75cl) price growing at only
  10p to 15p per year
• and population of wine drinkers is declining
• Volume growth from heavy drinkers ( at least 3
  bottles (75cl) /month)
• Values at consumer prices covering both off- and
  on-trade
• Figures cover still light wine, sparkling wine,
  fortified wine

SourceIWSR 2003 AC Nielsen 2003 Mintel Wine
2003 Drinks Pocket Book 2003
4
The UK wine drinking population

• PROFILE OF WINE DRINKERS
• Gender
• 63.6 of Men
• 68.8 of Women
• Social status
• 51 of wine drinkers are ABs
• 34 of wine drinkers are C1s
• Purchasing behaviour (off-trade)
• 76 buy in supermarkets
• 24 buy elsewhere

• Projected trend for 2000-2005
• 11 drop in numbers of 25-34s, almost balanced by
  a 6 increase in the 35-44 age group
• The 25-44s a key target group
• The largest rise forecast the 55-64 age group

Source Wine Intelligence other studies
5
UK wine consumption (litres/head) has steadily
increased
Source ACNeilsen 2003
6
Red white wine consumption is equal
Red wine has been increasing share of throat by
1-2 per year for the last 10 years, and overtook
white wine by volume in 2003
Source ACNeilsen 2003
7
The UK continues to be a growth market

• Where is the growth going to come from
• Heavy drinkers driving both volume and value
  growth
• Primarily red wine - both volume and value
• Higher bottle (75cl) prices
• Some reduction in widespread supermarket
  discounting (possibly)
• More volume at 5.99
• Some consumers trading up the rest generate the
  low-end volume
• Sparkling wine primarily Champagne
• Values at consumer prices covering both off- and
  on-trade
• Figures cover still light wine, sparkling wine,
  fortified wine

Source Key Note 2002, IWSR 2003
8
Where is this growth coming from?
Source HM CE clearances Drinks Pocket Book 2004
9
The latest news. . .
Source ACNeilsen 2004
10
Sales of US wine in the UK
Source ACNeilsen 2003
11
Section 1.2 Channels to market Off-trade

• Section 1 where are we now?
• 1.1 Market overview
• The key facts market size growth
• 1.2 Channels to market
• Off-trade
• Key facts
• Pricing
• Branding
• Multiple Grocers
• On-trade
• Key facts
• Pricing

12
Reaching consumers A few key routes to market

• share (volume) Trend
• OFF-TRADE
• Multiple grocers 58 Volume growing
• Multiple specialists 18 Volume/value static
• Independents 4 Value may grow/volume
  decline
• Direct/on-line 1 Value/volume growing
• ON-TRADE
• National / large multiples 13 Volume/value
  growing
• Other hotel/restaurant/bars 6 Volume/value
  static
• plus two other sources for UK consumers
• Direct from producers (mainly France)
• Cross-channel estimated at 4 - 6 of UK wine
  volume consumption
• Values at consumer prices covering both off- and
  on-trade
• Figures cover still light wine, sparkling wine,
  fortified wine

Source Key Note 2002, IWSR 2003
13
The UK market the wine choice is enormous

• Multiple grocer wine aisles

14
Wine retailers can offer a more intimate
environment
15
On-line retailing is a small channel, but growing

• Virgin Wines are the largest on-line specialist
  wine retailer in the UK
• Wines are sold in mixed themed cases, or
  consumers choose from the wines profiled by style
  to create a tailored package average price
  6/bottle (75cl)

16
Multiple grocers also offer on-line wine purchase

• Multiple grocers have successfully moved into
  on-line retailing, including comprehensive wine
  selections with on-line exclusive wines
• Tesco offers over 800 individual wine SKUs

17
Multiple retailers Majestic leads in sales by
the case
18
The best route to the UK market depends on
production volume

• Off-trade

On-trade
Your target market?
Your volume? Cases / Wine / Year
500-1000 250
gt1000 250-1000
Branded operator 1000 c/s
Supermarket gt 1000 c/s
Specialist retailer 250 ?1000 c/s
Top-end On/Off-trade lt500 c/s.
Ship Part-container/trailer-loads Intermediary
Stock-holding agency/importer Client Agency/im
porter who sell on to Shops/Restaurants/bars or
sell to wholesalers/distributors who sell on to
Shops/Restaurants/bars
Ship Container/trailer-loads Intermediary
Pure agency Client Supermarket/large
operator agency who distribute to their
retail outlets
Source Wine Intelligence
19
Section 1.2 Channels to market Off-trade
Key facts

• Section 1 where are we now?
• 1.1 Market overview
• The key facts market size growth
• 1.2 Channels to market
• Off-trade
• Key facts
• Pricing
• Branding
• Multiple Grocers
• On-trade
• Key facts
• Pricing

20
Light wine is the largest off-trade sector for
alcoholic beverages
Source AC Nielsen 2004
21
The off-trade dominates wine sales in the UK
On-trade sales
Off-trade sales
Source AC Nielsen 2004
22
..and continues to grow in importance

• The off-trade has seen 8 growth in volume sales
  since 2002

Source AC Nielsen 2004
23
Rosé is the wine style showing growth

• White wine consumption is declining in the UK
• Whilst the Rosé sector is the only style showing
  growth, at 52
• Many of the market leading brands are launching
  new Rosé styles

Source AC Nielsen 2004
24
US wine types in the UK retail market
Source AC Nielsen 2004
25
Source countries - Australia leads the pack

• The key competitive source countries for USA /
  California wines are Australia and France
• All old world wines are in decline, whilst South
  Africa and Chile are the ones to watch

Source AC Nielsen 2004
26
Section 1.2 Channels to market Off-trade
Pricing

• Section 1 where are we now?
• 1.1 Market overview
• The key facts market size growth
• 1.2 Channels to market
• Off-trade
• Key facts
• Pricing
• Branding
• Multiple Grocers
• On-trade
• Key facts
• Pricing

27
The average price paid in the UK off-trade is LOW

• The average price paid for a bottle (75cl) of
  wine in the UK Off-trade is just 3.76 6.76
• In the key distribution channel, the multiple
  grocer, the average price paid drops to 3.56
  6.40
• Exchange rate 1.80/1, spot rate 01-09-04

Source AC Nielsen 2004/ Wine Intelligence
28
How does pricing work in the UK market? Sample
costings Cellar to Seller (Calif.)

• Vintners Price / case 12 x 75cl
• FOB _at_ San Francisco

Shipping cost (½ container) , including
Insurance UK
Customs/Port Clearance UK Wine Bond RHD
Costs, incl .6 weeks storage In Bond
European CCT UK Excise (per 12 x 75cl, still
table wine)
Profit element UK agency _at_ 22 Gross Profit
UK retailer _at_ 30 Divide by 12 Case to bottle
(75cl)
UK Value added tax 17.5 _at_ point-of-sale
Notes (i) Numbers are rounded averages
Exchange rate used 1.80 / 1.00(ii) RHD
receiving, handling, distribution CCT
Common Customs Tariff(iii) European CCT varies
as S(ALC / exch. rate) UK excise fixed for
all still wine(iv) Agency/retailer costs/margins
vary according to routes to market example
numbers based on traditional agency
29
Under 5 is where the volume lies

• 85 of the volume of wine sold in the off-trade
  is under 5
• However, growth is strongest in the over 5
  category, but there is a long way to go!

Source AC Nielsen 2004/ Wine Intelligence
30
Volume growth for California looks good under 5

• In the Off-trade under 5 category USA wines have
  been steadily growing since 2002
• If the current rate of volume sales is
  maintained, USA wines will overtake the UK 1
  Australia in 2006 in the under 5

Source AC Nielsen 2004/ Wine Intelligence
31
but there are problems for California over 5

• South Africa and Australia are showing stronger
  growth than USA wines in the key 5 battleground
• California wines need to strengthen their
  offerings in the 5 category to ensure that they
  are not left behind by the competition

Source AC Nielsen 2004/ Wine Intelligence
32
California wine average price is decreasing,
whilst the competition is commanding more
3.96 equivalent US 7.12 (1.80/1)
Source AC Nielsen 2004
33
Section 1.2 Channels to market Off-trade
Branding

• Section 1 where are we now?
• 1.1 Market overview
• The key facts market size growth
• 1.2 Channels to market
• Off-trade
• Key facts
• Pricing
• Branding
• Multiple Grocers
• On-trade
• Key facts
• Pricing

34
So, what is a brandand what does it mean in the
wine category?

• A wine brand is a product cue projected by wine
  packaging or information such as origin, grape
  variety, region, price etc., for which consumers
  search during their choosing process
• (Halstead, 2002)

35
Product cues as a proxy for brand - what the
experts say

• Main influences of the wine purchase decision are
  product cues such as brand, label, price, product
  experience knowledge to reduce perceived risk
  (Spawton, 1991)
• Information given in wine packaging (e.g. origin,
  grape or region) act as brands (Cawley, 1992)
• Price - used as in indicator for quality and to
  reduce risk (Mitchell Greatorex, 1989)
• Most important criteria for purchasing wine is
  familiarity (Jenster Jenster, 1993)
• The influence of origin more important in wine
  than in most other categories - serves as
  assurance (Duhan, 1999)

36
Packaging to win hearts and minds

• Packaging is the total external offer
• The glass shape colour, weight
• The product name invented brand name
  producer or estate name
• The label design and style front AND back
  labels
• Packaging has to differentiate successfully with
  two essential audiences
• Gatekeepers
• Consumers

Source Wine Intelligence 2004
37
The majority of wines sold are branded

• Most of the wines sold in the UK are branded
  and their power is increasing as the market place
  becomes more marketing savvy
• Own-label still commands a significant portion of
  the market, but this is in slow decline in the
  face of brand dominance

Source AC Nielsen 2004
38
..with the USA taking second place for most
branded volume

• Australia leads the way with the greatest volumes
  sold as branded wines 9 of top 20 brands are
  Australian
• USA wines are a strong second, but hold only 5 of
  the 20 top brands a few brands are working very
  hard!

Source AC Nielsen 2004
39
New world brands dominate the marketplace in the
UK

• 17 of the top 20 brands are from new world
  countries
• Australia takes the lead with 9 brands
• California is the next most successful with 5
  brands however 2 of these are from Gallo the
  volume sales are not reflected in a healthy
  diversity of brands

Source AC Nielsen 2004
40
Section 1.2 Channels to market Off-trade
Multiple grocers

• Section 1 where are we now?
• 1.1 Market overview
• The key facts market size growth
• 1.2 Channels to market
• Off-trade
• Key facts
• Pricing
• Branding
• Multiple Grocers
• On-trade
• Key facts
• Pricing

41
Multiple grocers dominate the UK Off-trade

• of 9-litre cases 2002
• Tesco 16 million
• Sainsbury's 13 million
• Asda (Wal-Mart) 9.5 million
• Safeway 6.5 million
• Morrisons 2.5 million
• Marks Spencer 6 million
• Somerfield 4 million
• Waitrose 3.5 million

Now merged
Source Wine Intelligence What Trade Buyers Want
Report 2003
42
The top 4 UK Multiple Grocers

• Tesco
• Sainsbury's
• Morrisons (inc Safeway)
• Asda/Walmart

43
Of the multiple grocers, Tesco leads the way for
California

• Tesco is the most important channel for wine in
  the UK with 32 market share
• Tesco also shows the greatest commitment to USA
  wines of all the leading grocers
• Sainsburys, the UK number 2 grocer, trails for
  California wine at approximately half Tesco volume

Source AC Nielsen 2003
44
What does Tesco look like? The current story
(2004)

• Advertising slogan - Every little helps
• 237,000 staff, biggest private sector employer in
  the UK
• 1878 stores (including 910 TS) in the UK 440
  in other countries including Thailand, Japan,
  Poland and Hungary
• 64 new stores opened in 2003 / 2004 with 82
  planned store openings for 2004 / 2005
• Annual turnover to 2004 24,760m

45
Tesco (cont.)

• Wine team being re-structured in 2004 personnel
  changes (2 tier system)
• Biggest drivers for buying policy are the top
  line revenue and gross percentage margin
• Blind spot when it comes to selling wine over 5
  linked to focus on top line revenue and margin
  compared with their competitors

46
The range at Tesco (June 14th 2004)
47
The range at Tesco (June 14th 2004)
48
Section 1.2 Channels to market On-trade key
facts

• Section 1 where are we now?
• 1.1 Market overview
• The key facts market size growth
• 1.2 Channels to market
• Off-trade
• Key facts
• Pricing
• Branding
• Multiple Grocers
• On-trade
• Key facts
• Pricing

49
The On-trade shows a very different profile to
the off-trade
Source Wine Intelligence
50
The On-trade is complex and diverse

• Despite 81 of wines selling through the
  off-trade, the on-trade has over 3x as many
  outlets
• This reflects the diverse and fragmented nature
  of the on-trade in the UK a significant but
  difficult market

Source AC Nielsen 2003
51
The On-trade has multiple Channels

• Based on analysis of many large and small
  operations
• Characteristics are generalised to provide a
  top-line profile of the channel

Source Wine Intelligence
52
Restaurants are the largest on-trade channel
Source Key Note Catering Industry 2003 other
industry sources
83
53
How do UK restaurants work?

• How the restaurant pyramid works

share of 8Bn market
National operators Now only 7 companies with more
than 100 outlets
12
London regional operators 60 companies of 10
to 100 outlets
13
Specialist operators 800 businesses with 2 to
10 outlets
10
Single-outlet operators Still account for nearly
80 of total outlets
65
Source Key Note Mintel
84
54
Examples of on-trade wine menus
Bistro style Restaurant Wine List
Pubco Wine List
55
Section 1.2 Channels to market On-trade -
pricing

• Section 1 where are we now?
• 1.1 Market overview
• The key facts market size growth
• 1.2 Channels to market
• Off-trade
• Key facts
• Pricing
• Branding
• Multiple Grocers
• On-trade
• Key facts
• Pricing

56
Cellar to seller On-trade pricing for California
wines

• Notes
• Actual numbers will vary e.g. gross profits per
  operator size of deal exch. rates etc
• Retail prices will be rounded to nearest
  price-point e.g. x.49 x.69
  x.99 x.95

Source Wine Intelligence
57
Flow of presentation Section 2

• Section 1 where are we now?
• 1.1 - Market overview
• 1.2 - Channels to market
• Section 2 whats important when shopping for
  wine?
• 2.1 - Consumer wine buying process
• 2.2 - The role of wine
• 2.3 - Trade perceptions
• Section 3 who is drinking California wine?
• 3.1 Profile segmentation
• 3.2 - Behavioural attitudinal analysis
• Section 4 perceptions of California wine
• 4.1 - Consumer perceptions
• 4.2 - Trade perceptions

58
Section 2.1 Whats important when shopping for
wine

• Section 2 Whats important when shopping for
  wine?
• 2.1 - Consumer wine buying process
• Key purchase criteria
• Shelf Stand-out
• 2.2 - The role of wine
• Occasions
• 2.3 - Trade perceptions
• Key selection criteria

59
Consumers the essential basics
Occasion What is the consuming occasion?
Consumer choosing and buying
Situation Where is the wine being bought?
Influences What external factors influence
choice?
Source Wine Intelligence various sources
60
Consumer wine choosing in the UK - it is all
about reducing risk

• The consumer dilemma in all wine choosing
  situations
• In this environment-
• Well-known brands provide reassurance reduce
  risk
• All the Wine Intelligence research fieldwork
  identifies as the biggest choosing driver
  familiarity drunk this wine before
• Therefore, trial of unfamiliar (i.e. new) wines
  needs clear and strong encouragement

Will I like it?
Is it right for the occasion I am buying it for?
Source Wine Intelligence various sources
61
Section 2.1 Whats important when shopping for
wine consumer key purchase criteria

• Section 2 Whats important when shopping for
  wine?
• 2.1 - Consumer wine buying process
• Key purchase criteria
• Shelf Stand-out
• 2.2 - The role of wine
• Occasions
• 2.3 - Trade perceptions
• Key selection criteria

62
Previous wine experience is the key factor when
shopping for wine

• Previously having tasted the wine was considered
  the most important factor when shopping for wine
  (mean score of 4.2)
• Grape variety (3.9), price (3.8), promotional
  offers (3.7) and the country of origin (3.6) were
  the next most important factors

Source State of California/Mondavi Consumer
Quantitative Study 2004
63
Word-of-mouth is an important information source

• The chart below shows all the sources of
  information about wine that were mentioned by
  more than 10 of the sample
• The three most commonly mentioned sources were
  Word-of-mouth - Recommendations from friends and
  family (71), Information on the bottle (75cl)
  itself (65) and In-store displays or promotions
  (55)

Source State of California/Mondavi Consumer
Quantitative Study 2004
64
New and Old World wines satisfy different
purchase drivers

• Respondents were only asked to rate the regions
  that they had selected within their top 3
  regions.
• New world wines are being heard about more
  recently and are perceived to match peoples
  lifestyles better
• New world wines are not perceived as strong in
  terms of quality, and people are prepared to pay
  more for wines from the old world as well as
  perceive these wines as more of a treat

Source State of California/Mondavi Consumer
Quantitative Study 2004
65
Key purchase criteriaOverall observations -
the less involved

• The majority of consumers at this end of the
  spectrum are fairly conservative in their
  approach to choosing wine
• They are buying their wine mainly from the
  multiple grocer Sainsburys, Tesco, Asda,
  Waitrose, MS
• but also from local high street wine merchants
  for convenience

Theyre always doing good deals, special offers,
promotions
I get it with the weekly shop its convenient
Threshers because its just down the road from me
Source State of California/Mondavi Consumer
Qualitative Study 2004
66
Key purchase criteria Overall observations -
the more discerning

• The more involved consumers are prepared to take
  a considered risk
• When looking for something a bit special, they
  are using wine merchants, e.g. Oddbins, Majestic,
  local independent merchants, where they can
  discuss their choices with the staff and
  sometimes get to taste before they buy. They are
  prepared to take a detour for a good merchant
• Some are stocking up abroad
• Some are buying on-line with confidence (e.g.
  Sunday Times, Virgin)
• They will visit the multiple grocers for wine as
  part of the weekly shop, or for special offers on
  favourite wines, but the experience is more
  rushed and not as enjoyable (and often the domain
  of women)

Its more pleasurable in somewhere like Oddbins
where its a bit dusty, and theyve got slightly
weird and wonderful things, all the staff.
Source State of California/Mondavi Consumer
Qualitative Study 2004
67
Decision triggers and attitudes the 5 steps to
choosing the general pattern

• After the consumer has decided whether red or
  white wine, the decision gates are generally
  straightforward, involving high levels of
  familiarity and reassurance

Have a price range in mind
1.
Look for familiar cues e.g. brand, country,
grape
2.
Consider recommendations, awards, etc
3.
4.
Look for motivating packaging e.g. labels,
bottle (75cl) shape
5.
Seek out other information about the wine
Source State of California/Mondavi Consumer
Qualitative Study 2004
68
Decision triggers and attitudesThe steps to
choosing - step 1
1.
Have a price range in mind
I dont want to be paying an absolute fortune

• THE LESS INVOLVED
• Target price is typically around 4-8 a bottle
  (75cl) most are cautious and reluctant to make
  mistakes by buying too expensively
• ..but can depend on the occasion, e.g. they
  might spend more to impress friends
• Promotions are always enticing and encourage
  trial

4.99 is quite a benchmark
..if you can get 1 or 1.50 off and still spend
5-6 more you are getting that little bit more
6 or 7 unless its something exceptional
Price is a given - other decisions have to fall
within this
Source State of California/Mondavi Consumer
Qualitative Study 2004
69
Decision triggers and attitudesThe steps to
choosing - step 1
1.
Have a price range in mind

• THE MORE DISCERNING
• Will be looking to spend more for a good quality
  wine that they can really savour. It is not
  unusual for this group to be spending 15 on a
  bottle (75cl) of wine to consume at home
• Will be looking at a wider price range, from
  5, and will experiment within this
• Promotions remain enticing for favourite wines,
  but can also point to poor quality wines
• However, this group still need to feel that they
  have received good value they might shop around
  for a recommended wine

I would expect wine that is under a fiver to be
not wonderfuland if I wanted to taste the wine I
would expect it to start at a tenner
Source State of California/Mondavi Consumer
Qualitative Study 2004
Price range still underpins the decision, but
this market are prepared to be more flexible
70
Decision triggers and attitudesThe steps to
choosing - step 2
Look for familiar cues e.g. brand, country,
grape
2.
Sometimes I fancy a Rioja and at times I
dontthen perhaps you go with a producer you know

• THE LESS INVOLVED
• Familiarity and previous experience provide
  essential reassurance and trust that this wine
  will be safe territory.
• It also aids ease of choice when faced with such
  a variety, and when needing to suit a particular
  mood
• Known brand is a key factor for this group
• However, some grape varieties, e.g. Chardonnay,
  Merlot, are also considered as generically
  consistent and safe

Ive started trying a lot of Chilean wines and I
do like themwhen I like something I just stick
to it really
Penfolds seem to do really well
You know that when you open a Chardonnay, you
know what you are going to get
Source State of California/Mondavi Consumer
Qualitative Study 2004
71
Decision triggers and attitudesThe steps to
choosing - step 2
Look for familiar cues e.g. brand, country,
grape
2.
Villa Maria has a quality threshold and I would
tend to trust them and try anything theyve got

• THE MORE DISCERNING
• Quality brands can still be very key, especially
  when there is less time to browse
• This group have clear ideas about country and
  grape characteristics. Country/grape can be key,
  depending on the mood or the occasion
• Regionality holds strong quality associations
  for this group who show good wine knowledge

I might drink Australian or New Zealand tonight,,
because Ill be expecting strong flavours and
fruit, but maybe if its winter Ill be thinking
more Claret
If I were doing a barbeque tonight Id be more
likely to want to drink a Merlot or a Chardonnay
When it says Sonoma valley or Napa valley, those
are good things..these are premium places.
Whereas if it just says California, I dont feel
as if as much effort has been put into it
Source State of California/Mondavi Consumer
Qualitative Study 2004
72
Decision triggers and attitudesThe steps to
choosing - step 3
Consider recommendations, awards, etc
3.

• THE LESS INVOLVED
• Recommendation provides a vital safety net,
  minimising the risk of mistakes
• Friends, trials at dinner parties
• Shelf descriptors indicating award winning wines
• Recommended wines of the month, supermarket
  tastings
• Staff recommendations. The most knowledgeable
  staff tend to be the wine merchants as opposed to
  the multiple grocers, e.g. Oddbins, Unwins,
  Majestic
• In store magazines, e.g. Majestic, Sainsburys,
  Tesco

Quality marks..the Wolf Blass one has got medals
from different wine show s and stuff..
Source State of California/Mondavi Consumer
Qualitative Study 2004
73
Decision triggers and attitudesThe steps to
choosing - step 3
Consider recommendations, awards, etc
3.

• THE MORE DISCERNING
• This group are more inclined to experiment, but
  still like to seek out a second opinion or try a
  new wine based on recommendation
• In store advice, long discussions (and
  tastings), particularly Oddbins, Majestic and
  independent merchants
• Press recommendation. (e.g. the Spectator,
  Telegraph, Times). This group tend to have
  favourite wine writers whose tastes match their
  own

I actually make a detour into our local place if
I have time, because you know you are going to be
there for hours and have an enriching experience
talking to the chap who runs it
Source State of California/Mondavi Consumer
Qualitative Study 2004
74
Decision triggers and attitudesThe steps to
choosing - step 4
Motivating packaging
4.
The basic label look s really cheap Tesco

• THE LESS INVOLVED
• If the wine is not recognised, packaging needs to
  convey reassurances of safety and appropriate
  imagery
• Descriptive imagery on labels work well for this
  group, e.g. Turning Leaf,
• The more simple labels can be perceived as
  denoting a boring wine, e.g. Penfolds
• Bottle shape and colour also have considerable
  influence on a subliminal level
• Screw caps present a deterrent for the less
  involved

The colour I found a bit oldy looking didnt
really appeal to me
The labelling seemed cool. I liked the picture of
the beach, its a bit informal
I know its very shallow to say, but it is an
attractive looking bottle
The one I didnt like is Villa Maria its got a
screw capsomething you get on an airplane. Not
very nice
The actual shape Kumala it looks smaller and
almost more formal, which I dont like
Source State of California/Mondavi Consumer
Qualitative Study 2004
75
Decision triggers and attitudesThe steps to
choosing - step 4
Motivating packaging
4.
If I didnt know the wine at all and I didnt
have any other cues and I havent got much to go
on other than its a Chardonnay and they are all
the same price from the same area, then I am
going to have a look at the label

• THE MORE DISCERNING
• Choosing the wine by the packaging introduces an
  element of risk, which these consumers enjoy
• Simple, spare traditional, honest labels work
  well for this group
• visuals are often seen as cheap, mass produced,
  lesser quality
• but sophisticated visuals can win through, e.g.
  chateaux, cricket bats
• Unusual names can aid choice, e.g. Cricket
  Pitch
• Screw caps becoming quickly accepted by
  discerning consumers, particularly for white wines

If Ive got ten Riojas sitting in front of me and
it looks like a cheap label I wouldnt be
attracted
The label with the bell tower suggests its there
for the tourists its not quite classy enough
Source State of California/Mondavi Consumer
Qualitative Study 2004
76
Decision triggers and attitudesThe steps to
choosing step 5
5.
Other information

• THE LESS INVOLVED
• Will often read the back label for helpful
  information, e.g.
• Food partnering
• Flavours
• ABV will also help consumers to match a wine to
  their taste or mood

In the early days of our wine drinking and youre
thinking, what would go with lamb?
If youre not too sure about how heavy or light
it is..
Not too heavy on the alcohol
I like a few words that describes its flavour..
I just need to know its not going to be too
strong or something really rich.
Source State of California/Mondavi Consumer
Qualitative Study 2004
77
Decision triggers and attitudesThe steps to
choosing step5
5.
Other information

• THE MORE DISCERNING
• The back label information can be interesting,
  but can be a deterrent if too elaborate or
  prosaic
• Heritage of producer
• Year

It was quite extreme, and it made me take it less
seriously
Source State of California/Mondavi Consumer
Qualitative Study 2004
78
Label design needs to deliver taste reassurance

• The most important aspects of label design were a
  description of how the wine tastes (mean score of
  3.7) and information on grape varieties (mean
  score of 3.5)

Source State of California/Mondavi Consumer
Quantitative Study 2004
79
California drinkers are more reliant on
word-of-mouth recommendations

• California drinkers get more information about
  wine through friend and family recommendations
  than average, they are similar to the rest of the
  sample in the other information sources that they
  use

Source State of California/Mondavi Consumer
Quantitative Study 2004
80
Cork is the closure of choice

• California drinkers are similar to the rest of
  the sample in their attitude to closures, cork is
  preferred by approximately 80 of those asked

Source State of California/Mondavi Consumer
Quantitative Study 2004
81
Screw cap has low quality associations

• Cork was considered the preferred closure over
  screw cap by 82 versus 18
• Both groups indicated that they thought their
  preferred closure created a better seal, though
  this reason was given more by those who preferred
  screw caps.
• Those who preferred screw cap did not hold high
  quality associations for this type of closure

Source State of California/Mondavi Consumer
Quantitative Study 2004
82
Section 2.1 Whats important when shopping for
wine consumer shelf stand-out

• Section 2 Whats important when shopping for
  wine?
• 2.1 - Consumer wine buying process
• Key purchase criteria
• Shelf Stand-out
• 2.2 - The role of wine
• Occasions
• 2.3 - Trade perceptions
• Key selection criteria

83
Key purchase criteriaShelf stand-out behaviour

• Focus group respondents were asked to select one
  wine that they would be most likely to buy for an
  informal dinner at home, and the least likely.
• This exercise provides valuable insights into the
  basis upon which consumers make choosing and
  buying decisions.
• The following wines were offered in the
  simulated shop

Red wines Mosa Vin de Pays dOc Cabernet
Sauvignon Domaine Boyar Reserve Cabernet
Sauvignon Hardys Stamp Shiraz Cabernet
Sauvignon Penfolds Koonunga Hill Shiraz
Cabernet Kumala Shiraz Ruby Cabernet Goiya Ruby
Cabernet Pinotage EJ Gallo Cabernet
Sauvignon Tesco Californian Cabernet
Sauvignon Blossom Hill Cabernet
Sauvignon Woodbridge Merlot 35 South Cabernet
Sauvignon Casillero del Diablo Cabernet Sauvignon
White wines Goiya Colombard Chardonnay Barramundi
Semillon Chardonnay Lindemans Cawarra
Chardonnay EJ Gallo Chardonnay Tesco Californian
Chardonnay Blossom Hill Chardonnay Woodbridge
Chardonnay Villa Maria Chardonnay Casillero Del
Diablo Chardonnay Herrick Vin de Pays dOc
Chardonnay Sainsburys Cuvee Prestige
Chardonnay Antonopoulos Chardonnay
Source State of California/Mondavi Consumer
Quantitative Study 2004
84
Simulated shop white wines Focus group choices

• Most referenced wines in bold

Source State of California/Mondavi Consumer
Quantitative Study 2004
85
Simulated shop red winesFocus group choices

• Most referenced wines in bold

Source State of California/Mondavi Consumer
Quantitative Study 2004
86
Simulated shop wines Familiarity and trust
drive choice

• MOST LIKELY TO BUY
• Blossom Hill Chardonnay
• A brand that I know, you see them on the TV
  commercials.
• Im just completely familiar with it and trust
  it.
• Its always good for everyone.
• Its a wine that I drink.
• E J Gallo Chardonnay
• I just want to go with something that I know
  everyone likesthey recognise it, and thats
  important.
• Because I know it and I like it.
• Ive had it before and I like it, I like the
  bottle, I like the shape of it.
• EJ Gallo Cabernet Sauvignon
• I always drink it
• Very easy drinking.

Source State of California/Mondavi Consumer
Qualitative Study 2004
87
Simulated shop wines Names labels can be key
rejection triggers with unfamiliar wines

• LEAST LIKELY TO BUY
• Goiya Colombard Chardonnay
• Sounds a bit odd a bit cheap.
• I just didnt like the labelsa bit cheap.
• Goiya Ruby Cabernet Pinotage
• Just not very exciting.
• Its a bit plain and its quite tacky.

Source State of California/Mondavi Consumer
Quantitative Study 2004
88
Section 2.2 Whats important when shopping for
wine role of wine

• Section 2 Whats important when shopping for
  wine?
• 2.1 - Consumer wine buying process
• Key purchase criteria
• Shelf Stand-out
• 2.2 - The role of wine
• Occasions
• 2.3 - Trade perceptions
• Key selection criteria

89
The role of wine wine is very much a part of
everyday life

• Consumed nearly every day at home
• relaxing at the end of the day, before dinner
• or with dinner
• ..as well as socially with friends/family
• For restaurant consumption, but not as often in
  pubs, where beer (for men) is predominant

No way are we alcoholics but theres always cold
wine in the fridge if you want a glass
Its a sign of the end of the day
Source State of California/Mondavi Consumer
Qualitative Study 2004
90
Wine is a source of enjoyment, with varying
levels of involvement

• Most of the respondents felt they were on the
  know little about it side of the balance (59)
  rather than the know a good deal about it side
  (35)

Source State of California/Mondavi Consumer
Quantitative Study 2004
91
Role of wine in life

• Experienced consumers suggest that they started
  drinking wine 15-20 years ago
• and are still learning.
• Many drank wine as students to get drunk,
  buying largely on low price
• but all consumer types become more discerning as
  they get older, drinking on a regular basis, but
  less quantity and more quality
• Most have now reached a comfortable level of
  knowledge about what they like

Probably when you are 18 you drink it just to try
and get drunk and then as you get older and more
mature your taste buds change and you start
drinking nicer wines rather than 1.99 bottles
Im starting to get more of an appreciation for
older wines now after a while you start finding
your palette and what suits you best
Source State of California/Mondavi Consumer
Quantitative Study 2004
92
Section 2. Whats important when shopping for
wine role of wine occasions

• Section 2 Whats important when shopping for
  wine?
• 2.1 - Consumer wine buying process
• Key purchase criteria
• Shelf Stand-out
• 2.2 - The role of wine
• Occasions
• 2.3 - Trade perceptions
• Key selection criteria

93
Wine is drunk at most social occasions

• Wine is an integral part of social activity and
  is consumed at most social occasions as well as
  at home
• Wine is less likely to be consumed in a pub or
  bar where other alcoholic drinks may take
  priority
• The USA loyalist appears to be less social they
  are less likely to drink wine in a pub or bar,
  restaurant or in a friends home
• The trialist however, is more likely to drink
  wine on all occasions suggesting a more
  sociable, adventurous consumer

Source Wine Intelligence Wine Institute of
California Research Project 2004
94
California wines are associated with everyday,
but not special occasions

• The respondents felt that the most appropriate
  occasions for Californian wine were when at home
  relaxing (73), with meals (66), and at casual
  gatherings with friends (57)
• The respondents felt that the least appropriate
  occasions for Californian wine were for special
  occasions (43 indicated that they would not feel
  that Californian wine was appropriate for this)
  and for gift giving (33 rejected Californian
  wine for this)
• This indicates California is perceived not to
  offer serious wines for more formal occasions,
  but is strongly associated with everyday drinking

Source State of California/Mondavi Consumer
Quantitative Study 2004
95
..however, those loyal to California wine do
associate special occasions

• Those who rate California within their top 3
  regions strongly associate California wine as
  most suitable for everyday drinking, however they
  are more likely than the sample to consider gift
  giving special occasions as suitable for the
  wines
• Some California drinkers do feel that the wines
  are unsuitable for gift giving and special
  occasions however this is on at a lower level
  than the sample

Source State of California/Mondavi Consumer
Quantitative Study 2004
96
Key purchase criteriaBehaviour according to
occasion

• Paired/one to one interview respondents were
  asked to select one wine that they would be most
  likely to buy for each of their chosen key
  consumption occasions.
• The following wine bottles (75cl) were offered,
  with individual prices clearly stated for
  off-trade occasions

Wines to drink at off-trade occasions
Source State of California/Mondavi Consumer
Quantitative Study 2004
97
Key purchase criteriaBehaviour according to
occasion
Restaurant wine menu for on-trade occasions
Red
White
98
Consumption occasion choices reasons casual
dinner friends/family

• CHOSEN WINES
• Wolf Blass Chardonnay
• Chateau Laroque
• Woodbridge Chardonnay
• EJ Gallo Turning Leaf, Zinfandel
• Penfolds
• WHAT THEY ARE LOOKING FOR
• Often more than they would spend at home for
  personal consumption
• Needs to taste and look good quality (on the
  label)
• To impress discerning friends something quite
  individual looking More showy off if the
  dinner is more formal, or if friends are more
  sophisticated
• Risk reduction strategies Involve the use of
  grape variety and country of origin
• But for the less discerning, they still need to
  play safe on grape/brand if not sure what their
  friends like previously tasted
• Essential to provide a selection (red and white)
  regardless of food choice

I do believe youve got to give people
choices (Depth, Male)
I would go for New Zealand or California (Depth,
Male)
Theres an element of trying to impress, or
treat people to something they are not
necessarily familiar with
Source State of California/Mondavi Consumer
Qualitative Study 2004
99
Consumption occasion choices reasons Relaxing
at home without food

• CHOSEN WINES
• Penfolds
• Via Herminia Rioja
• EJ Gallo Turning Leaf
• Woodbridge Chardonnay
• WHAT THEY ARE LOOKING FOR
• Easy drinking, reliable, and familiar
• Not too expensive, good value, e.g. 5-6. maybe
  more for a treat

Good, solid, reliable, quality, quite
affordable. Its the sort of thing Id drink
every day of the week quite happily.
(Penfolds) (Depth, Male)
Source State of California/Mondavi Consumer
Qualitative Study 2004
100
Consumption occasion choices reasons Casual
dining - restaurant

• CHOSEN WINES
• Philippe de Rothschild Chardonnay
• Pinot Grigio
• Chablis
• Woodbridge Merlot
• Penfolds Rawsons Retreat, Shiraz Cabernet
• WHAT THEY ARE LOOKING FOR
• Mid-range price not too cheap
• Trusted grape variety, often overriding country
  due to matching with food, and sometimes brand
• Familiarity, however, for some, something more
  interesting than they would drink at home
  representing an opportunity to experiment and
  trial

I tend to go in the middle of the list because I
know the beginning of the list is going to be
cheapos, the end of the list is going to be
really expensive (Depth, Female)
I tend to look for the grape (Depth, Male)
Source State of California/Mondavi Consumer
Qualitative Study 2004
101
Consumption occasion choices reasons Formal
dinner at restaurant
Id choose if (Cheateau Roques) because its sort
of showy-off wine. Thats a dreadful thing to
say, but for a formal dinner party (Depth,
Female)

• CHOSEN WINES
• Chablis
• Wolf Blass Chardonnay
• EJ Gallo Turning Leaf Zinfandel
• Chateau Roques
• WHAT THEY ARE LOOKING FOR
• Good, reliable quality need safety if
  presenting at a formal occasion
• Essential to have a nicely presented bottle/label
• Largest influencing factor other guests at the
  dinner party
• Higher tendency to spend more, but not up to
  18/bottle (75cl) usually 8 - 10 per bottle
  (75cl)
• Essential to have at least one red and one white
  option

You need a safe one for a dinner party if you
dont necessarily know what people like (Depth,
Male)
I think I need to take something that looks a bit
better, silly isnt it (Depth, Male)
If I were with clients I might think that I felt
obliged, rather stupidly, to spend more (Depth,
Female)
Source State of California/Mondavi Consumer
Qualitative Study 2004
102
Consumption occasion choices reasons outdoor
events

• CHOSEN WINES
• Penfolds
• Woodbridge Chardonnay
• Villa Maria Sauvignon Blanc
• EJ Gallo Turning Leaf Zinfandel
• Chablis
• WHAT THEY ARE LOOKING FOR
• A risk reducing wine that is reliable grape or
  brand, e.g. Chablis
• White wine dominance
• Light, fruity, fresh
• Not too expensive, e.g. 5-7

Source State of California/Mondavi Consumer
Qualitative Study 2004
103
Section 2.3 Whats important when shopping for
wine trade perceptions

• Section 2 Whats important when shopping for
  wine?
• 2.1 - Consumer wine buying process
• Key purchase criteria
• Shelf Stand-out
• 2.2 - The role of wine
• Occasions
• 2.3 - Trade perceptions
• Key selection criteria

104
The consumer does not see California on the
shelves

• Wine Intelligence conducted a mini-survey of
  multiple grocer shelves which revealed the
  California share of facings is under-represented
  on several key measures
• California offers very few brands to the
  consumer
• Calif. White 4 x Gallo Blossom Hill, Fetzer, 2
  x own-brand
• Calif. Red 3 x Gallo Blossom Hill Fetzer, 2 x
  own-brand, 2 others
• Both Italy and South Africa have more facings and
  brands
• For example, Italy White Approximately 20
  facings on each of 5 shelves
• Signage for California is The Americas
• Out-of-stock facings seemed more pronounced for
  California than the other country categories
  spot-checked
• Of the total of 40 facings allocated to
  California White, 9 had no bottles (75cl)
• NB There are 2 Sainsbury's own-brand offerings
  on all 4 categories sampled
• California W R Australia W R

Source Wine Intelligence Multiple Grocer
Analysis - Sainsbury's Richmond July 2004
105
Comparative fixtures - California and Australia
White
13
11
9
7
23
20
20
34
27
Source Wine Intelligence Multiple Grocer
Analysis - Sainsbury's Richmond July 2004
106
Comparative fixtures - California and Australia
Red
23
14
13
7
33
29
26
22
18
Source Wine Intelligence Multiple Grocer
Analysis - Sainsbury's Richmond July 2004
107
Flow of presentation Section 3

• Section 1 where are we now?
• 1.1 - Market overview
• 1.2 - Channels to market
• Section 2 whats important when shopping for
  wine?
• 2.1 - Consumer wine buying process
• 2.2 - The role of wine
• 2.3 - Trade perceptions
• Section 3 who is drinking California wine?
• 3.1 Profile segmentation
• 3.2 - Behavioural attitudinal analysis
• Section 4 perceptions of California wine
• 4.1 - Consumer perceptions
• 4.2 - Trade perceptions

108
Section 3 who is drinking California wine -
profile

• Section 3 who is drinking California wine?
• 3.1 Profile segmentation
• Label leds
• Boutique buyer
• 3.2 - Behavioural attitudinal analysis
• Purchase behaviour
• Consumption behaviour

109
Polarised consumer segments exist for California

• A dichotomy of consumers appears to exist for
  California

Label led
A large group of less wine involved, brand
driven, low spend consumers
82 of sample

Boutique buyer
A smaller group of enthusiasts who are older,
spend more and who are prepared to hunt to find
their wines of choice
18 of sample
110
Section 3 who is drinking California wine -
profile

• Section 3 who is drinking California wine?
• 3.1 Profile segmentation
• Label leds
• Boutique buyer
• 3.2 - Behavioural attitudinal analysis
• Purchase behaviour
• Consumption behaviour

111
Summary Profile for Label Leds

• Young (below 40) and female
• Low spend typically purchasing wine at around
  5
• Do not know much about wine (enjoy wine and know
  little about it)
• To get information from what friends/family
  recommend and info on the bottle itself
• Like to experiment at the 5-6 price point, but
  will often seek familiar brands to minimise risk
  of mistakes
• Not to be high income people (10,000 - 40,000)
  nor very well educated (GCSE equivalent)
• Not to buy wine from the internet or
  cross-channel trips
• Not to indicate France, Argentina/Chile, Italy or
  Spain as top-3 region

Source State of California/Mondavi Consumer
Quantitative Consumer Qualitative Study 2004
112
Summary Profile for Label Leds

• They will not store vast quantities of wine at
  home. They will tend to have up to 6 bottles
  (75cl) at one time in their wine rack, and will
  make frequent trips to the supermarket or wine
  merchant to stock up for a few days
• California as a country driving choice is
  irrelevant they enjoy Blossom Hill, and
  purchase it because of its safe, easy drinking
  brand values
• They like Californian wine because it suits their
  lifestyle, desirable, prestigious, exciting
  and/or traditional

Im quite happy to spend 2 on a wine if
somebody says its nice
I would say we know what we like. Im definitely
not a connoisseur on wine. I just know what we
like and we like a glass of wine its nice to
unwind.
Source State of California/Mondavi Consumer
Quantitative Consumer Qualitative Study 2004
113
Label led tend to be less wine involved

• California drinkers tend to be less knowledgeable
  about wine than the sample as a whole
• This is consistent with a more brand driven
  consumer who is less concerned with country of
  origin

Source State of California/Mondavi Consumer
Quantitative Study 2004
114
Label led is more likely to be female

• USA loyalists are more likely to be female

Source Wine Intelligence Wine Institute of
California Research Project 2004
115
Label led is younger

• California drinkers (those who rate California as
  one of their top 3 regions) tend to be under 40
• Compared to the sample average, they are most
  likely to be 18-24 or 30-39 and least likely to
  be 40-60
• They are also slightly more likely to be female
  than average, 54 were female as opposed to a
  sample average of 48

Source State of California/Mondavi Consumer
Quantitative Study 2004
116
Label led earns less

• California drinkers tend to be lower income
  drinkers (10,000-40,000) and are most likely to
  be earning between 30,000 and 40,000 (The
  average wage in the UK is approx 24,000)

Source State of California/Mondavi Consumer
Quantitative Study 2004
117
Label led is less educated

• Compared to the whole sample California drinkers
  tend not to be educated at University
• Although a slightly higher proportion of them
  than average have doctorates
• The greatest difference between the California
  drinkers and the whole sample is the higher
  proportion of them who are educated to GCSE level
  only

Source State of California/Mondavi Consumer
Quantitative Study 2004
118
Label led is more likely to be in the brand-led
segment

• Analysing the elements that are considered
  important when shopping for wine, four segments
  emerge, their preferences are illustrated in the
  chart below
• People who indicated that California was one of
  their top 3 regions were most likely to be in the
  price/design/description segment indicating a
  more brand led consumer, or in the
  environmental/charity segment
• California is not attracting the consumer who is
  more wine involved and concerned with wine origin
  
• Other source countries with a stronger generic
  pull may command stronger category growth

Source State of California/Mondavi Consumer
Quantitative Study 2004
119
Section 3 who is drinking California wine -
segmentation

• Section 3 who is drinking California wine?
• 3.1 Profile segmentation
• Label leds
• Boutique buyer
• 3.2 - Behavioural attitudinal analysis
• Purchase behaviour
• Consumption behaviour

120
Summary Profile for Boutique buyers

• They adore their wine and enjoy researching,
  browsing and experimenting
• They display considerable knowledge about wine
  and are articulate when discussing it
• Will happily spend 15 on a good bottle (75cl)
  of wine on a regular basis
• Tend to believe that wine for under 5 is of poor
  quality
• Typically male, 35
• Purchase triggers are less about brand and more
  about regions and grape varieties
• They are well travelled and will have often
  visited vineyards on holidays and purchased wine
• They often buy their favourite wines by the case,
  but will also visit their wine merchant on an ad
  hoc basis to buy and experiment with single
  bottles (75cl)
• They are prepared to seek out good Californian
  wines from specialist merchants

We go through phases at the moment its New
Zealand sauv