CMO Interview: Changing the culture from wine-making to brand building at Treasury Wine Estates
- 11 June, 2015 08:21
Treasury Wine Estates (TWE) global CMO, Simon Marton, is on a mission: To transform the culture of the wine manufacturing business from a production-led, wine-making mentality, to a brand-led and consumer focused one.
“We’re changing virtually the whole culture and strategic direction of the business to be about building brands, with the wine making and supply supporting and delivering to our customers and consumers,” he told CMO.
It’s a huge task, but one that’s backed by company CEO, Michael Clarke, a former FMCG executive with a nose for consumers who joined TWE last March.
“It quickly became apparent to Mike that we needed to change from a company that’s really good at making great wine, to a company that is brand and consumer focused,” Marton said.
“That has been the transformation over the last 12-18 months I’ve been working on. It’s a huge change for our business – we have a highly institutionalised, strong wine-making culture, where everything is about the vineyards and how we make wine, and the ratings and scores we get for our wines. We’re changing that to be about what consumers want from their occasions where they consider a beverage, and how wine fits into those needs and wants. Everything then cascades from there.”
TWE is an Australian-based wine industry goliath and owns local brands such as Penfolds, Wolf Blass, Yellowglen, Coldstream Hills, Lindeman’s, Seppelt and Seaview. Overseas brands include Beringer, Santa Barbara Collection, Castello di Gabbiano and Cellar No.8.
The business was spun out of the Fosters Group in 2011 as part of a demerger of the beer and wine businesses. It came after several tumultuous years of acquisitions and investments that may have looked good on paper, but proved to be strategically and operationally less successful.
Marton has experienced all these ups and downs. He originally joined the marketing function of one of the acquired businesses, Mildara Blass, in 1997 in its spirits division before switching to wine in 1999. Since then, he has worked on various brands and categories, including Wolf Blass, and became the category’s marketing director in Australia in 2007.
Marton eventually rose to head of Wolf Blass and Penfolds brands globally, and in November 2013 was appointed chief marketing officer for the group.
It wasn’t until Clarke’s appointment in March 2014, however, that the business really “got into fifth gear” and started working on the changes needed to find success and growth post-demerger, Marton said.
Ingredients for a brand transformation
The transformation to consumer-oriented business has meant significant changes to how TWE engages with distributors and customers globally, Marton said.
One of the first big steps forward was acknowledgement TWE had been underinvesting in consumer brand support, Marton said. This encompasses all activities touching the consumer, from communication and promotion to packaging, digital and publicity.
To lift its game, the company announced it would increase consumer spend by 50 per cent this financial year.
Another challenge has been the diverse portfolio of brands, Marton said. Rather than trying to back all of them, TWE is taking a more disciplined approach by putting more support behind 15 priority brands including resource and marketing investment in multiple markets.
To help, Marton has decentralised much of the marketing function into its four key regions: The Americas, Asia, EMEA and Australia/New Zealand. In addition, regional marketing directors each lead several brands globally.
“I’m trying to get our marketing organisation to be focusing both on their own region and what that requires, as well as global requirements on some of their brands,” Marton explained.
In addition, TWE has re-engineered its agency roster to better support its new brand ambitions, appointing J Walter Thomson as its first global marketing services provider in February to oversee all brand marketing communications, creative strategy, trade marketing, shopper marketing, digital marketing and consumer and lifestyle public relations. The one exception is Penfolds, which retains its own global creative agency, Leagas Delaney.
“We had a fairly unstructured, non-strategic roster of agencies globally, so we’ve consolidated that into one partnership with JWT to give us increased capability, but also a better approach to building our brands globally,” Marton said.
“We are trying to both increase spend dramatically globally in terms of dollar amount, but also to multiply the effect of that spend by getting more effectiveness for every dollar. The way we were set up meant we were not as efficient as we should be, and we were having to duplicate and replicate execution of work around the region with different agencies.
“This was very much a simplification exercise so that when we do a new campaign or execution, we only do it once and can then send it around the JWT network.”
Alongside this, Marton is shaking up the marketing mix and in particular, focusing on fewer but more comprehensive campaigns for TWE’s priority brands.
“We were trying to support too many brands in too many regions and frankly, not moving the dial,” he said. “The catchphrase is fewer, bigger and better, and that’s what we’re doing. The main example in the first half of this year is Penfolds – in five priority markets, we supported the brand with integrating campaigns on a scale we’ve never done before.”
This approach is vital given the choices consumers have in wine brands today, Marton said. “The wine category is different to marketing in the milk or beer category, where the choices on the shelf are pretty consolidated. The choice in the wine category is enormous,” he said.
Driving consumer insight
One of the ways TWE is endeavouring to achieve consumer cut-through is by targeting behaviours, rather than just build brand awareness.
“Whatever we do and whatever campaign we run, there always has to be a behaviour change that we’re driving as well as an attitude change,” Marton said. “If you just drive attitudinal change, when you get to decision-making there are too many other things that can influence your purchase. The days of a nice ad campaign that says ‘be aware and buy me’, have past for wine.”
However, as a wine producer rather than retailer, TWE faces a lack of transactional customer insight and difficulty getting access to good data, Marton said. As a result, the step change made in terms of data in the last 12 months has been to ramp up consumer and shopper understanding and insights.
Whatever we do and whatever campaign we run, there always has to be a behaviour change that we’re driving as well as an attitude change
“The wine industry is a bit behind the eight ball globally in terms of understanding in this somewhat complex category,” Marton admitted. “So we have invested in segmentation understanding, needs-state models, and most importantly, applying that to the work we are doing.
“We are certainly looking to enhance our data capability, with JWT helping us with this. The other enormous opportunity area is our infrastructure of cellar doors in Australia, New Zealand and California, where we attract more than 1 million visitors per year. Getting organised, capturing information and engaging and influencing those visitors in the future will be a part of our program that at the moment, is pretty basic.
“Everyone person walking through our door is getting a half-hour advertising experience in a winery, tasting wine, and usually buying something, so it’s an incredible opportunity to create that experience and talk to them thereafter.”
According to Marton, the wine industry has historically been “like a cottage industry”, full of thousands of small producers making labels and trying to sell what they make.
“We’re trying to change that paradigm to build big brands that consumers can trust, and that we can proactively build and market. It’s a big change.”
To support this shift, TWE has adopted a balanced scorecard of consumer as well as brand health metrics. Marton said there’s no one size fits all, however, and metrics in Australia are different to China or the US.
“They’re tailored to the brand and market position, and it’s also shifted a lot from financial to consumer-driven metrics,” he said. “With the investment into insights we’ve made, that’s becoming a lot more powerful and we’re able to give more evidence for the continued investment in those campaigns.”
Digital is another critical area of focus for Marton and his team, especially around communications.
“It’s a global truth that the number one driver of purchase intention in a wine category is a personal recommendation,” he pointed out. “That could be your uncle, the sommelier in the restaurant or the bottle shop manager. The emergence of social is just a massive catalyst to drive personal recommendation for wine and our brands, and we are increasingly investing in that area.”
Marton again claimed brands in the wine category have a lot of catching up to do in social. He noted Penfolds is the second-most followed wine brand on Instagram globally, but followers are still under 10,000. TWE has a social presence for all priority brands.
“The interesting thing is those consumers following our brands and being influenced online are extremely engaged,” he said. “We know what we’re doing is working, we just need to expand the scale of it and apply this to all of our brands.”
Marton saw social as both an engagement and advertising opportunity, and said spend in digital and social channels is growing at a faster rate than overall marketing spend, now representing more than 10 per cent of total investment.
“One of the cool things about wine is that the content we can provide is extremely compelling in digital channels,” he added. “We can provide differentiated content for our category that really engages people. The wine category has such a high level of consumer love, where people are personally interested in finding our more, and it’s a constant discovery.”
Connecting to the supply chain
While keeping an eye on consumers is a big priority for Marton, retaining that direct link with TWE’s complicated supply chain aspect remains critical to success.
“We only get to make wine once a year during the harvest period and for about three months, so you’re deciding on what to make, what quality and flavour, for what you may sell in 60 markets in two or three years’ time,” he said. “That whole connection backwards into the supply chain is very unique but critical in our business, and the need for long-term forecasting and analysis is critical.
“Our marketing group has to be as connected to the supply chain part of our business as we are connected to the front end.”
Ultimately, what TWE needs to do is build a price premium for its products, Marton said.
“We have to market and build our brands in a way that convinces consumers they’re worth paying more for; it’s that simple,” he said. “Just because what’s in the bottle is brilliant, doesn’t mean you can charge more. It’s the nub of what we’ve got to get done, and that means a lot of work with consumers.”
A current priority is having an innovation pipeline to grow the value of the category.
“In the last two to three years, we’ve just focused on maintaining what we’ve got. With the direction the categories growing in the world, we need to bring more innovation to the table and out of the square stuff, which in wine, isn’t usual,” Marton said.
“We have been quickly building a pipeline and we’ll start bringing to market from the next financial year of consumer-led new category products under our priority brands. It’s one of the most important things we’re doing.”
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