Are French wines up Jacob’s Creek?

They have replaced wine corks with screw caps, launched wine in boxes, introduced tastings for the masses and branded their way into consumers’ consciousness. They sell much of their produce through aggressive price-cutting promotions and one of them – Jacob’s Creek – sponsors youth sitcom Friends.

Australian wine promoters have applied a battery of marketing techniques to make them leaders in the UK market, and they are close to their goal.

When they first stormed into the UK in the early Eighties with their heavily branded, clearly labelled varietals, they were like a ray of clear light in the muggy confusion that surrounded European wines. But just as Australia’s wines are threatening the French for leadership of the UK market, the steamroller appears to be running out of steam.

While the Australian wine producers have managed to overtake the French in UK supermarket and off-licence sales, French wine is still number one when sales through pubs, clubs, bars and restaurants are included. The heady 40 per cent annual growth in volume sales that Australian wines achieved in the UK through the Nineties is proving impossible to sustain and has levelled off. The fastest growth is now coming from South African and Californian brands. But the French, whose share of UK wine sales has dwindled over the past decade, are now fighting back with their own marketing assault.

In truth, most wines these days are pretty good, wherever they come from – even if it is the UK. And product parity is pushing marketing to the fore.

Changes announced last week at the Australian Wine Bureau, including the departure of Hazel Murphy (MW last week), the woman behind the aggressive UK marketing campaigns for Australian wines, come as other nations and regions are looking to replicate some of the Aussies’ success.

Murphy helped to set up the bureau and is leaving after 18 years to join the board of Chapel Hill Wine. But she believes Australian wine sales will continue to thrive in the UK and will grow across Europe. “We have succeeded by staying ahead of the game and never doing the same thing twice,” she says. “There will be two new people (Paul Henry, UK and Ireland manager, who joins from Enotria, and Marco Tiggelman, who will head the new European office in Amsterdam) and they will bring even more fresh ideas.”

There is plenty to play for in terms of market growth. In France, an average of 60 litres of wine are drunk per person a year. In the UK, the figure has grown 60 per cent over the past decade to 20 litres.

These days, it is hard to score a hit with a wine unless it appears on promotion at a supermarket or off licence. But to achieve this, the wine needs to be relatively high priced so that it can be discounted. It also needs a strong brand name that shoppers can remember. Critics say that many New World brands are on perpetual promotion – implying that their original price is misleadingly hiked to begin with so it can later be dropped to give the impression of value.

According to François Collache, managing director of France’s generic wine promotion organisation Sopexa, 80 per cent of Australian wines in the UK are sold on promotion. A recent study by Mintel shows that the percentage of people buying wines on offer has grown from 30 per cent to 47 per cent in two years. In 2001, he says, some 25.5 million cases of French wine were imported into the UK, about 24 per cent of the total market, while some 19.5 million cases of Australian wine were imported, an 18 per cent share. Although Australian wines have overtaken the French in off-trade sales by one per cent, French wines account for 40 per cent of on-trade sales. Collache says that Australian wines hold just 12.5 per cent of the on-trade market.

Cath O’Grady, communications manager for Southcorp Europe, which markets Australian brands Penfolds, Lindemans and Rosemount, rejects the charge that Australian wines sell solely on price. “It is not the case – look at our three key brands, they are all growing, there is no sign it is just purely on promotion.” She points to innovation, such as putting Lindemans in boxes with taps, and introducing screw caps on bottles sold through Tesco, both designed to keep wine fresh over a few days. “It exemplifies why Australia is ahead of the game,” she says. “Its wine producers are not afraid to innovate; they are more concerned with the quality of wines than staying with the traditional methods.”

Crucial, too, for wine makers is the ability to supply plenty of bottles, as they tend to fly off the shelves when prices are cut. The Antipodeans can achieve all of these pre-conditions. By focusing on grape variety, the wine makers can buy their grapes from a number of sources rather than depend on the vagaries of production from certain fields. Year-round sun helps. The vintages and place of origin that are the important determinants of the quality of French wines require a greater depth of knowledge on the part of consumers.

But the French are seeking to educate British consumers about their wines and to increase sales through the off-trade. “It will take some time because of the structure of the French industry,” says Collache. “The solution is to regain the confidence of the market through quality control and developing commercial branding with products in the £4 to £5 segment.” He says the grocery chains use French wines mainly for own-label products, so the French need to develop strongly branded wines that can be marketed through the supermarkets.

Sainsbury’s buyer for French wines, Justin Howard-Sneyd, attributes the stabilising of French wines’ market share to the fact that more wines are being imported that are “promotable”. He says: “The French are beginning to show signs that they are improving their understanding of UK customers and approaching them from a branding and marketing point of view.”

As part of the French fight-back, four winemaking co-operatives in Burgundy have banded together to create a new brand to take on the New World wines. With branding by UK consultancy Brandcorp, Blason de Bourgogne is already selling well through Tesco.

If the Australians can overtake the French, it will in part bear testament to the strong marketing of the Australian Wine Bureau. But it will also be a measure of the failure of the French to get to grips with wine marketing in modern Britain.