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Impact Seminar Snapshot: Treasury Wine’s Clarke On The Globalization of Wine Marketing

March 25, 2015

As managing director and CEO of Treasury Wine Estates, one of the wine industry’s most geographically diverse marketers, Michael Clarke was well placed to address the topic of “The Globalization of Wine Marketing” at the recent Impact Marketing Seminar.

Clarke began by noting that some industry observers questioned TWE’s wisdom in hiring an FMCG veteran as CEO when he took the helm in February of 2014 (Clarke has held senior executive roles with both Kraft and Coca-Cola). But in his speech he pushed back on the idea that the wine category is unadaptable to more efficient business practices. “We are challenging the implicit—and misplaced—contradiction that seems to exist between preserving the mystique of wine, and at the same time delivering outstanding, quality brands of scale, sustainably and with less complexity.” At the same time, he acknowledged the challenge of generating consistent returns “when Mother Nature is your partner.”

Delineating his strategy for maximizing the potential of Treasury’s portfolio, Clarke observed that out of the company’s 80 brands, it has identified about 15 that are “scaleable globally,” among them Penfolds, Etude, Wolf Blass and Stags’ Leap. One way to help scale brands on the global stage, he pointed out, is to use flexible sourcing, as TWE has begun doing on Etude, a California brand that will soon introduce a New Zealand-sourced offering and position itself as a global Pinot Noir franchise. “Building scale via sourcing breadth is one of the most critical platforms necessary for the globalization of wine brands,” he asserted.

Another avenue is to create a halo of innovative products around a strong premium franchise like Stags’ Leap, which recently introduced The Investor, an upscale red blend that is scaleable from a sourcing standpoint and could usher the brand into new occasions and audiences, Clarke said. TWE has also identified the $10-$20 “masstige” segment as an area of opportunity across its business, and is separating its luxury and masstige business from its commercial segment—which still accounts for two-thirds of group volume—to better compete in both arenas.

Meanwhile, the long-term future for the global wine market appears bright. “The emerging and increasingly affluent middle class in countries such as China and Russia are looking to Western influences and indicators of sophistication in respect of alcohol consumption, and are therefore becoming more engaged in the wine category,” Clarke said. “Moreover, consumer demand for wine in most regions is strongest at the premium price points—say above $10 a bottle—and value growth is outpacing volume growth.”

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