From a Masters to a PhD in Marketing Incomprehensibility (20 June)

In our two most critical export markets, there have been three brands that have essentially been responsible for laying the foundation stones on which Australia’s export wine business has been built. Lindemans and Jacobs Creek were the underpinning brands in the UK, and Rosemount was the foundation of our drive into the US.

Over the years, the volume shipped to the UK market has lead to Lindemans and Jacobs Creek becoming household names, and brands that ship in the millions of cases. Jacobs Creek in particular is a rock solid brand. Penfolds also managed to do reasonably well in the UK.

Lindemans was established in 1843 and Orlando/Jacobs Creek in 1847. The new comer, Rosemount was established in 1969 and grew slowly but steadily. By 1990 the brand, due to the terrific value offered by the Diamond Label, had established a solid presence in the Australian market.

As well as the Diamond Label, Rosemount had a Reserve range and one of these wines metamorphosed into their iconic Balmoral which was released in 1992. Over time, Rosemount wound up with four ranges.

The Split Diamond was the entry level, and the least expensive. It sold for as low as $8 a bottle. The Diamond Label was around $12-15. The Show Reserve Range had a RRP of around $30 but could be found as low as $24 on a regular basis. There were 3 Icon wines, the most prestige being the Balmoral which had a RRP in the $50-$60 range.

From the beginning, Rosemount started to make small inroads into the US. Over time, they gained a foothold and steadily built on it until they had solid brand recognition. They were responsible for showing the US market the “sunshine in a bottle” concept that became so popular. Consumers loved the full fruit flavour.

By the 1990’s the “upstart” Rosemount had succeeded where Penfolds and Southcorp brands had failed. Despite their best efforts, Southcorp had been unable to get Lindemans or Penfolds well established in the US. Southcorp saw Rosemount’s success in the US as one of the Rosemount’s most attractive assets when they were looking to buy them out. US market penetration was so important, that when Southcorp bought Rosemount, they let the Rosemount management take over, hoping the US success of the Rosemount brand could be replicated to other Southcorp brands.

Once the takeover was complete in early 2001, the management took their eye off marketing the Rosemount Brand and the volume dropped, both in Australia and the US. One also has to wonder about the winemaking strategy after the takeover.

Within 12 months, the management had decided to drop the Split Diamond Label series as it was not profitable enough. The Diamond Label series, in my opinion, changed in style, and slowly declined in quality, something that started in 1997. The Show Reserve Range mostly sold out in a reasonable timeframe, but the quality and value seemed to be inconsistent. The style sometimes seemed to be a bit of a moving target.

I loved the early vintages of Balmoral. The 1992 was terrific, especially given the vintage conditions. The 1994 was generally regarded as one of the best. The 1995 found its way into my cellar and I overdosed on purchasing the 96, at $40 (mate’s rates) it was a fantastic buy. 97 was an “ordinary” vintage and the wine reflected the vintage conditions. In 1998 the wine was back to form and sold out in a reasonable time, as had all the prior vintages.

Although 1999 was a credible vintage, the Balmoral was not as good as expected and it took a long time to sell through. 2000 was a shocker of a vintage and my comment when I tried the wine was that it should not have been released. The buying public must have agreed because even though I was told that volumes were way down, it was available at cellar door and bottle shops for years, and I do mean years. The 2001 was not released in Australia but was shipped overseas.

By 2006, when Fosters had purchased Southcorp, the Rosemount Brand was on life support. By the end of 2006, the Reserve Range was selling for give-away prices in the US; it went as low as $8, but $12 was common. Early in 2007, Balmoral was also offloaded.

There was a marketing method behind this madness. Fosters had decided the Rosemount Brand had been neglected and should be relaunched. Much was made of the importance of this relaunch when I was talking to the top PR/Marketing guys at Fosters. In the middle of 2006, I was informed the relaunch was to occur “soon.” Soon is a relative measurement, and Fosters must have found the old inventory problem was larger than expected, as the relaunch happened not that long ago.

So what did this relaunch give us?

A new bottle shape, a new TV advert and new press advertising. I won’t mention my thoughts about the relaunch advertising, other than saying I didn’t find it impressive.

Any product relaunch is based on a new marketing strategy, and the Rosemount relaunch is no exception. The most “incredible” part of this strategy revolves around the Balmoral.

Recently the 2002 Balmoral was released. The wine used to have a RRP of about $60 but could be found for about $50 on special (from time to time.) I was flabbergasted, indeed gob-smacked when I saw it available from one major Australian retailer at $19.95 ($18.50 in full 6-packs). Was I seeing things? Is this the bargain of the year? After all, for many years this wine had an impeccable pedigree and I had purchased dozens of bottles of for the cellar. Add to that, if you couldn’t make a good wine in McLaren Vale in 2002, you shouldn’t be making wine, so it looked like a gilt-edged buy.

Many punters thought the same thing and bought a dozen (or more) without a second thought. Then the tasting notes started to hit the wine forums and there was almost universal disappointment expressed by these purchasers. The general consensus was it was drinkable, but in reality no great bargain as it was only about $20 worth of quality.

As far as quality is concerned, another professional independent opinion is worth examining. Jeremy Oliver’s rating for the Balmoral is as follows:

1992   96
1993   88
1994   95
1995   97
1996   94
1997   90
1998   97
1999   90
2000   89
2001   91
2002   87

What the heck happened? Who knows, but “the what” is not as important as the implications on not just Balmoral, but the whole product line and brand.

If we concentrate on the Balmoral for a moment, the wine has gone from being a top shelf, respected, desirable icon to just another $20 wine. So when people think of Balmoral will they think of an icon or just another wine? 2003 was a difficult vintage so if there is a Balmoral; will it still be at the same $20 price point? Once a wine has been at $20, you can’t go back up to $60 quickly. Even over time, as Lindemans discovered with their premium Coonawarra Trio, it is bloody difficult to raise the price after it has been dropped substantially.

If Balmoral, which is listed on the Rosemount website in the Icon range, remains at the $20 price point in the long term, the Reserve Range will be more expensive than the iconic Balmoral. That doesn’t make sense, but then not much of the marketing of the Rosemount brand has made much sense to me for a long time.
 

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Copyright © Ric Einstein 2007