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The Wine Value Play

If I am Cameron Hughes, I would have to humbly think I am sitting in the catbird seat.

His young, hustling and savvy wine company is perched to capitalize on a unique convergence of increasing consumption, consumers trading down in wine price segments, all happening at the same time as a global oversupply. 

When you combine that convergence with a transparency in business that explains the negociant model in what is typically a cloaked area of the domestic wine business, and you deliver with quality juice, well, good things seem to happen. 

The reason I thought of Cameron Hughes, and lest you think I’m a complete sycophant, I do have to note that that I thought Lot 81 was disappointing, I read an article in the Wall Street Journal yesterday that discussed “value marketing” particularly as it relates to high-end home espresso makers and Starbucks.

The gist is that Starbucks reports of a softening of foot traffic is directly related to people tightening up the belts on discretionary spending – the simplest way to do that is to make your coffee, or espresso, at home.

According to a press release quoted in the article,

“Did you know cutting just one of those typical ‘tall’ lattes a day and replacing it with a delicious premium organic coffee you brew at home can save more than $1,200 a year?”

We have long heard the word-of-mouth that if you cut your Starbucks intake back to once a week, over the course of 10 years, you could save $17,000 or some equally large sum.

The thing is, analogous to wine, Cameron Hughes has been doing this since their launch.

Even if the messaging hasn’t been implicit, the consumer connection has always been, “drink great wine for a cheaper price and save money.”

*  If I am Cameron Hughes, I would effectively double-down on this hand of wine selling blackjack and reinforce this messaging.

*  If I am Cameron Hughes, I would raise the quality stakes and double-down on the value.

*  If I am Cameron Hughes, I would say, “Drink Cameron Hughes wine and save $4000 this year while not noticing a quality drop-off.”

I’m reminded of The Bank of America “Keep the Change” program that rounds up all of your ATM purchases to the next dollar and then deposits that money into a savings account.

Do you think it would be compelling to consumers, especially online, if they rolled out a similar “Keep the Change” program, but rolled that over to some level of online store credit or a points program?  “Buy a $19 wine and we’ll credit you the difference on the value of the bottle onetime to $35.”  That immediately lifts the shipping cost issue that is the albatross to wine sales online.  Or, what if they did a keep the change style program and combined that with a program like Amazon Prime where shipping is effectively paid for one-time annually.  There are some legal issues here that would have to be addressed, but they are addressable.
 
If “Chance favors the prepared mind,” to quote Louis Pasteur, then certainly “Luck Favors the Bold,” according to Roman statesman Cicero.

Cameron Hughes had a pretty clear and compelling value proposition pre-recession, but nowadays it’s practically like loading the crack pipe for the trading down wino.

The email I received yesterday touted a $12 Chardonnay that is comparable to a $28 bottle from a luxury chardonnay program winery.

That’s a pretty tasty marketing hook (no pun intended) when I like my wines priced at $12 dollars, but my taste buds don’t necessarily share my pocketbooks opinion.

In this day and age of oversupply in the wine industry, when wines can be re-labeled to ensure brand preservation and to sell less inexpensively, the time to be a consumer has never been better.

Viva la Consumer and value marketing and Viva la Cameron Hughes, too.  I have a hunch his business is going to get big, very big in these economic times.



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Posted in, Wine: A Business Doing Pleasure. Permalink | Comments (4) |


Comments

On 01/18, mydailywine wrote:

Wonderful insights into the Cameron Hughes success story.
Transparency+ good juice+ reasonable prices= kaching.

On 01/19, .(JavaScript must be enabled to view this email address) wrote:

Outside of France, where are you seeing this global oversupply?  California is becoming desperately short on everything but Merlot and Syrah (and even those are coming back into balance).

I’ve always found CH’s wines to be extraordinary in one respect - the hype.  Beyond that, the were pretty ordinary juice.

V

On 01/19, Jeff wrote:

St. Vini,

Thanks for the note.  I’m still looking for you to get back on the blogging wagon, btw.  4.5 years in, now is not the time to quit.  Plus, you were the first blog that I started reading, so I have a connection to you continuing ...

That said, when I talk about a global oversupply, I’m not necessarily referring to the bulk market, but instead at the sales value-chain. 

I talked to somebody in the sales arena in the industry and he talked extensively about re-labeling premium brands down to a palatable price point to get some return on the dollar.  This would be a market Cameron Hughes would definitey play in.

In regards to CH wine—I don’t disagree that the hype is omnipresent, but I have found, for the most part, that the wines delivery a very good QPR relative to price point.  There has been a clunker or two, but by and large they over-deliver on the $$‘s spent.

Thanks, as always, for reading!

Jeff
http://www.goodgrape.com

On 12/21, Forex Trading Reviews wrote:

I need a standard two bottle gift wine box; black and simple,to be used in the trade of selling/marketing wine for corporate gifts. No finish, just plain and black. Having my company logo created for exterior of box in a sticker (gold) to run the length of the box.


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