Wine Vision Live News Blog: Tesco's Dan Jago vision of being a world class wine business

By Richard Siddle

Published: 19 November, 2013

6pm

If you want to be world class in your field then you have to be constantly looking to try different things and ensure what you are doing is based on what your customers are telling you was the key conclusion of Tesco's head of wine Dan Jago to today's global wine conference Wine Vision.

He said he believed Tesco was doing a "world class" job itself in trying to do as much as it possibly can to provide the best possible wine retail service for its customers wherever they may be in the world.

In a wide ranging presentation Jago set out the in-depth consumer knowledge it has built up thanks to its Clubcard loyalty scheme that now covers 50 million consumers around the world. The data was playing a vital role in helping Tesco make sure it has the right range of wines in the right formats for the right type of customer.

It was also, crucially, helping Tesco understand what are the barriers for entry for some consumers into wine.

But is was crucial, he argued, that for a business to be truly world class then they must place consumers and their needs and desires at the heart of their future strategy. You have to make sure you are "following" your customer and going in the direction where they want you to go.

Jago outlined some of the key trends driving its online operation which was now the fastest growing part of its business.

He said the three biggest search terms for wine were simply: red; white; or wine. Dig a little deeper and then with red wine consumers were searching for Rioja, Merlot and Pinot Noir. For white wine it was Sauvignon Blanc, Chardonnay and Pinot Grigio.

This may not please some in the trade, particularly wine journalists who lament the rise of the Pinot Grigio consumer, but he warned we should not ignore them, but actually embrace them.

Wine alongside household goods were seen as the most important categories amongst its online shoppers, said Jago. Even though only 10% of its store shoppers are also buying wine online.

Although overall wine growth is down in all but one major multiple there was plenty of areas for optimism. Wine is now being bought more frequently across a wider range in more channels than ever before, said Jago.

It was enjoying double digit growth in its new look wine store at the Tesco Extra in Watford where it has introduced different fixtures, more softer lighting, integrated beers and other alcoholic drinks in to the wine fixture and introduced more interactive elements. Here, he said, it had been able to invest far more in chiller space which he admitted was an area it needed to offer more in its bigger stores. Particularly in mind of research that shows 46% of consumers will buy wine if it is chilled.

Other key facts revealed by Jago were:

· 56% of Tesco customers buy wine

· 18-24 year olds are taking longer to move in to wine from other categories like cider, spirits, cocktails and mixed drinks

· 9% of wine shoppers have shopped across all wine categories in last 52 weeks

· These shoppers will spend twice as much on wine than average customers and up to 3.5 times more

· When wine is bought the average basket spend is 15% higher

· Wine customers are most loyal in the BWS fixture and even more loyal when also buying beer

· Average dwell time of an average shopper in wine aisle is one minute 20 seconds. Highest in the store compared to just 0.8 seconds for chilled juice or 0.36 seconds for crisps

He also said its extensive consumer research had revealed two types of wine shopper. Those that want to be engaged and those that want to be sold to...the Tell Me or Engage Me shoppers and its wine fixtures have been laid out as a result.

3pm: Direct Wines invests £300,000 in wine education

Direct Wines has increased its spending 10 times on wine eduation over the last six years to £300,000 a year and is "worth every penny" said group chief executive, Simon McCurtrie, at today's global wine conference, Wine Visionbeing held in London.

Speaking at a session looking at the commercial benefits of investing in wine education, McMurtrie urged every senior manager in the audience to go back to their business and make sure the wine education they provide is available for "everyone".

It was one of the first initiatives he introduced on joining Direct Wines from the world of publishing. Having completed the advanced Wine & Spirit Education Trust course himself, he was "convinced" he "wanted to educate everyone in the business" regardless of what position they held, be it IT, marketing, administration or sales.

"I was convinced everyone in the business needed to know 'the stuff' that everyone else in the business did," he explained.

As a result spending on wine education has gone from £30,000 a year to £300,000 all of which he said has been rewarded not only in improved sales, but a better atmosphere and feeling of team spirit within Direct Wines staff.

He said it had also opened up wine education to its customers and now held evening classes at his office in Theale, Berkshire where staff and customers sit side by side learning about wine together.

But he also stressed wine education needs to be made fun. He argued "education" is not always the best word to use as it puts people off. But by making it fun everyone will connect with wine in a different way and it was vital wine businesses recognise that and exploit the fact different staff members see wine and like wine in different ways. It was something Direct Wines was now looking to make capital off in how it communicates with its customers.

"How you connect with wine will be key in how you then communicate about wine to other people," explained McMurtrie.

12pm Marks & Spencer looks to engage with customers "emotionally"

Marks & Spencer is moving to engage its customers "emotionally" by displaying wine alongside food, offering tastings and introducing the "human touch" delegates at today's Wine Vision heard.

Andrew Bird, head of trading, grocery and drinks at the company, said retailers were "underplaying the glamour" of wine by displaying wine in "naked, austere gondola ends" made up only of wine.

Findings from consumer research revealed that customers didn't want to be educated or talked down to, but rather want to be "transported to the country of origin". He said customers want to be inspired, and given ideas of what to drink in ways that give them a sense of "one upmanship" over their friends.

Bird added that customers also want to be "affirmed and supported" in their wine buying decisions by having wine advisors available. People are interested in the "humanity of wine", he said.

The retailer identified 87 "touch points" where it can talk about emotional insights, whether that's via the back label or through its Twitter feed.

In-store it's also transforming displays in order to mix wine with other products. Over Christmas it will be displaying wine in baskets, alongside Christmas trees and cakes as well as in chillers with party food. It has also put "drink me" tags on bottles of sparkling wine rather than price labels.

It is also offering sampling alongside fresh produce in-store, and a dozen stores now have tasting kitchens where chefs are filmed and broadcast in store talking about food and wine.

The retailer has also changed its back labels to introduce more of its expertise - focusing on conversations between its winemakers and producers. "It allows us to get over some quite tricky innovation stories," said Bird, including Georgian and Turkish wines.

It is also talking about using wine in cocktails in a bid to attract younger consumers to the category. "Why would we be so stiff-collared about wine and insist it's drunk on its own?" said Bird.

It is bringing the "glamour of wine" into stores with 10 litre bag-in-boxes "expressed direct from the winery" which advisors fill directly into PET bottles in stores. "It's a way to break down the barrier, sell wine in a fun way and allow the wine advisor to interact with the customer."

"The further we move away from standard fixtures the greater competitive advantage we have."

11.30am: China being held back by "profiteering" wine importers

The Chinese wine market is being dangerously held back by "short term, profiteering" wine importers that are pushing vastly over priced wine in to the market and confusing consumers, according to leading Chinese players speaking at today's Wine Vision conference.

Ian Ford of Chinese wine importer, Summergate Fine Wines, said there was enormous potential for China to eventually have a "healthy", well educated market in wine, but it was being dangerously held back by "short term, profiteering" companies from both inside China and outside that consumers are having to navigate around so that they can get to real wine in real wine bottles at the right price.

"We are trying to build a wine culture in China but it is really hard," he stressed.

Don St Pierre Jnr of ASC Fine Wines agreed and said doing business in China was becoming increasingly difficult due to the large numbers of unprofessional importers in the country. It is estimated there are currently some 4,200 importers operating in China and the number has "exploded" in recent years, stressed St Pierre. It has resulted, he said, in "massive confusion in the market".

"It is a challenging envirnoment to find the right partner," said St Pierre.

"Most of the new players are unprofessional who are selling wine at price points that do not make sense."

He warned anyone looking to work in China to ensure they have trademarked their product in China or they would not only be open to fraud but would find it hard to do business there.

It was also hard to get the usual return on investments working in China and companies need to realise the complexities of the market.

11am: Online sales helping to open up China to mass wine market

E-commerce and online wine sales is helping to democratise the Chinese wine market and open up the global world of wine to consumers in even the most remote parts of China, delegates heard at the second day of the Wine Vision conference in London.

The online wine market was way beyong the "tipping point" said Ian Ford of Chinese wine importer, Summergate Fine Wines. "It is such an exciting and dynamic arena. It is the great equaliser in China," he stressed and meant any consumer in China can now access wine.

Which was equally great news for wine producers looking to get wider distribution of their wines in to a notoriously difficult market.

David Pedrol of China's biggest online player, Yesmywine.com, said there was currently around 300 million online consumers in China. He said it was a platform that Chinese consumers trusted in an economy hampered by fraudulent products.

It was also a great way to tap in to the lucrative middle class market of China and that most had access to computers.

Vitally it also brought transparency to the wine market, stressed Pedrol. The sector was awash with vastly over priced products from short sighted, often profiteering suppliers and online meant products could be easily searched, and benchmarked against international sites such as Winesearcher.

It was also a great way to educate consumers about wine and said its site often had four pages of information about wine.

The impact of wine online he said was illustrated when it sold 100,000 bottles of wines on November 11, the Chinese equivalent of Valentine's Day.

Ford said online wine was an "incredible platform" for it to showcase its range of international wines. It was also an "honest and healthy" place to trade wine in a market that has some notoriously unscrupulous players.

He thought the ecommerce market in China had greater potential than in more mature markets.

Judy Leissener of Chinese winery, Grace Vineyards, said social media was very active in China even amongst older, middle aged consumers who may not have access or know how to use a computer but are active through social media with their mobile phones.

10.30: We must make wine less intimidating say world wine leaders

Industry leaders issued stark warnings about making wine less intimidating for consumers and moving the focus away from price at today's Wine Vision conference in London.

In a panel debate chaired by Simon McMurtrie, group chief executive at Direct Wines, Dan Jago, UK and group wine director at Tesco, said he'd like consumers to feel "less intimidated by wine". He said the industry should "wake up" and start making wine for consumers outside "the rarefied 5%" who are consuming top wines. He believes the future includes embracing flavoured wines, sweeter-tasting grapes like Moscato and "whatever is easiest for the consumer to understand".

There should also be less of a fixation on meeting price points in mature markets like the UK, according to Cristian Lopez, corporate director for Asia of Concha y Toro. Pressure on producers to absorb tax and other increases could reduce wine quality, he warned. "I'd like the supply chain to understand we all have to have profitable businesses. We need more professionalism in the sector."

Christophe Salin, president and chief executive, Les Domaines Barons de Rothschild, is worried about a difficulty in attracting people to work in vineyards. "Not oenologists, but workers. We give good salaries." He added the move towards mechanisation wasn't "the right way".

Identifying the priorities for action right now, Lopez, said that when focusing your energy on developing new and emerging markets, there was a real risk of "neglecting core markets". "The UK and the USA are still the largest - something brand owners tend to forget." While China may move into third place in time, he added, these established markets "will continue to be significant".

The biggest challenge in China is how to build brands, added Lopez.

Rick Tegner, president of Jackson Family Wine Estates, said he has spent most of his time in recent years "shoring up supply", spending $100 million buying land. He said outside of the USA it is looking to grow in China and spending time on education and intelligence. Agreeing with Lopez, he said brand building there was a challenge, especially since they don't have much Californian wine there.

For Lafite's Salin, while "making good wines is certainly a challenge, where we can sell and how we sell them" is more of an issue. Selling to new consumers is a major concern. "We are able to make good wines everywhere on the planet - that's new - but are we able to market them?" He said Lafite questioned whether it was possible to make a top estate in China or a first growth in England.

Christian Seely, managing director of AXA Millesimes said acquiring unique vineyards was vitally important given the growing demand for wines from "that can only come from specific, magical places".

Jago said the price/quality relationship was the "neverending debate". He said Tesco's Finest range helped by offering a "benchmark". He said consumers are becoming "increasingly sceptical about the concept of value". Instead in some areas, the perception of prestige and image was more important.

Salin said that while the most expensive Lafite sold at $200,000 per bottle, it takes the same care at the £10-£15 mark. But scarcity added value, "when you're drinking a bottle of top wine - it's not going to be replaced."

While iconic wines can "start the ball rolling" said Seely, "people who have the money to buy these wines got it by not being stupid. They end up realising they really enjoy wine and can have a lot of fun with all kinds of other wines."

Follow the action on Twitter @harperswine #WineVision

Engage me shoppers make up 59% of wine sales, and are 37% of shoppers.

Jago said Tesco was rightly proud of its Finest range which was by far its most important wine range feature some 139 SKUs and has influenced much of what was going on in the trade and introduced varietals like Fiano to the UK consumer.

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