A Talk with W.J. Deutsch Brand Manager, Mark Lyle

FILED NOVEMBER 1, 2009

Dear Client:

Mark Lyle, the vp of brand marketing for W.J. Deutsch & Sons, sat down with WSD to discuss marketing initiatives for HobNob, including its new iPhone app, reasons for the brand’s success amid the recession, and how they target millennial consumers. Mark also gave some insight on the success of Yellow Tail and its new TV ad campaign, “Open for Anything.” Sit back, dear reader, as you are a fly on the wall.

WINE & SPIRITS DAILY: How is HobNob performing in the US?

MARK LYLE: Actually it’s doing very well. We launched it in 2007 and we’ve sold over 100,000 cases already and we’re continuing to experience double-digit growth. Given the fact that it was launched right ahead of the recession and it’s lived most of its life in the recession speaks more of the success of the brand. We think we’ve found a good message that resonates with our consumer and they seem to be responding.

WSD: What areas of the country is HobNob most popular?

MARK: Well, it’s available nationally and it’s doing well nationally. But to be honest, its real success is lying in the urban centers – the New Yorks, the Chicagos, the Bostons of the country. If you think about it, that’s where our target consumer, the millennial, is most aggregated.

WSD: What is the suggested retail price?

MARK: $10.99.

WSD: So HobNob falls in what seems to be the sweet spot for wine?

MARK: Yeah, it seems to be one of the price segments that consumers are flocking to. It’s not your everyday purchase point and it’s not an over-the-top purchase either, so we couldn’t have said it better ourselves that it’s at the sweet spot right now.

WSD: Is it correct that millennials are your target audience for that brand?

MARK: Absolutely. We are very strict with our marketing efforts and how we behave with HobNob to go right after the millennials and be part of their world.

WSD: What are millennials like as consumers?

MARK: The strict demographics are roughly 21 to 34 for us, but it’s not so much the demographics about this consumer set. It’s much more about their behaviors and how they’re pretty much blazing new trails as opposed to their predecessors. They’re independent, they’re confident, they’re acquiring new things but on their own terms. They’re not interested in the old way of doing things. They want to discover things themselves, and they’re very much into technology and innovation. The fact that they do things in groups and technology is a conduit to help them get together in groups kind of speaks to their lifestyle and what they’re all about.

WSD: And how is HobNob reaching out to those consumers?

MARK: Well, one of the first things that comes to mind is we put out an iPhone application for HobNob, and that’s not your standard issue Marketing 101 for wines, especially our application in and of itself. It doesn’t talk about fermentation and so on and so forth – the winemaking attributes. This is not your typical wine application telling you which wine is which and how to pair them traditionally. It talks more about games and how to have fun with HobNob at any kind of event. It’s much more about speaking to their world as opposed to us speaking about ourselves and our world.

WSD: Are you going to stick with digital marketing for HobNob in the future?

MARK: Well, going forward I think we’re going to stick with what we’ve been doing because we found a nice success rate with our digital and viral efforts. Eventually digital and viral comes to life when folks are out with their friends enjoying themselves, and that’s the whole point. We’re going to be sponsoring events that this crowd kind of migrates to and the technology that enables them to get there. One thing I’d like to bring up is a cultural platform we’re doing with Hob Nob called “Creative Juices”. They’ll be able to download exclusive tracks from various underground bands. Again, this is not about wine, this is about being part of their lives. And we all know music is a big part of these consumers’ lives.

WSD: Would you say that it is more difficult to build brand loyalty around wine versus beer or spirits?

MARK: Yes. Beer and spirits are much less fragmented. Consumers are more likely to call spirits and beer by their brand name. Wine has to do things a little differently to appeal to consumers because, as we all know, wine is a very experimental category and it’s in the nature of the business. When you find something that works with consumers and they can come to you over and over again because they feel proud of their decision, you’ve hit a home run.

WSD: It’s well known that millennials nowadays are more open to drinking wine than their predecessors. Would you say that one of W.J. Deutsch’s goals is to bring them in, get them drinking HobNob, and then eventually have them trade up to more expensive brands as they mature and grow older?

MARK: Well, I think you’re right. This consumer set is a little more open to wine earlier in their career, so to speak, than traditional boomers and so forth. They’re also very open to imports, which is good news for us as well.

In terms of getting them into the category and trading them up, I think it’s natural for folks to come into the category and experiment once they’re there, but where a great brand comes to live is where they come back to it time and time again. This may not be their wine for every occasion in their wine life, but it’s going to be the wine brand for them going forward because it’s done a great job in resonating with their life.

WSD: How is the new Yellow Tail ad campaign, “Open for Anything,” going?

MARK: It seems to be going very well. It’s a little early yet to get statistics back, but we’ve got some very positive feedback through our social media sites and from the consumers via email. The fact of the matter is that Yellow Tail fans are very adoring of the brand and the quality, and this new campaign has done a great job of reflecting the wine brand in a humorous, unexpected way.

WSD: Yellow Tail is perhaps the perfect example of a wine brand that people are loyal to and that people come back to time and time again. How did you guys do that?

MARK: It’s interesting. There’s been a lot written about this subject over the years and I wouldn’t want to try and resuscitate all of that, but the fact of the matter is Yellow Tail has got a great position with the consumer because it’s a great wine at a great price point. Also, folks love the marketing and the message, which is that you don’t have to be into the wine category and understand everything there is to know about a complex agricultural product such as wine. You just want to take it home and enjoy it and drink it, put it on the table and be proud to serve it. I think Yellow Tail has done that better than anybody over the years and continues to do so. We can’t say much more than that.

WSD: On a different note, what are some of the fastest growing brands at W.J. Deutsch?

MARK: Well, we talked about HobNob, that’s first and foremost. We just talked about Yellow Tail and its ability to deliver to consumers time and time again. The recession has pointed out a couple trends for us and one of them is interesting – that consumers are taking a step backwards in wanting to make sure that the brands they’re associating themselves with are tried and true. So Yellow Tail, even though its magnitude is eight-plus million cases, is still experiencing some tremendous growth in certain areas like pinot grigio. We’re fairly new to the pinot grigio segment and now we’re upwards of almost 700,000 to 800,000 cases. And we’re number five in the category where, if you look at Nielsen, seven of the top 10 SKU’s in pinot grigio are actually declining.

We are seeing some trends where consumers are going to brands they know and then are possibly experimenting within that portfolio because they feel safe about the purchase. Every purchase means something these days.

WSD: Are there any other trends you’re seeing in the wine category?

MARK: Well, you know consumers are returning to domestics as well, and I think the overall trend is going towards brands that really have relevance in their life. You know, we picked millennials for HobNob, but there are a lot of consumers who play in the under $20 range. For example, we feel we’re doing a great job with Geyser Peak. It’s experiencing good growth these days because it’s a great varietal at a great price point that has some of the more traditional wines used in a domestic profile.

WSD: Thank you for your time.

WSD BRIEFS:

ON-PREMISE HOLIDAY SALES COULD RISE 6% OVERALL. Marketing analysis firm IbisWorld Inc. predicts that sales at bars and restaurants this holiday season will reach about $7.8 billion, up about 6% from a year ago mainly because 2008 was such a drag. That figure is still down -11% from the pre-recession level of $8.8 billion in 2007, points out LA Times writer Jerry Hirsch in his article. Meanwhile, Bellwether Food Group, a food industry consulting firm, doesn’t expect restaurant sales to rebound to pre-recession levels until 2012. As a result, expect more deals from restaurants through the holidays, offering percentage discounts, gift cards and cheaper three-course meal options.

SAN JOAQUIN PRODUCERS MUST WATCH OUT FOR CHEAP IMPORTS. Grape growers in the San Joaquin Valley have benefited from consumers trading down to value wines (below $6), while sales of wines priced above $20 have fallen double digits. Their grapes are traditionally used for less expensive wines, such as value wines produced by E&J Gallo and Bronco Wine, according to an article in The Fresno Bee. In speaking at the annual San Joaquin Valley Winegrowers Association, Bronco Wine chief Fred Franzia told listeners that they must watch out for inexpensive imports hailing from countries such as Australia, New Zealand and Argentina, who are targeting the US market. To stay competitive, San Joaquin producers must continue to offer varietals most loved by consumers. Fred also recommended they save money by maximizing their use of water and contracting harvesting to other companies.

FREIXENET AMERICA APPOINTS NEW PRES. Freixenet Group has appointed Tom Burnet as president of its American arm. Tom most recently served as executive vp at Moet Hennessy USA, ceo of the Americas at Southcorp, and president of Brown-Forman Wines.


Until tomorrow, Megan

“Doubt whom you will, but never yourself.”
Christine Bovee

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