Extract: Luxury Wine Marketing by Peter Yeung and Liz Thach MW

19 January 2022 by in Extracts, Lifestyle, Wine and spirits

Luxury wine: luxuriously defined
The French term elevage, meaning to be grown or reared, with regard to winemaking is a good starting point for understanding what luxury wine is. The wine world at the highly commercial end is made up of manufactured commodities, wines made by formula and at industrial scale, often to great effect, but manufactured more than grown. The other extreme is the small farmer, meticulously tending to his or her small plot and “raising” the wines from the vineyard to the cellar to the bottle. Though luxury wine is the opposite of a commercially manufactured product, that still does not fully encapsulate the definition of luxury wine.

In order to define luxury wine, it is useful to begin with some basic definitions of the term “luxury.” Merriam-Webster provides the following:
1. a condition of abundance or great ease and comfort: sumptuous envir­onment // lived in luxury
2. a: something adding to pleasure or comfort but not absolutely necessary //one of life’s luxuries
b: an indulgence in something that provides pleasure, satisfaction, or ease // had the luxury of rejecting a handful of job offers

These definitions showcase that luxury should provide a sense of a sumptuous lifestyle, refinement, privilege, and pleasure. However, it is also instructive to examine luxury from an economic standpoint. In his book Macroeconomic Analysis, Hal Varian states that “a luxury good is a good for which demand increases more than proportionally as income rises.” This definition adds the element of high price and scarcity to the mix. Therefore, when all of these concepts are combined, some bound­aries are created around what luxury wine is.

Definition of luxury wine: Luxury wine is of the highest quality, coming from a special place on earth, has an element of scarcity, an elevated price, and provides a sense of privilege and pleasure to the owner.

The six attributes of luxury wine
The above definition can be further explained by delving more deeply into the six attributes of quality, place, scarcity, price, privilege, and pleasure.
1. Highest level of quality – globally recognized for producing a wine of the highest quality that can age and is suitable for cellaring. Must have achieved this for a long period of time with consistency – at least twenty years – proving the unique heritage of the brand.
2. Coming from a special place – recognized as coming from a special wine-grape-growing region with cultural significance. High-quality grape vines can only be grown in unique places in the world that have a special climate and soil. Many of these locations have long been recognized as supreme wine-grape-growing areas and have a strong sense of heritage.
3. Sense of scarcity – part of the branding component of luxury wine is that it is difficult to obtain, which can be developed through actual scarcity (hard to find), perceived scarcity (barriers to purchase), or price (so expensive it feels scarce). Often luxury wine has the ability to achieve higher prices on the secondary market.
4. Elevated price point – a foundational element of luxury wine, high price creates a barrier to purchase, higher perceived quality, and, if sustainable, higher willingness to pay by consumers. Generally speaking, luxury wines should be $100/bottle or greater in US retail.
5. Provides a sense of privilege – part of the exclusivity of luxury, be it from price, scarcity, or the symbolic nature of the brand and product is the status it confers on the owner, or in this case, drinker. This provides a sense of privilege to be able to partake in a wine that few others may have the opportunity to enjoy. The bottles in the cellar are the envy of other wine geeks globally. Luxury, by its definition, is a privilege, and wine is no exception.
6. Provokes pleasure – provides an aesthetically pleasing experience by viewing the bottle/collection and showing it to others. Also provides a hedonistic experience through consumption.

The growing importance of sustainability
Having both the highest level of quality and coming from a special place, luxury wines exhibit a character common amongst many luxury products, which Kapferer and Bastien describe in Luxury Strategy as “timeless” – the ability to be relevant decades from when the product was produced. When this is applied to wine, several elements come into play. The ability to improve with age and be of consistently high quality are both fundamental elements of luxury wine. Being relevant over a sustained period of time, to produce the highest quality, creates the special places where luxury wine is grown. For all those attributes to flow into luxury wine, both the viticultural and winemaking practices must be increasingly sustainable, often incorporating elements of organics, biodynamics, and environmentally sustainable practices. If they are not, the land and the vines will no longer have the energy or the nutrients to consistently, continually, produce the quality necessary for a luxury wine. Interestingly, most luxury wines do not aggressively market themselves as organic or biodynamic, though most utilize those practices, in order to focus on their brand and the quality of their product as opposed to the farming methods.

A similar case can be made for economic sustainability as well. Without generating strong enough returns to survive, the winegrower will no longer be able to continue producing top-quality wine. For luxury wine, this is embedded in the elevated price, as crafting luxury wine with meticulous care often requires a great deal of investment in facilities, tools, and labor.

What luxury wine is not
Just as important to understand what luxury wine is, is to understand what it is not. The world of wine is privy to trends like the fashion industry, technological revolutions on par with the digital revolution for an agricultural industry, and instantaneous hits similar to food fads – yet luxury wine separates itself as being classic and timeless. It may be easy to consider wines marketed with a luxury lifestyle component – advertisements set on yachts or in high-end clubs – as luxury wines, but more often than not they fail to live up to the definition of luxury wine.

The luxury lifestyle
Often, the term luxury and luxury wine are directly associated with a luxurious lifestyle. Many aspiring luxury wine brands believe they must appear to fit in with a lifestyle of private jets, yachts, and twenty-thousand-dollar watches to be a successful luxury wine. However, the two are not always related. Many top Burgundian producers will often profess that their wines are not luxury, that they are farmers, and their wines are merely an expression of the land. In their way, their marketing focuses on the special place where their wines are grown and their focus on making wines of the highest quality. These wines also happen to cost hundreds of dollars, are limited in production, are scarce, and are sought after by a global set of wine collectors. They fit the definition of luxury wine more easily than other wine brands with multi-million-dollar marketing budgets.

The luxurious cult
A common and confusing subset of fine wine is the notion of cult wines. Cult wines have a rabid, loyal following and are generally very small in production, often with fewer than 2,000 cases produced a year. However, it is possible, given enough time and with consistent high quality over a long period of time, that a cult wine can become a luxury wine. Two good examples of this are Napa Valley’s Screaming Eagle and Harlan Estate, which have built their history and heritage and now firmly belong in the luxury category. They meet all the criteria – high quality, from a special place, elevated price, scarcity, aesthetically pleasing, and imparting a sense of privilege. However, there are equally as many cult wines that do not meet the definition but do have scarcity from low production and a loyal following. This could apply to Frank Cornelissen’s wines from Mount Etna in Sicily and Clos de la Roilette in Beaujolais. Their wines are unique, small production, and high quality, but generally not with an elevated price and are generally appreciated by specific niches of consumers. For example, Cornelissen’s wines are natural with no sulfur dioxide used in winemaking and Roilette is a sommelier favorite, partially due to its relative value as a Cru Beaujolais, and would not meet the definition of a luxury wine.

Extract from Luxury Wine Marketing © Peter Yeung and Liz Thach MW (Infinite Ideas, 2019)
To read more, buy your copy direct from the publisher.