French wine opens up to brand culture
Published: July 24, 2006

By Eric Pfanner International Herald Tribune

LONDON With the 2005 Bordeaux vintage fetching record prices in the wine futures market, the elite chateaux of France have rarely had it better. Further down the pecking order, though, French winemakers' woes are growing. Consumers are drinking less or snubbing French wines in favor of New World alternatives. And the European Commission wants to tear up some vineyards to reduce excess production and cut subsidies to growers.

The crisis has forced some vignerons to embrace a new approach to marketing, a concept that some of them used to hold in roughly the same esteem as phylloxera, the pest that ravaged French vineyards in the 19th century.

"Wine increasingly is becoming a consumer good, not a cultural exception," said Pierre Courbon, international marketing director at OVS, a French company that was created to sell a new wine brand, Chamarré, which aims to go head-to-head with consumer favorites from Australia, California, Chile and elsewhere. "Beer, spirits, vegetables, dairy products and even bread is branded. Why not wine?"

Until recently, such words might have been seen as heresy in France, where many winemakers have an almost religious attachment to the idea that wines must reflect the specific attributes of the land on which they are grown, not the global characteristics of a brand. French law requires quality wines to be labeled accordingly, listing details like the region, the vineyard and the producer.

But many consumers in major export markets like Britain and the United States now prefer to choose their wines according to the grape variety, like cabernet sauvignon or riesling, rather than the name of the region in which they were grown, like Bordeaux or Burgundy.

New World producers have obliged, providing ranges of varietal wines and lining them up on supermarket shelves under familiarly reassuring brand names like Jacob's Creek, Hardys or Gallo. Though France, a country synonymous with wine, was slow to follow suit, a few French brands are catching on with consumers. JP Chenet, a line of wines marketed by Les Grands Chais de France, a privately held company, is one of the fastest growing.

While the French provenance of JP Chenet is clear, Chamarré, which recently went on sale in Britain and the Nordic countries, is a further step down the road toward international-style branding. The labels, with the Chamarré name in large type, accompanied by the region or varietal blend, closely resemble those from some of the leading California brands, a clear indication of where OVS is setting its sights.

The company, owned by Pascal Renaudat, a French wine industry veteran, and several of the country's largest wine growers' cooperatives, recently set up an office in Miami and plans to enter the U.S. market this year. There, the wines will generally be priced at $7 to $12, said Hubert Surville, who heads the U.S. arm.

OVS has big plans, hoping to sell one million cases, or 12 million bottles, each year in the United States alone within five years, Surville said. The company, which has attracted financing from the French government and private banks, plans to support the introduction of Chamarré with a broad-based marketing campaign. In the United States, Surville said, OVS plans to spend $10 million on advertising and other promotions over the next three years, a sizable amount for a wine brand. In Britain, much of the marketing activity will be focused on the point of sale, as in-store promotions fuel up to 70 percent of wine sales in that country, Courbon said.

Though French wines once held a 10 percent market share in the United States, that has fallen to about 3 percent, analysts say, with Australia, Chile and other exporters taking up much of the slack. In Britain, French wines retain nearly one-fifth of sales, but their share has been sliding, and France has yielded market leadership to Australia.

Some of the other successes in branding French wine have come through outside involvement. Fat Bastard, an irreverent wine brand created about a decade ago by Guy Anderson, a British importer, and Thierry Boudinaud, a French producer, and featuring a cartoon hippopotamus on the label, sells 500,000 cases a year in the United States. Anderson and Boudinaud have sold the brand to its U.S. distributor and moved on to other quirky branding ventures involving French wine, including Le Freak.

E. & J. Gallo, meanwhile, is selling a French wine under the label Red Bicyclette, an attempt to build on nostalgic images of rural France. Southcorp, which owns the Lindemans, Penfolds and Rosemount brands of Australian wines, has also started a French brand, La Belle Terrasse. Analysts say it is probably only a matter of time before other big wine and spirits companies start their own French wine labels.

"You've got a supply crisis in France which is never going to be dealt with through the existing distribution and marketing infrastructure," said Richard Halstead, operations director at Wine Intelligence, a market research company in London whose clients include OVS. "As long as that exists, there's going to be a willingness to try new things."

Australians have shown a particular knack for branding, with a relatively recent entrant in the U.S. market, Yellow Tail, growing into something of a phenomenon, selling more than 7.5 million cases last year. Like many of the other new wine brands, Yellow Tail features an animal on the label, in this case a wallaby.

Chamarré is also taking the animal route, as the name, in southern French patois, refers to a kind of butterfly, the yellow- tailed skipper. OVS has yet to select an advertising agency to develop this image further, but Courbon said OVS had narrowed the list to three finalists, with a decision likely next month