Selling luxury goods: 'Be fearful when others are greedy, and greedy when others are
fearful'
by PHILIP WHITE
"Ideology: the
mistaken belief that your beliefs are neither beliefs nor mistaken." So
says Eric Jarosinsky, the New York-based editor of the 'the internet's
Compendium of Utopian Negation, the Nein.
Quarterly,' which seems mainly composed of brilliantly witty tweets.
And Jarosinsky's lecture
tours.
Australia borrows a lot of
its English from the United States, which borrowed it from Britain, Africa and
Europe. Even Germany. Grovelling to American wine buyers like the sly Dan
Philips in the mid-nineties led some of us to adopt a word he thought was
kinda cute: artisanal. Suddenly we had artisanal winemakers. And then we had
the Young Artisans. And then Philips and his Grateful Palate exercise vanished
back into the US, leaving millions of dollars of dept and a herd of terrified artisanal
winemakers who suddenly faced life without the support of the US critic Robert
Parker Jr., to whom Philips had been the conduit.
The adherents to this
tetchy artisanal uprising really did seem mistakenly to believe that their
beliefs were neither beliefs nor mistaken.
Being philosophically more
of the Nein than artisanal school, it
was with a certain glee, about a decade back, that I greeted the news from
Barossa winemakers Charlie Melton, Big Bob McLean and Peter Scholz, that they
would henceforth be called The Old Fartisans as they drove around together drinking
beer and delivering wine from the back of a huge Nissan four-wheeler. More than
anywhere else, I seemed to find them in the Mallalla pub, which was about as
far from the Barossa as that particular export drive extended.
I write so loudly on this as
I was always of the perhaps mistaken belief that an artisan was an artificer,
someone who spent their lives mass-producing copies of great artworks and
fitments that their customers could never afford in the orginal version. Like,
for example, the dude with the plaster works, turning out thousands of
metre-high copies of Michaelangelo's David, all sharing the deformities
inherent in the crafter's imperfect mould.
The artisanal appellation
seems to have mercifully waned with the memory of Philips. It was first replaced
by the light-hearted ridicule of the Old Fartisans, for which there's no longer
much call since the death of Big Bob (below, by Milton Wordley) and the consequent return of Sholz and
Melton to their vineyards and vintage sheds.
But all this left me with
an abiding suspicion that most artisans were indeed true to their banner. As a
mob, they seemed intent on reproducing endless imperfect copies of much more
famous wines that they couldn't afford to drink, and their customers could
never afford to buy. If, just for example, you were engaged, however
deliberately, in copying the style of Penfolds Grange, there was always the
nice little incentive there called potential margin.
Even Treasury Wine Estates
fully understands this. Bin 389 is 'the baby Grange.'
Like, if one couldn't
stretch one's skill set to the extent of, say, coming up with a new style or
idea, and instead just stuck to emulating a Grange one once tasted, one could
jack one's price up quite a distance past the $20-$25 bracket, especially if
Dan Philips rang to say Parker had just awarded one the perfect 100-point
score.
Herein lies the difference
between what I consider to be 'premium' wines - not my term - and 'luxury'
ones.
Like with its pricing,
unique provenance, incredible mystery and what the Amurkhans who've forgotten the
meaning of 'history' call 'back story,' Grange is luxury. Pure and simple. It's
an original. It's unique.
While his sales figures still
soar, my friend Peter Gago, chief winemaker at Penfolds, easily Treasury Wine
Estates' biggest buck bang per bottle, is a tad more coy about the
international luxury goods market.
Peter knows. He fills passports faster than anybody I know in the wine business, travelling the world nine months of the year, answering questions, filling glasses, visiting Grange buyers and collectors.
Things out there ain't
quite such the easy breeze they have been in recent years, especially in
luxuries other than very fine wine.
Not only is social media democratising
the luxury goods landscape, spoiling its exclusivity for the truly loaded
elites, but the terrorism business has put an end to a lot of impulsive
first-class travel, the sales of really posh extravagances has dwindled, and
China's top-end spend has tumbled all the way across handbags, shoes and premium malt
whisky (down 40%) to Bordeaux and Burgundy. Et cetera.
As if to convince the
freshly parsimonious mega-rich that everything's tickety-boo, many of the
manufacturers of top-end caucasian artefacts have increased the dividends they
pay their shareholders, a move which is raising increasing derision in the markets: the pundits are
saying this can't possibly go on.
Which brings me to another
New York-based outfit, Milton Pedraza's Luxury Institute, and its recent white
paper, 7 Rule-Breaking Moves Needed Now
to Flourish in the Most Perplexing Luxury and Retail Market Ever.
Pedraza quotes Warren
Buffet: "Be fearful when others are greedy, and greedy when others are
fearful."
He suggests that while
further automation, more robots and digitisation is inevitable and partly
necessary at the production end, these mechanisms "are all commodities
that create zero competitive advantage ...
"Playing defense in
this highly complex downturn, where store traffic and sales can be down as much
as 20%, will further weaken brands."
The Luxury Institute
doesn't report much on the top end of the wine market, but I have always found
it a handy measure of the shorter-term future of expensive wine
internationally.
Like at Louis Vuitton Moet
Hennessey, Dom sales follow handbags.
In the face of today's
downturn, Pedraza says "the reaction from most luxury and retail brands
has been to shut stores, cut people, cut costs and dive deep into the trenches
until the crisis passes."
This he says, is wrong.
Tellingly, he urges a major rethink across the sector, and his advice is just
as good for artisans as it is for the luxury brands they artifice.
While he never dares
suggest tootling about drinking beer in a big 4WD to make personal deliveries,
that's pretty much along the lines of his solution. It's all about people, and
better, more polished and reliable personal service. Don't simply close stores,
he suggests, but train your sales folks better. Retain them; slow your staff
turnover. Make them happier to stay. Encourage the best of them. Reward those
who offer constant, truthful, reliable attention to long-term customers:
believers in the brand. Slash your numbers in head office, not the troops out on
the front.
In previous reports, the
Luxury Institute has repeatedly warned that there's no point in having websites
and digital mailouts unless they're kept up-to-date and the prospective client
can phone a real human with a real name on a real phone number listed right
there.
Repeatedly. Reliably.
Intimately.
All this conveniently
applies as much to the artificers as the very big companies with luxury goods.
In fact, it would be wise for more of the aspirant little guys to learn conversely
from the leviathans: grow and reward your front line troops rather than stacking
head office with psychopaths in suits.
And never decry Peter
Gago's tireless regime of travelling the world every minute of every day that you're
not at home touring vineyards, making new wine or blending maturing batches. Be
personal and absolutely reliable; tell the truth.
This may all seem pretty
obvious, but there's little point in being fearful when others are greedy, and
greedy when others are fearful if your ideology involves the mistaken belief
that your beliefs are neither beliefs nor mistaken.
Penfolds photos (top and bottom) both by Philip White
1 comment:
Hi Philip,
on 26th Oct we are tasting wines from Alsace and Rueda. Winestate is conducting its inaugural judging of these wines and after the judging you will have the opportunity to try them if you wish.Date: WEDNESDAY 26 October 2016 Time: 3.30pm – 6.30pm
Location: Upstairs Function Room at Cos, 18 Leigh Street, Adelaide.
No cost but RSVP required - sales@winestate.com.au if you are coming please.
**If you wish to stay on for a meal (after the tasting) at Cos please book at http://18leigh.com.au
Hope to See you there!
Peter Jackson
Winestate magazine
08 8357 9277
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