Meet Cellr’s Weekly Crush: Tony Battaglene, the Chief Executive at Australian Grape & Wine (AGW). Australian Grape & Wine is the peak national body for the Australian wine industry. Their aim is to lead and represent a united, sustainable, dynamic and internationally renowned Australian wine sector.
With the Cellr mission being to combat counterfeit wine,provide transparency over supply chains and direct to consumer engagement for wineries we dove head first into topics surrounding both export and domestic markets with Tony.
To find out more about what Cellr can do for your wine in the domestic and export market for brand protection, product tracking and direct to consumer marketing click here. Also, check out our First Press Project pilot campaigns we are running with Hydra here.
Let’s dive right in, why is supply chain transparency important for wineries in any market, from a producer and consumer perspective?
Consumers are demanding that their products can demonstrate authenticity and are safe. A transparent food chain ensures this. Producers are also under continuing threat from copycat and counterfeit or adulterated products and need to protect their brands and reputations through supply chain management.
What are the challenges wineries face in managing their supply chains in the domestic and export market?
Copycat brands have recently increased substantially as the Chinese government attempts to curb sale of fraudulent goods. Copycat brands imitate the trade-dress of a leading brand, such as its brand name or its package design, to take advantage of the latter’s reputation and marketing efforts. Copycatting is pervasive and, in many cases, not technically illegal making it a prime avenue. While penalties for counterfeit are much higher and easier to prosecute, copycat products require greater effort to prosecute and have hence grown in prevalence. When a copycat brand is so similar as to deceive the consumer, it becomes a serious problem for brand-owners and the sector’s reputation as a whole.
Recent highly publicised cases concerning Penfolds demonstrate the scope of the issue around copycat brands. However, it appears that in China many small brand owners are also falling victim and many are not even aware that their brand is being imitated or even blatantly copied. Some are falling victim to fraud and don’t even sell their wine in China. It is also much more difficult for small businesses to get the information and have the available resources to address the issue of copycat brands. For this reason implementing processes and systems for resource and information sharing becomes a key factor in improving protection.
It is important to note that copycat wine brands do not just start at the Chinese border. There are multiple points across the whole supply chain where wine can be diverted for copycat or counterfeit products. The wine in these products (if indeed it is even wine) can originate from within China or from other countries, including our own. It is a serious problem and one which we can have the most impact on through the avenue which we control – the Australian domestic market. While there are aspects which we can address in market with Chinese authorities, Australia also needs to ensure we are doing all we can to act domestically to reduce the risk.
What impact would having detailed data that allowed wineries to track and trace where (in the world) their wine is and when their wine is being opened by the consumer?
Current detailed data is useful and indicative. However, for counterfeit or copy-cat products, this may not appear on normal data collection points. Data that is obtained from the bottle when the consumer opens it would be extremely valuable as the producer/exporter would know if it has gone through the normal channels, or been potentially adulterated.
With the global explosion of wine fraud pushing into the mid/premium brackets due to sheer volume, how important is it for wine consumers to be able to identify your (legitimate) products via anti-counterfeit measures?
Copycat and counterfeit behaviour is not limited to the “big” brands – Brands of all sizes, including those of small volume boutique producers, can be the victims of brand (and brand story) theft and copying. Counterfeit is less of a problem in major export markets such as China due to increasingly heavy penalties. However, copycat is on the rise.
How many of our Australian wineries have been affected by wine fraud (rough percentage), and what issues does this cause for them from both a financial and branding point of view? Are Australian producers well prepared for this?
It is very difficult to assess how many wineries have been affected by fraud, but the number is much larger than brand owners realise. One major retailer estimated up to 30 percent of major branded wine on a particular internet site in a major market was fake. Producers are not well prepared.
What are the current solutions to wine fraud in the global wine export market and why is it still such a prevalent issue that eats away at around 20% of the global wine market (and growing at ~7% per annum)?
There are numerous technical solutions available. To successfully protect your brand requires several solutions as counterfeiters are very nimble. I believe that having a strong regulatory system with built in traceability will give a substantial market advantage to any country that can implement it with its major markets.
Giving customers the ability to authenticate Australian wines anywhere in the world using tamper-proof closures and immutable digital records from production changes everything. What would this mean for the export industry as a whole?
See the previous answer. Consumers all around the world are demanding authenticity and integrity in the product.
In the context of domestic direct to consumer marketing, how has COVID19 changed the way wineries interact with consumers and position themselves in the market? What do you think this will look like as Cellar Doors reopen?
Digital marketing and selling has dominated through COVID-19. It appears that the growth in this sector will maintain its position as a market leader and I believe will become the key route to market for small producers. The market niche that will be filled will be in terms of B-B distribution which will take the place of current distribution networks unless they move rapidly to respond.
How do Australian wineries currently engage consumers in the export market, what is working and what challenges do they face?
Currently, wineries are still concentrating through trade shows or by face-to-face direct selling. This does work, but in China it is clear that the role of influencer is now dominant and this is becoming an increasingly important part of the marketing mix in all markets.
How important is the wine bottle alone in engaging consumers domestically and internationally? What would the effect of being able to target the same bottle of wine with a unique message for different geographical locations be?
Difficult question. The wine bottle is not enough and requires an engaging story. This is not necessarily a geographic location, but a sense of place, experience and connection is what is required.
What sort of data are wineries currently able to collect about consumers once their wine is sent abroad? How important is this data for winemakers?
I believe that this is a neglected area and very few companies know anything about their customer internationally or indeed where the wine ends up. This is vital to assess trends and tastes.