Pete Randeria is the Director of Global Innovation at Treasury Wine Estates. With a long history in agencies and roles in TWE that have straddled advertising, marketing and product innovation, Pete had great observations and wisdom to share about the balance between product innovation, packaging, brand experience and communications that has to be upheld in this challenging and complex category, many of which are transferable to other industries.
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Brands in this world (wine) are built from the shelf out. No question.
You have to build the brand through the lens of the pack and the design.
Transcription:
David:
Welcome to Managing Marketing, a podcast where we discuss the issues and opportunities facing marketing, media, and advertising with industry thought leaders and practitioners. My name is David Angell, and today, I’m joined by Pete Randiera, Director of Global Innovation at Treasury Premium Brands.
Welcome Pete, and thanks very much for joining me.
Pete:
David, thank you for having me.
David:
You’re more than welcome. There’s lots I want to ask you about, Pete. I think you’ve had a really interesting career progression; ex-agency, long-in-time agencies and marketing. And I think (you tell me if I’m wrong) your new role has become sort of more product-focused.
And I’m interested in the wine category. It’s obviously, very storied. There are a lot of perceptions attached to it, both positive and challenging. And I’m interested to understand your view in this category.
What’s the balance between the true innovation of the product, the kind of innovation that really inspires people to try and buy, and the influence of marketing in shaping people’s perceptions of a brand. And is that particularly different from any other category?
Pete:
It’s a really great question, David. I think about this in the context of, there’s probably two ways to think about it. There’s, in some ways, the wine category is vastly different to many other categories. I think there’s this extraordinary fact that I once read that said that there was 20,000 brands in wine in the U.S. and Australia — 20,000 brands.
And we all sort of experienced the sort of bewilderment that we face when we get to the shelf, and there’s a myriad of kind of options and opportunities when you get to the shelf.
But that being said, I think one of the things that excites me about Treasury as an organization is that actually in that context, we are very good at building brands in wine. We know how to drive the kind of efficiency and impact that comes from actually building brands, not just having products at shelf.
And I think that is the difference. That is the advantage that we bring. As well as of course, we are a global winemaking, and wine-sourcing and wine-selling business. And we sell in 70 countries around the world. We sort of know a lot about how to sort of make the wine and get it out there.
But fundamentally, we bring a level of discipline and scale, the FMCG rigor that most wine businesses don’t. And that becomes very important when as a consumer, you are confronted with that wall of wine at shelf and the imperative to drive mental availability, to drive salience at the point of purchase so that your brand comes to mind.
You have some sense of association of what a brand means — that becomes incredibly important, almost more important in wine than in many other categories that are far less complex. Our imperative to drive impact is far greater. And therefore, the opportunity to attach associations to brands like Penfolds or 19 Crimes or Squealing Pig become incredibly valuable.
So that I feel something, I know something, it’s an intrinsic feeling that I have as to what the value exchange will be when I get to shelf or when I’m thinking about an occasion when it’s something special, I want to do something right, of course, I’m going to reach for Penfolds.
There are inherent associations that are very carefully built in doing so. So, I think we are in some ways vastly different from many categories because of the complexity and in some ways, almost the apotheosis of simplicity and discipline that we had to bring.
David:
Yeah, I think it’s interesting, the level of interest in wine purchase. If I think about the purchasing experience in the average off license or bottle shop in the country you come from, and you can liken it to sort of grocery, more traditional grocery, FMCG, where there’s almost a choice fatigue. There are so many bottles on the shelf.
But the huge difference is that wine-buying has a hugely higher level of interest for the consumer. The brand of wine, the wine you purchase is a much higher level of interest purchase than if you are buying butter or chocolate or whatever it might be in the supermarket aisle. So, I think the importance of brands in that is … I mean, based on what you’re saying does make a huge difference.
Pete:
I think there’s an inherent assumption there, David, that perhaps I’ll pick you up on. You and I were talking before we started, we’ve recently conducted a major usage and attitude study around the world, understanding the behavior of consumers inside the category of wine and outside of the category of wine, but who are operating within what we call alcohol appropriate occasions.
And what’s interesting is that there is a very significant cohort of consumers that we call low-involved, who really aren’t that interested in wine. They sort of perhaps like it, but they aren’t paying that much attention to the category.
And it’s not that they’re buying cheap all the time. In fact, oftentimes, low-involved consumers or shoppers will be buying sort of often … shelling out a lot of money for wine because it says that there is some association, or they believe that at least the money they’re paying for is going to kind of represent them well.
But the truth of it is there’s probably an even split between low, medium, and high-involved consumers. And then there’s a significant cohort of consumers who buy alcohol but don’t buy wine. And so, our task really is to sort of offer them things that match their level of interest.
I think a low-involved consumer is probably not going to want to hear about terroir and kind of varietal expressions and all of that kind of … it goes way over their heads and I’m not talking down about them. It’s about understanding kind of what you need to offer them to get them engaged.
We have a brand in our portfolio of 19 Crimes that has been a brilliant, brilliant on-ramp into the wine category for people who either haven’t drunk wine before or have been lightly involved in the category previously, and it’s been a sort of a story of innovation over many, many years.
About three years ago, we launched a partnership with Snoop Dogg on that brand.
David:
I saw it, it was brilliant.
Pete:
And because he’s a cultural icon, he has been a massive influence in helping us introduce wine to many people who wouldn’t be interested in wine previously. There was some extraordinary fact that something like 40% of the people who bought our Snoop Cali Red in year one in the U.S. had never bought 19 Crimes before. 20% had never bought wine before.
And so, that level of engagement and interest in the category didn’t exist until you gave them through marketing and through smart branding, and actually a very successful product that keeps them coming back. I think that’s the sort of sweet spot of how you don’t … that proposition is very different to our Penfolds brand, for example, and because they’re talking to quite different kind of cohorts and people.
David:
Well, you mentioned the U&A study, I wish you’d shared the results because then I could have seemed much clever in this conversation. You’re quite right to pick me up. You have the data but the low-involvement customers, I mean, that is interesting.
Their low involvement, what does that lead to? Does it lead to just habitual — in other words, I’ll just buy the same brand every time because they don’t really care, or does it lead to non-habitual and they’ll just pick up whatever they like the look of?
And once they’re at the shelf … take Snoop Dogg outta the equation for a sec, is it packaging design? Is it bottle and packaging design and labeling, that it’s what catches their eye?
Pete:
Unquestionably. I think one of my great learnings having come from the world of advertising into the world of wine, I think brands in this world are built from the shelf out. No question.
You have to build the brand through the lens of the pack and the design, and almost the brand world that then surrounds the pack needs to be reflected of that pack in order that it continues to reinforce the purchase decision that we’re sort of wanting to drive.
And it makes us very, very focused on identifying, reinforcing our distinctive brand assets. Because that becomes … again, because the complexity of the category is so great, you need to know that everything that you are doing will continue to sort of build the memory structures that we know are so important to drive impact.
I think in terms of your question, you’re absolutely right. A low-involved wine consumer probably does have a repertoire that’s relatively narrow. They like what they know and they know what they like.
But that doesn’t mean that in time, they don’t get a little bit more confident in the category and perhaps sort of step up the involvement scale. That’s a well-worn sort of path. You buy one thing, you sort of like the taste of it.
You’re out and you buy … you now know that you kind of quite like that sort of Shiraz that you had last week, so you might be interested in another Shiraz. I think as an industry, wine has made understanding wine quite complicated, varietals and place and all of that kind of stuff.
But I think once you are in, you can easily gain the on-ramp into learning and growth because there’s so many vast opportunities to unlock there.
David:
I mean, we’ll come and talk about opportunities a bit in a sec, but I think a lot of what we talked about there, certainly from a brand perspective, a choice, a complexity perspective, a consumer perspective and understanding perspective relates to challenges, certainly from a marketing perspective.
And again, you tell me where I’m going wrong here, it’s my interpretation. But I think it’s fair to say that the category and certainly parts of the premium wine category, there’s been a number of headwinds.
I mean, large sort of hangovers of the trading issues that Australia has had with China, and there’s inflationary pressure that affects everything in the world right now. But cost of production and margin must be challenging.
And then consumer-focused challenges, macroeconomic conditions. People are struggling, they’ve reduced their discretionary or luxury expenses. I mean, does any of that … how much does that figure? I mean, what keeps you up at night regarding those kind of challenges? Or are you really focused on the opportunities of the products and the brands?
Pete:
I mean, no doubt, those are challenges — and by the way, I sleep quite well.
I think that I’m an inherently optimistic person. I think those challenges that you identify are all very real, and we cannot kind of ignore them, and believe me, we’re confronting them day in, day out. And some things we can control. But Australia’s relationship with China, it’s probably not something that we have a big hand in influencing.
David:
It’s a challenge, right? But that makes it more of a challenge because you-
Pete:
It’s more of a challenge. But I think I’m optimistic because from 25 years of working in agencies, I know how powerful and important brands are, and I think we have an unparalleled set of brands that help set us up to sort of navigate these kind of challenges.
I think that’s where it becomes sort of massively helpful to have scale and clout and depth in a portfolio of some of the best brands and wine, I’d say. And certainly, amongst ours, are some of the best brands full stop.
And so, I just think that we can get very bogged down in those sort of challenges, but I think if you lift yourself above the parapet and look at what assets we have to play with; great brands, extraordinarily significant kind of wine-making capability and scale, we have unbeatable kind of resources at our fingertips to create success for ourselves.
And I think that for me, is what excites me and why I do sleep well and what gets me to sort of zipping out of bed in the morning.
David:
Well, I’m going to let you talk more about that in a sec, I really am. But you mentioned … before we do that, I mean, you are an optimistic, I have worked with you and I don’t disagree. You are an inherently, from what I’ve seen, optimistic person.
But you mentioned agencies there, and I’m interested, as a poacher term, gamekeeper — a lot of time spent in agencies yourself. And yeah, we talked about the challenges a bit, but of course, as part of the marketing mix, getting advertising right really is important. You’re investing in it.
I mean, Snoop Dogg, wow. I mean, that’s an amazing … just that example, it’s an amazing investment from you that translates to advertising.
When you’re choosing an agency to drive advertising with you … I mean, again, a very competitive category. You are working in a global perspective. It can be hard to see the wood from the trees a bit. What do you think differentiates a great agency from a good one at the moment?
Pete:
My view is that Treasury is a business that like none that I’ve ever kind of worked with or for, absolutely backs ideas, like 150% embraces big ideas. And so, I think what we look for from the kinds of agencies that we want to work with is the bigness of thinking to help us land those ideas.
So, we really celebrate and reward great strategy. We really demand strategic rigor. And we work well strategically with our agency partners, I think. But the strategy is for naught if it doesn’t lead to great big disruptive thinking.
And we are absolutely kind of focused on trying to disrupt the category. And we can talk about that now or we can talk about that later, but I think that therefore, the agencies that we work with need to help us kind of drive the kind of disruption that we’re after both in the strategy and the ideas that we kind of ultimately go after.
And I think that we talk a lot about as a global business, our imperative and the ideas that we sort of celebrate is about unlocking the universal human need, not a sort of culture-specific kind of consumer insight, but a universal human need.
We’ve just done a major restage of our 19 Crimes brand, built a new global brand platform, and the agency we partner with on that brand, Observatory in LA who are a brilliant partner of ours, had just helped us land to a really sort of simple nugget of a truth, which is that in a world of rules and restrictions that we all experience, sometimes it’s quite good to be bad.
And that’s true whether you are in China or in the U.S., or in France or anywhere. The level of badness, the level of how much you can talk about badness or rebellion differs, but the universality of the need that’s unlocked there becomes really interesting. And that’s the kind of big thinking that we really kind of want to … well, we need more of in our brands and that we embrace constantly.
David:
How big is your role in enabling that from the agency? It strikes me — we’ve both worked in agencies a long time, and I think with all due respect to every client I’ve ever worked with, sometimes that sort of creative bravery really that you’re talking about doesn’t always follow through, and agencies can be challenged by that.
And it’s difficult to know how much that has affected over time or eroded the quality of agencies thinking generally and how much brave organizations have had to step in. You’ve obviously found an agency in the Observatory with that brain power there. But how much of it was you … well, not you personally, but whatever team maybe including you, enabling them to think like you wanted them to think?
Pete:
No doubt. And it’s not just me, there’s a few people that the organization has … I think that I really admire an organization that recognizes its strength and its weaknesses. And of late, it’s brought in a few people with a more creative mindset to perhaps make up for the sort of analytical kind of order and structure that a big global wine business like ours needs.
Obviously, you can’t just sort of work your way through that. You need to have discipline and order and structure to get things done, but beyond the science, you need a bit of the art.
And I think I see sort of my role as giving those inside the organization a bit of the confidence that the ideas that we’re backing are good. And so, I’m not deeply involved in every creative decision in this organization, nor should I be, but on significant projects.
We like to sort of surround the team with people who can spot an idea and can celebrate an idea and help the team to embrace that, and to help sort of advocate for that up the line. We don’t want to do things that are reckless, but we also want to push the envelope.
And I think our CEO, Tim Ford is very clear that our agenda is to be disruptive. And when you get that kind of permission from the top, I think it makes the task of people like me who can see opportunity much more … it’s much more enticing. There’s more impact that we can make because we can back ourselves and back the ideas that we’ve got.
David:
Go on. Sorry, you were going to say something else?
Pete:
No, no, no, I was just trying to remember your question and whether I quite answered it.
David:
I’ve got it written down. No, you have definitely answered it.
Role of agencies in advertising, yes, you did answer the question. And I asked you then another question about your role within that. And what you talk to, what I heard was that its sort of generated … it’s cultural things, a state of mind that you can put within your own team and with the agency that at the end of the day, creative human beings, they want to be motivated and that will produce the best thinking.
I think that that is lacking in our industry, in the advertising and marketing industry. So, it’s great to hear that you’re driving that because I think it does get the best out of agencies, and I think it’s self-perpetuating.
Pete:
I think I learned long ago that agencies are at their best when they’re solving problems. It’s not when they’re responding to tasks — that they’re actually getting to the number of the problem. And we can’t do that ourselves. We need the best kind of thinkers to help us kind of take the leaps that we can’t see ourselves.
And whilst we have a very now, significant in-house agency that we’ve built over the last year or two, 18 months called Splash, who are an amazing bunch of talented people. And we recognize that sometimes we need to take a leap outside and we need bigness of thinking that comes from the outside.
We continue to work with external agencies for strategy on an ongoing basis. And then on major projects, we’ll work with external partners to help us kind of make the leap.
David:
And you do that because there’s so much opportunity. Let’s get to the favorite bit of the conversation, the opportunities. I mean, you talk there, you’ve mentioned a couple of times category disruption and that’s really interesting.
We’ve talked also about the huge complexity of the category. But scale of 1 to 10, where are you on that journey? I mean, I think I know what you’re going to say, but how much opportunity is there to disrupt this category?
Pete:
Oh, massive. We’ve only scratched the surface. I think we’ve only scratched the surface. We’re probably at like a two so far. I think that if there was one thing that sort of kept me up at night, which if you flip into an op opportunity is I think interesting is, I talk about the fact that the wine category has a sort of existential challenge ahead of it.
Which is essentially that our buyer base, our consumer base is aging out of the category, is basically dying out. And that is when you look at the sort of the age profile, particularly in our advanced markets, it’s no surprise a significant chunk of the consumption of wine happens by people over 50, and it goes up from there.
And so, our task on behalf of both our business and our brands, but also the entire industry, and in the case of Treasury Premium Brands, on behalf of the Australian wine industry, we need to be bringing new people into the category at a rate of knots to stem that sort of aging that I talked about.
And we have to do that in multiple ways. And it’s not just about recruiting legal drinking age and above consumers. It’s also about getting people who have been in the category, but may have dropped out of the category for very good reasons that wine makes them feel unpleasant or it’s too strong for them, or the chemicals set them off or whatever.
So, we are investing heavily in thinking about how to bring consumers back into the category with propositions that are more inventive and interesting, that perhaps those people, deliver against all of their core needs of the category, but then also remove some of the barriers.
We’ve, just, in Australia, launched our first sort of significant play into mid-strength wine. We’re partnering with Endeavour Drinks to essentially create a category in store and through the lens of our brands for mid-strength wine, between 7 and 8%, something like that.
And we’ve helped to name it, we’ve given the category a colorway that now helps to identify it not just on our brands, but Endeavour is taking that to other suppliers that they work with to help them develop their propositions.
But I think it’s really an interesting opportunity of where we are kind of working with a close retail partner of ours to essentially, address some of the challenges, those existential challenges in the category. And early indications are that we can’t keep up with demand at the moment.
David:
You’re illustrating the huge white space that you’ve got in terms of opportunity both in bringing consumers in, but also in product innovation, those two things together, alongside the marketing and the branding.
Yeah, 2 out of 10 as an optimist, that’s exciting.
Pete:
Yeah, it’s all upside.
David:
How far can you move the … I mean, if I think about the future, typical sort of what does success look like — three years down the track, where do you want to have moved that two to? What do you think you can have achieved in the next two to three years? What would success look like for you?
Pete:
We’re a premium wine business, but I think what our task is fundamentally is to bring the pleasure of what premium wine is to more people on more occasions. We need to get more people enjoying wine or wine-like products. And we’re not confined to the 750-mil bottle, and it’s not confined to full strength Shiraz.
So, we are flexible on our beverage options. We’re flexible on the brands, we’re flexible on the format. But our task is to essentially drive penetration. More people enjoying our products on more occasions.
There are categories around the world that are flying right now; spirits and RTDs particularly are just going off the charts. And so there is a real appetite to, I think, look at ways that we can innovate to capitalize on that. Think about what’s driving those categories for growth; refreshment, conviviality, whatever.
And if we can address the sort of core needs that those consumers have, but bring what makes wine special; wine’s more elevated, wine’s more sophisticated, wine’s more sort of premium — if we can bring sort of work to the strengths of what we do as a business, but open up the category to more people who may find it intimidating or may feel like at a product level, it just doesn’t fulfill their needs, that becomes a really interesting opportunity space. So, I’d say in three years’ time, we’d want to have driven sort of our penetration gains significantly.
David:
Well, I love the positivity, I love the optimism. I think you’ve got it all to play for, which is a fascinating thing. It might be an existential sort of challenge, but what an opportunity. I mean, like with working with the brands you’ve got already, it’s all upside as you say.
And I wish you all the best with it. It’s been a fascinating conversation and we’ve touched quite a few different areas within that. Not just marketing, but no less fascinating for it. Thanks again for joining me and we’ll talk in three years, and you’ll be up to a seven by then, I’m sure.
Pete:
You can review my scorecard in three years’ time.
David:
Okay, thanks again, Pete.
Pete:
Cool, Dave, thanks very much for having me.