BSc Business Studies (2005–2008)

Cass Business School

Marketing

strategies

for

Champagne

Author: William Tarvainen

Supervisor: Prof. George Balabanis

Submission: 27 March 2008

Grade: Distinction

I certify that I have complied with the guidelines on plagiarism outlined in the Course

Handbook in the production of this dissertation and that it is my own, unaided work.

! william.tarvainen@gmail.com | " +358 (0)40 721 1276, +44 (0)79 1497 0781

Tarvainen (2008)

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ACKNOWLEDGEMENTS

I would like to dedicate this dissertation to my beloved father, who has not only made it

financially possible for me to study several degrees, but also contributed at a deeper level –

constantly encouraging, never doubting, always inspiring.

My sincere thanks to Professor George Balabanis, who has supervised this

dissertation and been a truly stimulating guide to marketing. I would also like to thank the

academia at Cass Business School for creating an academic environment in which intellectual

discussion challenges students to find their full potential. From the academia, I would

especially like to thank Doctors David Edelshain and Ajay Bhalla for offering not only

outstanding academic support but also for encouraging and building me as an individual.

I am grateful to all the 13 interviewees for taking the time to meet me personally – I

sincerely hope you will find this research useful. I am especially honoured to have worked

with what I consider to be among the very greatest Champagne houses – and some of my

personal favourites.

Lastly, I would like to thank my family and friends. My sister has been an academic

inspiration and also a comfort in my dissertation preparation; and without the inspired late-

night tastings with my Champagne-drinking friends, I would have had a much harder time in

deciding on the dissertation topic.

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ABSTRACT

This dissertation looks at what makes for a good marketing strategy in the Champagne sector.

With global demand outstripping the supply of Champagne, there has been pressure to

manage this demand by getting consumers to trade up to more specialist value-added styles

from the lower-value non-vintage style of Champagne. This changing nature of the

Champagne market generates new opportunities and challenges, and the prominent role of

brands in this market creates unique opportunities for marketing strategies.

To gain a better understanding of marketing strategies and brands in this market, 13

people were interviewed from different parts of the trade, and the findings were analysed in

the light of modern academic thinking in luxuries, brands, and wine. The interviews showed

that among the most crucial aspects for marketing Champagne are visual branding and

distribution channel management, with consistency and quality becoming more vital in the

long term. Shifting the marketing focus onto more value-added styles has clear benefits, but

this has to be carefully managed to avoid confusing the consumer or diluting the brand

identity. The findings resulted in four recommendations for current areas of improvement:

brand the mid-sector; tailor your offering to your customer’s values; communicate your

speciality; and send a consistent message.

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TABLE OF CONTENTS

INTRODUCTION ______________________________________________6 Dissertation structure _________________________________________________________________ 7

PART I: LITERATURE REVIEW __________________________________8

1. Luxury _______________________________________________________________8 Luxury consumers___________________________________________________________________ 10 Veblenian consumers ________________________________________________________________ 11 Snob consumers ____________________________________________________________________ 12 Bandwagon consumers _______________________________________________________________ 13 Hedonist consumers _________________________________________________________________ 13 Perfectionist consumers ______________________________________________________________ 14 The role of culture___________________________________________________________________ 15 New luxury markets _________________________________________________________________ 15

2. Brands ______________________________________________________________16 Brand extensions ____________________________________________________________________ 16 Brand portfolios ____________________________________________________________________ 17 Brand knowledge and linking brands to other entities _______________________________________ 17

3. Wine ________________________________________________________________19 Wine as a hedonic product ____________________________________________________________ 19 Wine consumption and purchasing ______________________________________________________ 19 Wine marketing_____________________________________________________________________ 20

PART II: INDUSTRY OVERVIEW ________________________________22 Definition of Champagne _____________________________________________________________ 23 The history of Champagne (Appendix 1) _________________________________________________ 23 Champagne sales____________________________________________________________________ 24 Champagne markets _________________________________________________________________ 25 Environmental analysis (Appendix 2)____________________________________________________ 27 Industry analysis (Appendix 3) _________________________________________________________ 28 Brands in Champagne ________________________________________________________________ 29 Champagne styles (Appendix 4) ________________________________________________________ 30

PART III: RESEARCH PROCESS ________________________________31 Before the interview _________________________________________________________________ 31 The interview process (Appendix 5) _____________________________________________________ 31 The discussion guide (Appendix 6)______________________________________________________ 32 The interviewees ____________________________________________________________________ 34 Analysing the interviews______________________________________________________________ 35 Interpreting the interviews ____________________________________________________________ 36

PART IV: FINDINGS AND ANALYSIS _____________________________38 Marketing Champagne _______________________________________________________________ 38 Marketing mistakes __________________________________________________________________ 39 The Champagne market ______________________________________________________________ 39 The Champagne consumer ____________________________________________________________ 40 Purchasing Champagne_______________________________________________________________ 41 Indicators of quality and prestige _______________________________________________________ 42 Linking brands to other entities_________________________________________________________ 42 Product lines _______________________________________________________________________ 43 Perception differences________________________________________________________________ 45 Validity and reliability _______________________________________________________________ 46

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PART V: RECOMMENDATIONS_________________________________49 Brand the mid-sector _________________________________________________________________ 49 Tailor your offering to your customer’s values_____________________________________________ 50 Communicate your speciality __________________________________________________________ 51 Send a consistent message ____________________________________________________________ 52

CONCLUSION_______________________________________________53 Further research_____________________________________________________________________ 54

REFERENCES_______________________________________________55

APPENDICES _______________________________________________70

Appendix 1: History of Champagne ________________________________________70 History of Champagne _______________________________________________________________ 70 The process ________________________________________________________________________ 70 The trade __________________________________________________________________________ 70 History of Champagne brands__________________________________________________________ 71

Appendix 2: Environmental analysis _______________________________________72 Political ___________________________________________________________________________ 72 Economic _________________________________________________________________________ 72 Social_____________________________________________________________________________ 73 Technological ______________________________________________________________________ 73 Environmental______________________________________________________________________ 74 Legal _____________________________________________________________________________ 74 Demographic_______________________________________________________________________ 75

Appendix 3: Industry analysis_____________________________________________76 Suppliers __________________________________________________________________________ 76 Buyers ____________________________________________________________________________ 76 New entrants _______________________________________________________________________ 76 Substitutes _________________________________________________________________________ 77 Industry rivalry _____________________________________________________________________ 77

Appendix 4: Champagne styles ____________________________________________78 Non-vintage________________________________________________________________________ 78 Prestige cuvée ______________________________________________________________________ 78 Vintage ___________________________________________________________________________ 78 Rosé______________________________________________________________________________ 79 Blanc de blancs, blanc de noirs _________________________________________________________ 79 Ultra brut__________________________________________________________________________ 79 Sec and demi-sec____________________________________________________________________ 79 Mono-crus _________________________________________________________________________ 80 New combinations___________________________________________________________________ 80

Appendix 5: Discussion guide _____________________________________________81

Appendix 6: Approach letter ______________________________________________83

Appendix 7: Interview codebook___________________________________________84

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LIST OF TABLES

Table 1: Values of luxury...................................................................................................... 9 Table 2: Champagne brand collaborations........................................................................... 30 Table 3: Interviewee perception differences by role in the industry ..................................... 45 Table 4: Interviewee perception differences by experience .................................................. 47 Table 5: Consumer types and Champagne ........................................................................... 51

LIST OF FIGURES

Figure 1: Luxury consumer grid .......................................................................................... 10 Figure 2: Luxury consumer motivations .............................................................................. 11 Figure 3: Global Champagne sales 1997–2007 .................................................................... 24 Figure 4: The proportion of Champagne sales in the top 6 markets...................................... 25 Figure 5: Top 10 Champagne export markets ...................................................................... 26 Figure 6: Environmental factors for Champagne ................................................................. 27 Figure 7: Champagne industry factors ................................................................................. 28

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INTRODUCTION

Champagne is the great success story of wine. Its status as the celebratory sparkling wine is

undisputed – even other wine-producing countries serve Champagne at their embassies

(Lowe 2006). It is often seen as being closer to a luxury commodity than a wine (Stevenson

2005 b), and has arguably one of the strongest-ever unique selling points (Boothman 2005).

Champagne is currently enjoying a boom in global sales, and supply is struggling to keep up

with demand (Beckett 2005 a & 2006; Straker 2007 b).

The great majority of Champagne is a blend of several vintages, and as the entry-level

product to any producer’s product line, non-vintage Champagne also sells at the lowest price

(Juhlin 2004). With limited supply and booming demand, many producers are now

attempting to shift the emphasis from lower-value non-vintage Champagne toward higher-

priced value-added styles; these are more specialist cuvées (blends) such as vintage

Champagne (Evans 2007; Fallowfield 2006 a). However, the value of new Champagne styles

might be more difficult to communicate to the consumer who is more driven by lifestyle than

wine quality. With these emerging opportunities in mind, this dissertation answers to the

research question, “What makes for a good marketing strategy for Champagne?”

To answer the research question, 12 trade interviews are conducted and the findings

examined in the light of past academic research and current industry trends.

This dissertation is targeted toward brand managers and other Champagne sector

decision-makers. Most of the interviewed people work in the United Kingdom (UK), the

largest export market for Champagne (Hey 2008), and thus the findings of this research are

best suited for UK brand managers.

An interesting aspect for research in Champagne marketing is that much cutting-edge

research on marketing is done in countries outside the European Union (EU) that do not

recognise the Madrid Agreement Concerning the International Registration of Marks

(Madrid Treaty) (WIPO 1891), which protects the intellectual property rights (IPRs) of the

word “Champagne”. Thus, there is very limited research on applying concepts of luxury

consumer behaviour (e.g., Liebenstein 1950; Vigneron and Johnson 1999) or brand

management (e.g., Aaker and Joachimsthaler 2000; Keller 2005) to Champagne. This is not

to suggest a total lack of research in Champagne marketing – merely that considerable scope

for further research exists in this area. This dissertation explores this gap in research, adding

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value by combining modern academic thinking on luxuries, brands, and wine with the insight

from the 12 trade interviews.

Dissertation structure

To provide a balanced picture of marketing Champagne, this dissertation combines past

research and current industry analysis to the new information gathered from trade interviews.

The structure of this report is divided into five distinct parts.

To provide an understanding of what is already known of Champagne marketing, Part

I: Literature Review examines past research. Since research into Champagne marketing in

itself is in woefully scant supply, research into three different aspects of Champagne is

reviewed; luxury, brands, and wine – these aspects help to understand the consumption and

marketing of Champagne as a luxurious branded wine.

However, Champagne is more than just a luxurious branded wine, and the

Champagne market has unique characteristics. To understand the speciality of Champagne,

Part II: Industry overview provides a look at the current markets, analysing Champagne from

the perspectives of history, the macro-environment, the industry environment, brands, and

different Champagne styles.

Part III: Research process explains how this particular research was conducted,

helping to understand where the findings might be most applicable.

In Part IV: Findings and analysis, the findings from the 12 interviews are presented

and analysed in the light of theoretical and market knowledge.

Finally, Part V: Recommendations arrives to four recommendations for the modern

Champagne marketer, and the Conclusion sums up what has been researched and where

further research might be directed.

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PART I: LITERATURE REVIEW

An important first step in research into a new area is recognising past research, and how the

aspects of past research can contribute to the new research. Although Champagne is a very

prominent brand in itself, academic research into Champagne marketing is miniscule. Thus,

to get an understanding of what research might be valuable for Champagne marketing,

research into three different aspects of Champagne are reviewed separately. The first part of

the literature review examines past luxury research, and especially the theories of luxury

consumer behaviour. The second part looks at past research in brands, looking at areas such

as brand portfolios and linking brands to other entities. Finally, the third part examines the

specific attributes of marketing wine, also explaining the differences between hedonic and

utilitarian products.

1. Luxury

The word luxury derives from the Latin word for excess, luxus, and it has been researched for

over a century (Soanes and Stevenson 2005). Veblen’s The Theory of the Leisure Class

(1899) was the breakthrough work on luxury consumer behaviour; so influential in the field

that latter research often talks of the conspicuous consumer as the Veblenian consumer. Rae’s

(1834) earlier work examined conspicuous consumption along similar lines. With the

introduction of the concept of “prestige value” (Keasbey 1903), it became easier to examine

and understand luxury products and luxury consumer behaviour.

Research into luxury products has suffered from differing definitions of key terms.

Vigneron and Johnson (1999) define prestige brands as the umbrella category for upmarket,

premium, and luxury brands. This dissertation, however, uses the terminology of the

Champagne industry, where prestige cuvées are at the very highest end of luxury brand

portfolio.

Luxury products can be defined as those “whose ratio of functional utility to price is

low while the ratio of intangible and situational utility is high” (Nueno and Quelch 1998 p.

62). Luxury products present the very extreme in high-involvement decision-making

(Vigneron and Johnson 1999), and people may buy luxury products for what they symbolise

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(Dubois and Duquesne 1993). Luxury also makes people dream, and these attached

emotional and aspirational values justify some of the price premiums of luxury (Dubois and

Paternault 1995). As research has progressed, several aspects of luxury value have been

identified. Table 1 segments and aggregates some research examples of perceived luxury

values into five main categories (the dark areas have not been researched by the given

authors).

Table 1: Values of luxury

The different values of luxury (Table 1) imply that people perceive luxury in different

ways. It is thus important to understand how luxury is perceived – understanding the luxury

consumer is the key to understanding luxury marketing. The following looks at these

different consumer types in more depth.

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Luxury consumers

In early research to different luxury consumer types, Leibenstein (1950) differentiates

between the Veblenian, snob, and bandwagon consumer. The bandwagon effect makes the

luxury consumer more price-sensitive, and the snob effect makes the consumer less price-

sensitive than otherwise. The Veblen effect makes the luxury consumer so price-insensitive

that a higher price can actually increase demand.

Vigneron and Johnson’s (1999) model divides luxury consumers into four different

categories, as indicated in Figure 1. Self-consciousness is defined as the consistent tendency

to direct attention inward or outward: publicly self-conscious consumers are more concerned

on how they appear to others, while privately self-conscious consumers reflect more on their

personal thoughts and feelings. The private or public value of luxury goods is built on the

strong communicative status of these items (Dawson and Cavell 1987). Building on

Leibenstein’s (1950) three consumer types, Vigneron and Johnson (1999) add two further

consumer types: the hedonist and the perfectionist consumer (Figure 2).

Figure 1: Luxury consumer grid

Understanding the differences between luxury consumer types can contribute to

segmenting – value-based segmenting may be a more efficient way to target modern

consumers than traditional demographic segmenting (Forsyth et al. 1999). Understanding

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these consumers also allows researchers to adjust their advertising message to underline the

values perceived as most important in determining the level of luxury (Vigneron and Johnson

1999). Further research on this framework presents tools to measure perceptions of luxury

along the dimensions of Figure 2 in order to manage marketing activities more efficiently

(Vigneron and Johnson 2004). As the primary values of these consumers are very different, it

is important to understand these five consumer types in more depth – the following examines

the specific traits of the Veblenian, snob, bandwagon, hedonist, and perfectionist consumers.

Figure 2: Luxury consumer motivations

Veblenian consumers

Veblenian consumers are motivated by ostentation – conspicuous consumption can be used to

signal wealth, and by inference, status (Veblen 1899; Leibenstein 1950). Conspicuous

products are typically consumed publicly, and thus have primarily interpersonal motivations

(Bearden and Etzel 1982). Highly visible brands are thus best positioned for this consumer

segment.

In addition to high visibility, conspicuous consumers place high importance on price.

Not only is price a perceived as an indicator of quality (Erickson and Johansson 1995), it is

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also a signal of luxury (Lichtenstein et al. 1993). The price of conspicuous products can be

divided into two categories; the real price refers to the actual price the consumer paid for the

product, whereas the conspicuous price is the price other people think the consumer paid for

it (Leibenstein 1950). This has led to a conscious effort to add value to the product by

applying a prestige-pricing strategy in support of other marketing activities of luxury

products (Groth and McDaniel 1993). Conspicuous consumption can also be linked to

materialism through envy – as envy is usually directed at expensive products one cannot

obtain oneself, the envious person consequently places higher value on acquiring and

consuming these products (Wong and Ahuvia 1998).

Snob consumers

Whereas the Veblen effect is directed solely outward, snob consumers also considers

personal desires in luxury consumption (Leibenstein 1950). The snob effect may occur in two

directions; the snob can either take advantage of the limited nature of consumers at the launch

of a new luxury product, or reject a product when it is perceived to lose the rarity value and

becomes more widely available to the masses (Rogers 1995). The primary perceived value of

luxury thus lies in its uniqueness, and the snob consumer emphasises his non-conformity to

the mass by avoiding popular brands (Leibenstein 1950; Vigneron and Johnson 1999; Wong

and Ahuvia 1998).

Like the Veblenian consumer, the snob consumer is also highly aware of price.

Relative scarcity can increase the value the consumer attaches to a brand (Bearden and Etzel

1982; Verhallen 1982), and this limited supply has an even stronger effect on demand if the

product is also seen as expensive (Verhallen and Robben 1994). Prestige pricing can thus also

be used to communicate luxury to the snob consumers, as it can concurrently be an indirect

indication of exclusivity (Groth and McDaniel 1993; Vigneron and Johnson 1999).

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Bandwagon consumers

Whereas snob consumers seek non-conformity to the undesired social group, bandwagon

consumers seek conformity to the desired prestigious social group (Leibenstein 1950). Snob

and bandwagon consumers have the same basic motivation for buying luxury products:

enhancing their self-concept through luxury consumption (Dubois and Duquesne 1993).

Bandwagons can also be seen as the antecedent of the snob effect (Miller et al. 1993). The

bandwagon decision-making process can be seen through the materialistic model; measuring

success by the things one owns (Belk 1985; Richins 1994). The desire to possess and

consume prestige brands can also be seen as a symbolic marker of group membership (Belk

1988); this can mark between the consumption and non-consumption of a luxury brand

(Vigneron and Johnson 1999; Tian and Belk 2005).

Price is relatively weak indicator of luxury for bandwagons, who are the most price-

sensitive of the Leibenstein’s (1950) three luxury consumer types. Consumers may try to

imitate stereotypes of affluence by consuming similar luxury products, which act as devices

for locating other people in the social hierarchy (Dittmar 1994).

The three discussed consumer types reviewed – Veblenian, snob, and bandwagon –

consume luxury for primarily inter-personal motivations. However, many consumers also

consume luxury for primarily personal motivations, such as emotional (hedonist) or quality

(perfectionist) reasons.

Hedonist consumers

Hedonist consumers are more concerned about their own feelings when consuming luxury,

and thus place less emphasis on price as an indicator of luxury. They focus more on the

subjective, intangible benefits of the products, such as sensory pleasure, aesthetic beauty, or

excitement. Hirschman and Holbrook (1982 p.1) define hedonic consumption as the “multi-

sensory, fantasy, and emotive aspects of one’s experience with products”. Hedonist

consumers absorb experiences from luxury products, sometimes escaping from reality by

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engaging in fantasy (Hirschman 1982; Hirschman and Holbrook 1982). Research into

product-fantasy relationships shows that certain products have a “dream premium”; they

possess and communicate this hedonistic value more strongly than other products (Dubois

and Paternault 1995). (Vigneron and Johnson 1999.)

Although hedonist consumers place less importance in the social context of their

consumption (Vigneron and Johnson 1999), differences in consumers’ emotional responses to

products are closely tied to subcultures (Hirschman and Holbrook 1982). The value of

hedonistic goods thus exceeds their functional utility, feeding into consumers’ aspirations of

a better life (Silverstein and Fiske 2003). Those consumers who decide what to buy while

remaining “intentionally oblivious to social demands” are referred to as role-relaxed

consumers (Kahle 1995 p. 1) – this type of behaviour is at the extreme end of personal self-

consciousness (Figure 1).

Perfectionist consumers

In addition to social (Veblenian, snob, bandwagon) and emotional (hedonist) factors,

consumers may evaluate the level of luxury on the basis of perceived quality. Perfectionist

consumers seek reassurance of this superior quality through their own assessment of product

attributes, but also from price (Vigneron and Johnson 1999). Maintaining a quality leadership

and developing quality indicators are key elements in marketing premium products (Quelch

1987).

Price is perceived as an indicator of quality (Erickson and Johansson 1995), and for

some consumers, higher prices can make luxury products even more desirable (Leibenstein

1950; Groth and McDaniel 1993). Although perfectionist consumers rely on their own

perception of the product’s quality, the price cue may serve as further evidence to support the

quality offering (Vigneron and Johnson 1999).

Personal preferences shape the primary values of luxury, as discussed with the five

consumer types. In addition to these internal determinants, external factors also affect how

luxury is consumed; culture plays an important part in luxury consumption.

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The role of culture

Although income is the single most important determinant of luxury consumption, culture

influences luxury consumption across all income classes – the propensity to consume luxury

products may triple in moving from a luxury-to a more luxury-endorsing (Dubois and

Duquesne 1993). Culture also determines how consumers are allowed to respond to luxury,

shaping not only the amount but also the type of luxury products consumed (Hirschman and

Holbrook 1982).

The strongest recent growth in luxury consumption has been in the emerging markets,

and modern research has consequently compared attitudes toward luxury consumption across

different cultures (Dubois and Laurent 1996; Dubois and Paternault 1997; Wong and Ahuvia

1998). New luxury markets can emerge not only in new cultures, but also in unexpected

demographics, as discussed below.

New luxury markets

In addition to searching more and more exclusive markets, the luxury sector has also

extended downward. Whole new market segments have emerged between the old mass

market and the high-end luxury market; these mass affluent can be targeted by slightly

modifying the luxury consumption context (Nunes et al. 2004). Other ways to reach these

new markets are using unconventional price points and extending the distribution channels

downward (Johnson and Nunes 2002). So-called new-luxury products differ from old-luxury

products by being able to generate high volumes despite their premium prices (Silverstein

and Fiske 2003). To support the mass marketing of luxury, special strategies have been

identified (e.g., Nueno and Quelch 1998; Silverstein and Fiske 2003).

This section has identified key values for luxury, and explained how different consumers

value the aspects of luxury. In addition to these internal reasons, external reasons such as the

culture affect luxury consumption, and new markets are emerging at unconventional price

points. Luxury can be communicated through a prestigious brand (Liebenstein 1950; Wong

and Ahuvia 1998), and the next section reviews the aspects of brands in more depth.

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2. Brands

Kotler et al. (2005 p. 549) define a brand as a “name, term, sign, symbol or design, or a

combination of these, intended to identify the goods or services of one seller or group of

sellers and to differentiate it from those of competitors.” However, these external attributes

are only one dimension to brands – a brand can also be viewed more internally as a collection

of associations, consisting of benefits and attributes connected to the brand as a consequence

of marketing efforts and personal experiences (Keller 1993).

Brands that have favourable, strong, and unique associations are better differentiated

from competing brands, and can also be more easily extended into other product categories

(Keller 1993). Brands are the most important aspect for marketing when emotional and

experiential aspects of the purchase are strong, and when the experiences are passed from one

person to another (Lemon 2001).

Brand extensions

If a brand is strong, its value can be further utilised by brand extensions. Modern research has

assessed the attractiveness of brand extensions (Aaker and Keller 1990); conditions under

which brand extensions are likely to have favourable associations (Keller and Aaker 1992);

and how this can be done without damaging the core brand (John et al. 1998).

A balance needs to be struck – extensions outside the apparent category may dilute

the image of the parent brand, whereas a too narrowly defined brand makes any future

extensions difficult to justify (Meyvis and Janiszewski 2004). In general, consistent brand

associations are more easily and quickly recalled than diffuse associations, and brands with

narrow category associations thus seem to have a greater potential for extensions (Anderson

and Spellman 1995).

Without explicitly extending the brand, even implicit retail environment cues

implying some commonality between a higher- and a lower-established brand can benefit the

latter (Simmons et al. 2000). Brands, however, have boundaries – they can only be stretched

so far.

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Brand portfolios

When the core brand cannot be further stretched, managing multiple brands as a portfolio can

have significant benefits (Barwise and Robertson 1992; Kotler and Keller 2006). The many

brands can also be seen as a family, with an umbrella mother brand and possible sister brands

(Aaker 2004; Randall 1997) – recent research has even identified “problem child” brands in

some families (Harrison and Hartley 2007).

Brands can be viewed strategically, as a portfolio of assets to be leveraged and

managed to maximise their total worth to the company (Day 1998; Randall 1997). Although

typically seen as the sum of the company’s own brands, an alternative definition of brand

portfolios suggests they should encompass all brands influencing the consumer’s purchase

decision, whether owned or not (Hill and Lederer 2001). This definition would include brand

alliances, brand extensions, and ingredient brands as a part of a company’s brand portfolio.

Coordinating brand portfolio management strategically helps to identify which brands

deserve most attention and investment, and to avoid customer confusion or investment in

overlapping product development or marketing efforts (Carlotti et al. 2004).

Brand knowledge and linking brands to other entities

Brand knowledge means all the brand-related information a consumer has, whether positive

or negative, true or false (Keller 2003). Earlier research examined how these brand

knowledge structures were organised and their effects on consumers (Johnson and Russo

1984; Mitchell 1982). Aaker (1997) suggests five basic perceptual dimensions of brands:

sincerity, excitement, competence, sophistication, and ruggedness. Further research has

helped grasp the relationships that consumers form with brands (Fournier 1998), and the

community relationships among brand users (Muniz and O’Guinn 2001).

Linking brands to other entities give a chance to “borrow” equity from other brands.

This wider brand knowledge can affect how the consumer perceives and responds to the

brand. (Keller 2003.) The most sustainable form of differentiating the brand is when the point

of difference itself can be branded – Aaker (2003) calls this the branded differentiator. The

consumer does not need to thoroughly understand the differentiator – as long as the

differentiator is perceived as delivering something special, it can work to the brand’s

advantage. (Aaker 2003.)

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Understanding how the values of luxury differ across consumers and what kind of

possibilities new modern thinking in brand management can offer have given some insight

into luxury brands, such as Champagne. However, Champagne is also a wine, and it is

important to finally review the research on wine marketing to fully appreciate the

multidimensionality of marketing Champagne.

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3. Wine

Wine as a hedonic product

The core benefit of wine is quenching thirst – but as consumers are willing to pay significant

amounts for wine, there has to be something more to it than fulfilling a basic need. To

understand why consumers might be willing to pay more for wines such as Champagne, it is

important to distinguish between hedonic and utilitarian products. Hedonic products should

not be mixed with the hedonist consumers, although the terms may sound similar.

The underlying rationale behind hedonic products is that consumers do not buy

products merely on the basis of rationally maximising their functional utility (Hirschman and

Holbrook 1982; Millar and Tesser 1986; Tauber 1972). In some instances, emotional desires

are even more important than the basic utilitarian motives in choosing products (Maslow

1999); and consumers may also inject subjective meaning to a product to supplement the

product’s concrete attributes (Hirschman 1980). Measuring exactly how weight consumers

base on the utilitarian attributes of a product is very difficult, but Babin et al. (1994) have

arrived to a scale for assessing these utilitarian and hedonic values of shopping experiences

more accurately.

Empirical research supports this theory of hedonic and utilitarian sources of consumer

attitudes, and they appear as varyingly important across different products and consumer

behaviours (Batra and Ahtola 1991). Due do differences in the nature of different products,

the Batra and Ahtola (1991) findings might not be generalisable to all product categories

(Crowley et al. 1991); research continues in this area (Voss et al. 2003). Segmenting

consumers based on their utilitarian/hedonic shopping goals may offers benefits, as firms can

better adjust their marketing communications to highlight the benefits for the different

consumers (Guido 2006).

Wine consumption and purchasing

Consuming wine is very complex, even for a hedonic product – it is more similar to art

appreciation, with its complex combination of sensory, emotional, and cognitive responses

and a strong role of personal taste (Charters and Pettigrew 2005).

The main bases of wine choice are risk reduction and familiarity; factors indicating

familiarity include previous tastings (Dubow 1992), type or style (Mitchell and Greatorex

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1989), price (Mitchell and Greatorex 1989; Nerlove 1995), brand (Gluckman 1990; Mitchell

and Greatorex 1989), and region (Gluckman 1990; Spawton 1991). When purchasing wine

for an occasion, the first consideration is typically style suitability, then value, endorsement,

and wine character (Halstead 2005). Understanding the consumer motivations allows for

creating marketing strategies specifically tailored for the wine consumer.

Wine marketing

The move toward more branded wines is inevitable (The Economist 16 Dec 1999), and

marketing strategies mark success from failure to wine producers (Felzensztein et al. 2004).

Wine branding differs significantly across global regions, with two different commercial

strategies – European wines based on strictly defined destinations of origins, and new world

wines based on the grape variety (Martinez-Carrasco et al. 2005).

Marketing wine to specific consumer groups is a relatively new concern (Thomas and

Pickering 2003). Producers have been slow to adopt segmentation concepts, being more

preoccupied with wine quality (Spawton 1991). Occasion-based segmentation in the wine

markets may be more useful than user-based segmentation, providing clearer differences in

positioning for brands (Dubow 1992). However, behavioural segmentation using number of

bottles purchased might still be the clearest method for examining a wine market (Thomas

and Pickering 2003). Regional differences persist in channels and retail structures (Malhotra

et al. 1998), but strategies aimed at identifying high-involvement wine consumers may still

be successful on a global scale (Lockshin et al. 2001). Further, strategic partnerships with the

right channels are crucial for a wine producer’s global success (Thach and Olsen 2006).

The price hedonic model is often used as a basis for wine research (e.g., Landon and

Smith 1997; Combris et al. 1997; Oczkowski 2001). The model suggests that the product’s

price is an additive function of a bundle of attributes (Lancaster 1966). In the context of

wines, these attributes may refer to more objective features such as production district, grape

varieties, and the vintage year, or more subjective attributes (Thrane 2004). Although unable

to untangle the supply and demand effects on price (Unwin 1999), these models can provide

important insight to the price implications of a wine’s region, vintage, and subjective

qualities (Combris et al. 2000; Thrane 2004). Empirical research suggests that a wine’s

quality rating is strongly correlated with its price range and producer rating (Horowitz and

Lockshin 2002).

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Part I: Literature review has examined past research on luxuries, brands, and wine – three

different aspects of Champagne. Wine consumption has idiosyncratic characteristics, as does

luxury consumption; brand knowledge gives tools to market to these luxury wine consumers.

Marketing Champagne is not only affected by the consumer behaviour, though –

industry-specific factors are looked at in Part II: Industry overview before going on to the

main research process.

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PART II: INDUSTRY OVERVIEW

The Champagne market is not only unique in relation to other wine markets, but it is also at a

unique point in its history. It has enjoyed its biggest boom ever over the past years, and is

now faced with different choices: whether to increase supply by expanding the area; to

increase the price of generic Champagnes; or to increase the proportion of higher-value

Champagnes to manage the demand.

To gain an inclusive picture of the Champagne market, Part II: Industry overview

examines it through various angles. The part looks at how the history of Champagne has

contributed to its unique status as a world-famous sparkling wine, and current global sales

and regional markets are also reviewed. What happens in the macro-environment of

Champagne affects the industry environment, and factors affecting both environments are

analysed. Having reviewed these factors, brands in Champagne are reviewed from the

perspectives of AC Champagne itself and the various Champagne producers’ brands; and

finally the different styles are mentioned. To begin, though, Champagne is defined more

exactly.

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Definition of Champagne

The word “Champagne” has four meanings. Geographically, it denotes both the Champagne

province in northeastern France, and the delimited area inside the Champagne province that

can produce sparkling wine under the denomination Appellation Champagne Contrôlée (AC

Champagne) as defined by the Institut National des Appellations d’Origine (INAO).

Champagne is also the famous sparkling wine itself produced by the Champenois

(Champagne locals) in that area with the specific production standards set by the INAO.

Fourthly, champagne (with a lower case “c”) can be a generic word for any sparkling wine in

those countries that do not recognise Champagne IPRs (WIPO 1891). This report is on

Champagne, the French sparkling wine defined by the INAO. (Juhlin 2004; Stevenson 2002)

The history of Champagne (Appendix 1)

The wines of Champagne have had a celebratory status for centuries. As explained in greater

detail in Appendix 1, the unique history and characteristics of the region have led to brands

being more dominant than in any other wine area. Champagne differs from most other wine

areas in several respects: even of the best Champagnes can be sold under the same generic

AC Champagne denomination as the poorest ones, and most Champagne is a blend of several

vintages, several grape varieties, and several villages. As consumers often cannot use the

denomination, vintage, grape variety, or village name as an indicator of quality, the

producer’s brand has become one of the few quality indicators for the consumer. (Juhlin

2004; Robinson 2006)

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Champagne sales

Some 30 billion bottles of wine are produced and consumed globally per year, of which 2.8

billion bottles are sparkling wine. At 340,000 bottles, Champagne represents roughly 1% of

global wine production and 12% of sparkling wine production in 2007. (Straker 2008.)

By and large, Champagne sales have grown strongly over the past 300 years (Juhlin

2004). The global market took a dramatic hit in the early 1990s when the world economy

went into recession; and experienced more recent a bubble and crash right after the

millennium (Figure 3). This millennium crash is usually attributed to over-optimistic sales

projections for the millennium parties and the ensuing problems with overstocks, but the dot-

com crash had also an effect on the demand. (The Economist 11 Mar 2008; Williams 2008.)

In 2007, global Champagne sales topped the 1999 peak of 327,000 bottles, having

fully recovered the serious drop in the post-millennium sales. The 2007 annual turnover for

Champagne was an estimated !5 billion (£3.9 billion), and margins for producers have

improved over past years. Overall, the current market looks strong. (Straker 2008.)

Figure 3: Global Champagne sales 1997–2007

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Champagne markets

Despite its international appeal, more than half of Champagne is still consumed domestically

(Figure 4). The domestic French market still accounts for 54% of the sales, but exports are

growing more rapidly at 7.9%, compared to the domestic growth of 4.6% between January

and November 2007. The average bottle price is higher for exports, and they also seen as an

attractive buffer against domestic demand volatility. (Hey 2008; Williams 2008.)

Figure 4: The proportion of Champagne sales in the top 6 markets

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Of the export markets the UK is clearly the largest, with sales more than those of the United

States and Germany combined (Figure 5). The UK’s role as the market leader is often

attributed to geographic proximity and a long, shared history with the French. Although the

emerging markets still have very small sales volumes, booming sales growth in them has

created hopes that Champagne could shrug off a possible western recession. (Hey 2008.)

Figure 5: Top 10 Champagne export markets

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Environmental analysis (Appendix 2)

A standard framework for examining the environmental factors is the PEST (political,

economic, social, technological) analysis, which categorises macro-environmental factors by

their source (Grant 2008). The framework here is extended to incorporate environmental,

legal, and demographic aspects as well. Figure 6 presents the currently most relevant macro-

environmental factors for the Champagne industry, and these are analysed in more depth in

Appendix 2.

Figure 6: Environmental factors for Champagne

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Industry analysis (Appendix 3)

The history of Champagne and the current macro-environmental trends have shaped the

industry environment where the brands compete, and the Champagne market is distinctly

different from other wine markets. Figure 7 analyses the industry environment through the

five aspects of Porter’s (1979) Five Forces analysis, and the factors are viewed in more depth

in Appendix 3.

Whereas growers elsewhere usually make wine of their own grapes, Champagne is

characterised by large producers purchasing and blending grapes from several producers and

villages. Although Champagne houses can own some vineyards, they are restricted from

owning or renting more than 15 hectares of land (Stevenson 2005 a). The 100 or so

Champagne houses account for 90% of exports (Mintel 2006), and largest houses are referred

to as the grandes marques. The rest is dispersed between some cooperatives of producers,

and grower-producers doing all or part of the process themselves. (Juhlin 2004.)

What is curious in the UK market is that although Champagne is the most profitable

sector of the British wine trade (Rose 2005), it is the only wine regularly sold on discount

(Mintel 2006). Even the current shortage of Champagne has not restricted high-profile price

promotions, which have had a big impact on the industry – the editorial of The Drinks

Business Champagne Report 2008 remembers 2007 as “the year of half-price Dom Pérignon”

(Schmitt 2008 p. 5), and the same report describes discounting as “deconstructing the value

of Champagne as a luxury good (Cawood 2008 p. 33).

Figure 7: Champagne industry factors

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Brands in Champagne

Demand for Champagne outstrips its supply, and the industry can sustainedly address this

issue not by heavy price increases in the non-vintage, but by moving toward more

differentiated, higher-value Champagnes (Fallowfield 2006 a; Evans 2007). The combination

of intra-industry consolidation and the need for varied product offerings create a particular

need for effective brand portfolio management. Brands in Champagne can be looked from

two perspectives: the following first looks at brand of AC Champagne itself, and the brands

of the individual Champagne producers.

Although the name Champagne itself holds unique brand value (Williams 2007 b), its

sub-brands are less known. In the nearby Burgundy, the terms Premier Cru or Grand Cru on

the bottle label carry enormous value, acting as strong indicators of prestige for the consumer

(Johnson and Robinson 2001; Robinson 2006). In contrast to Burgundy, most Champagne is

a blend of many crus and consumers remain largely unaware about Premier Cru or Grand

Cru Champagnes (Fallowfield 2006 b). To address this gap, some leading Champagne critics

have called for a reshuffle in the classification: Stevenson has called for a dozen or so

hierarchical appellations (Redman 2002), and Juhlin (2004) suggests demoting Champagne

from the Aube area to a secondary status. There has also been a recent counter-trend toward

regionality, as the big Champagne houses promote more mono-cru Champagnes (Fallowfield

2005 b & 2008 a). What is peculiar is that the effort toward finally branding mono-crus and

smaller regions has come from the large houses, although smaller grower-producers would be

optimally positioned to capitalise on this (Stevenson 2005 b). The ongoing debate about the

expansion of AC Champagne has raised some concerns regarding the long-term brand value

of the AC Champagne itself (Hickman 2007 b; Stevenson 2007).

The producer’s brand is the key determinant of consumers’ Champagne purchases

(Juhlin 2004; Fallowfield 2008 b). A prestigious etiquette creates feelings of which hedonic

consumers are willing to pay without apparent limits (Nuikki 2007; Vigneron and Johnson

1999). External cues such as packaging are seen as increasingly important, as Champagne is

becoming more popular as a gift (Boothman 2005). Consumers are not usually told when the

batch for non-vintage Champagnes changes (Juhlin 2004; Edwards 2006), and producers

create a house style that consumers assume to stay consistent and reliable through the years

(Parkinson 2006) – the consumer thus learns to trust the producer’s brand more than

anything. Veuve Clicquot herself showed exemplary branding sense when she patented the

orange colour used in her Champagne labels (Juhlin 2004); now 200 years later, anything in

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Champagne with bright orange is automatically connected to the brand (Boothman 2005).

Not all brands enjoy the unique strength of Veuve Clicquot, though, and linking Champagne

brands to other entities is seen as increasingly important for distinguishing the brand from

competition (Sheppard 2007). Table 2 presents examples of some key brand collaborations of

the leading Champagne producers.

Table 2: Champagne brand collaborations

Champagne styles (Appendix 4)

As Champagne houses are trying to make the most out of the limited grape supply by selling

more added-value products such as the vintage, there has been a pronounced move from the

dominance of the brut non-vintage toward different styles of Champagne (Fallowfield 2006

c). With current high grape prices, the higher returns from selling more premium styles of

Champagne are not only attractive for companies, but also vital for many (Fallowfield 2007

b). Appendix 4 explains the characteristics and trends in different styles.

Part II has analysed the Champagne market from different perspectives: history, sales,

macro-environment, industry environment, brands, and styles. The big picture conveyed was

that Champagne is doing very well, supply is limited, and one way to manage demand is to

shift the emphasis into more specialist value-added styles. Before linking the theory of Part I

and industry insight of Part II to the findings of the 12 interviews, Part III: Research process

explains in more depth how this research was conducted.

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PART III: RESEARCH PROCESS

The dissertation is exploratory and interpretive in nature, and based on face-to-face

interviews and analysis thereof (Sanday 1979). As it is more effective to aim the work for a

specified external audience (Shugan 2003), the target audience of this research consists of

Champagne brand managers and other Champagne industry decision-makers.

Before the interview

The researcher’s personal work history in wine industry had provided a unique opportunity to

scan the challenges and opportunities in the Champagne industry with managers – this served

as a starting point for gathering relevant information. For example, work experience at a wine

shop had suggested that consumers behave differently when buying Champagne to when

buying less aspirational products; that consumers link Champagnes to other entities so

strongly that they might ask for “the Formula 1 Champagne”; and that product lines seemed

to be proliferating.

Secondary sources for research included academic journals and books, trade reports

and magazines, and business papers and magazines. Wine industry reports and wine

magazines such as Decanter, The Drinks Business, Harpers, and Wine & Spirit were used to

identify further issues to be brought up in the interviews, helping also to put the observed

industry trends into perspective. Academic articles were also used, and concepts from

Vigneron and Johnson (1999), Dittmar (1994), and Keller (2005), among others, were used to

shape the discussion guide. Academic jargon was avoided, and rather than asking about

“Veblenian” behaviour, the interviews used more understandable wordings like ostentation,

status, and price perception to define the mentioned ostentations or “Veblenian” behaviour

(Leibenstein 1950; Veblen 1899).

The interview process (Appendix 5)

Face-to-face interviews were selected as the only source of gathering primary data. As this

research looks into the makings of a good marketing strategy, qualitative data seemed to be

more appropriate for exploring this. Interviewing face-to-face allowed for the optimal

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combination of flexibility and depth for this research. Focus groups were not selected as a

tool, since the interviewees were mainly senior managers and organising a focus group for

this sample would not have been feasible regarding their schedules. More quantitative

methods such as surveys do give differential insight, but a combination of qualitative and

quantitative methods were not feasible due to the time and scope limitations of this

dissertation. (McDaniel and Gates 2006.)

For the primary research, 12 face-to-face interviews with professionals from different

parts of the Champagne trade were conducted. Depending on how much time the

interviewees had, the length of the interviews was between 40 and 100 minutes, typically

around 50–60 minutes. Effort was made to avoid assumptions by keeping the questions as

open-ended as possible. All interviews were conducted in greater London, typically at a

conference room at the interviewee’s office or a café. Because the interview discussions did

not go into very sensitive personal areas, a completely private was not as imperative as for

other research projects.

Two managers came to the interview from Ruinart, but all the other managers were

interviewed individually; no differences in response were noted between the Ruinart

interview and other interviews. The interviews were conversational, with some freedom to

focus more on those areas the interviewees felt they had to most to say about. (Gubrium and

Holstein 2001; Hermanowicz 2002; Warren et al. 2003.)

The interviews were semi-structured, following a discussion guide with five main

areas – Champagne marketing, the Champagne market, consumer motives, linking brands to

other entities, and product lines (Appendix 5). Rather than serving as an extensive handbook

for strategic marketing, the research focused on marketing issues of particular relevance in

the current Champagne market, and the discussion topics were selected accordingly.

The discussion guide (Appendix 6)

The interviews began with an ethical disclosure that the interviews would be recorded for

personal records. The background of the interviewee(s) was also inquired to understand how

it might affect their views (Schaeffer and Presser 2003; Reynolds and Gutman 1988).

The first part of the actual interview asked open-ended questions about marketing

Champagne – this allowed the interviewees to spontaneously bring up whatever they

perceived as the most relevant aspects. To understand both positive and negative aspects, the

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interviewees were also asked about most common mistakes, whether currently or in

hindsight.

The second section discussed the Champagne market itself – how the market is and

how it differs from other markets. This included the trends, challenges, and substitutes.

The third section discussed different aspects of Champagne consumers – what roles

and occasions Champagne has for consumers, and what kinds of differences exist. The main

emphasis was on how consumers buy champagne – what aspects are important, what aspects

indicate quality and prestige, and how price is perceived (Gluckman 1990; Mitchell and

Greatorex 1989; Vigneron and Johnson 1999). Without explicitly explaining the five

discussed luxury consumer types (Vigneron and Johnson 1999), questions on private/public

motives (direction of self-consciousness), perceptions of price, imitation, and exclusivity

gave a good picture of who the consumers might be.

Brand partnerships have become very current in the marketing of Champagne

(Boothman 2005; Sheppard 2007), and the fourth section examines them as a form of linking

brands to other entities (Aaker 1997; Fournier 1998; Keller 2003). Event sponsorships and

branded bars were used as current examples of linking brands to other entities.

The fifth section discussed product lines, whether in brand extensions into new styles

or to geographical areas (Aaker and Keller 1990; John et al. 1998; Keller and Aaker 1992), or

by focusing the brand’s attention more to a certain direction (Meyvis and Janiszewski 2004).

This was to understand how to best manage the limited supply of Champagne, and what kind

of implications adding new items to the brand portfolio might have (Aaker and Keller 1990;

Day 1998; John et al. 1998).

To conclude the interviews, the interviewees were asked what advice they would give

to a new marketing manager in the Champagne sector. To end with a positive personal note,

the interviews concluded with a personal vision for Champagne.

In addition to the questions described in the discussion guide, prompting questions

were used to understand the cause and implications of the discussed matter. Prompts included

asking why; why not the other one; how; what is driving this; how sustainable is this; how

does this affect/translate into profitability; how does this affect the brand; how does this

affect the consumer; and is this specific to you or general. These prompts turned the

discussions from descriptive (what is happening) into more analytical (why it is happening)

in nature, going into higher levels of abstraction. (Hermanowicz 2002; Schaeffer and Presser

2003.)

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The interviewees

A total of 13 people were interviewed for this research in 12 sessions. Managers were better

suited than consumers to be interviewed about marketing strategies, although consumer

interviews would certainly have given further insight into how the marketing strategies were

actually perceived. To gain a more balanced view, managers were interviewed both from the

producer and the retailer side – the producers had worked with several retailers and the

retailers with several producers’ brands. Further, the retailer side was more in contact with

actual end-users, whereas the producer side might have a more coherent view of the longer-

term marketing strategies.

The people were interviewed not as official spokespeople of their representative

companies, but rather as individuals with unique experience and insight. It should be noted

that all interviewees had worked at a number of companies in the trade, and thus could also

provide insight into Champagne marketing over and above their current role.

From the producer side, managers from three grande marque Champagne houses

(Bollinger, Pol Roger, Ruinart) were interviewed, as well as a person from the leading

holding company, Moët Hennessy. In addition to these, a manager from a leading Italian

sparkling wine producer (Bisol) was interviewed, not only as a competitor to Champagne, but

also for his long tenure as the manager of Wines & Spirits floor for Harrods. Lastly, one

Champagne consultant was also interviewed to hear the views of someone who had worked

with many different sides of the trade.

o Jonathan Stevens is the Brand Manager at Mentzendorff, owner of Champagne

brands Bollinger and Ayala.

o James Simpson, Master of Wine (MW) is the Director at Pol Roger in the UK.

o Giles Henton and Max Helm are Sales Managers for Ruinart in the UK.

o Sophie Janion is a Sales Assistant at Moët Hennessy UK; despite being at a junior

position, her knowledge and experience into linking luxury brands exceed her status

o Roberto Cremonese is the European Export Manager at Prosecco Bisol Desiderio &

Figli, a leading sparkling wine producer, having also worked as the Sales Manager for

the Harrods Wine Department for six years.

o Maggie McNie MW is a long-time Champagne consultant to producers and

Champagne bodies, buyer, educator, and author of the influential book Champagne

(McNie 1999).

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The secondary data seemed to imply that certain distribution channels were more

desirable for Champagne producers than others; preferred off-trade channels were wine

merchants and high-prestige outlets, and preferred on-trade channels were restaurants and

clubs (Cawood 2007 c; Grant 2007; Woodard 2007 b). Thus, managers from these channels

were interviewed. Although supermarkets are increasingly important retail channels for

Champagne, this dissertation only interviewed managers from specialist or luxury outlets.

From the retailer side, managers were interviewed from London’s big three luxury

department stores (Harrods, Selfridges, Harvey Nichols), a leading wine merchant chain

(Oddbins), an independent fine wine merchant (Roberson Wine), and a restaurant (Harrods

restaurants).

o Dawn Davies is the Sommelier at Selfridges.

o Jeremy Lithgow is the Floor Manager for Wines & Spirits at Harrods.

o Jeremy Lee is the Wine Shop Manager at Harvey Nichols.

o Joe Gilmour is the Manager of Roberson Wine, a past agent for Champagne Devaux.

o Amelia Aragón is a Manager at Oddbins and Export Manager at Cillar de Silos, a

Spanish wine producer.

o Penny Johns is a Restaurant Manager at Harrods, having also managed a Champagne

bar and a wine merchant.

To get 12 responses, 25 companies were contacted. Some companies had a policy of only

commenting in writing; others’ managers were not available for the interview period; still

others never answered. No major trend was seen in what kind of companies either accepted

or rejected the invitation. The standard approach email is shown in Appendix 6.

Analysing the interviews

After the interviews had been completed, they were personally transcribed into written form.

As in interpretive research, the data was observed, selected, coordinated, and interpreted by

the researcher (Sanday 1979). Spiggle’s (1994) guide was used as a basis for disaggregating

the analysis and interpretation of the qualitative research data into separate operations.

The first step in analysing the data was categorising it. As the discussion guide for the

interviews included five topics, data was labelled and codified along these lines (Lincoln and

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Guba 1985; Weston et al. 2001). As some comments referred to more than just one specific

area, the data was categorised using both deductive and inductive methods (Spiggle 1994).

Closely following the categorisation, the data was then abstracted into fewer, more

general categories to enable comparison of common features (Spiggle 1994). Comparing the

comments of the different interviewees helped to understand how the views of interviewees

from different parts of the trade differed, and what views were shared across the sample.

Comparing the findings of previous interviews also served as a tool for refining the

subsequent interviews to address the most interesting aspects (Lincoln and Guba 1985).

Where applicable, the data was dimensionalised in the relevant categories to empirically

clarify how the perceptions and views of the interviewees from the various professional

backgrounds differed (Bagozzi 1984; Spiggle 1994). For this, a basic codebook was used

(Appendix 7). Because the interviewer and analyser was the same person, and because the

sample size of 13 was too small for valid empirical quantitative analysis, the codebook was

very bare. The codebook did, however, enable detecting where the retailer/supplier side or

the senior/junior interviewee answers differed. MacCoun’s (1998) article on biases was used

to scrutinise the findings. (Weston et al. 2001.)

To gain a more coherent understanding of Champagne marketing, the findings were

then integrated in respect to different interviews and the relevant academic and trade

literature. Identifying where strategies, contexts, and outcomes were linked enabled the

construction of a framework for key findings from the data. (Spiggle 1994.)

In this process, the already collected data was iterated by revising the previous

interpretation of the data – hearing the views of others puts the first view into perspective and

aids induction (Spiggle 1994). The data was also refuted with inherent scepticism toward the

researcher’s own findings and ideas (Strauss and Corbin 1999).

Interpreting the interviews

Whereas data analysis is about manipulating it into more actionable forms, interpretation is

making sense of it through more abstract conceptualisations (Spiggle 1994). When going in

depth in interviewing Champagne trade professionals, years of work experience in the

industry benefited the researcher essentially in interpreting the interviews. For instance,

expressions such as “the Cristal crowd”, or “the yellow label drinkers” have specific

stereotypical connotations in the trade. Further, understanding the dynamics of the trade and

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the orientation of different Champagne houses, channels, and consumers gave more meaning

to some references in the interviews.

Some sales figures or potentially offending views of rivals were asked not to be

quoted, and were consequently not transcribed. Not disclosing some exact figures or

wordings in the few instances that this was asked was not likely to have a large impact on the

validity of the interpretation – the aim, after all, was to understand what those figures or

attitudes mean, not dwelling on exact figures for their own sake. (Spiggle 1994.)

Having explained the methods used in the research process, the results of the 12 interviews

will be presented in Part IV: Findings and analysis. As typical in qualitative research, the

findings are reported together with analysis.

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PART IV: FINDINGS AND ANALYSIS

The general feel from the interviews was that Champagne has done very well as a whole –

the main concern from the producer side was managing demand, rather than creating it. It is

natural that the producers’ views differed from those of the retailers in some area, as they had

the possibility to observe the dynamics of multiple retail channels. Similarly, retailers had the

possibility to observe the brands of multiple producers. Regarding the compatibility of the

findings with the theory of Part I, the behaviour of Champagne consumers seems to have a

better fit with luxury consumer behaviour than wine consumer behaviour; although this is not

to suggest that these areas of study would be by any means mutually exclusive.

The following discusses and analyses the findings of the interviews thematically,

loosely following the structure of the discussion guide. For reasons of research ethics, the

exact interviewees will not be identified; rather, they will be referred to as PSIs (producer

side interviewees) and RSIs (retailer side interviewees).

Marketing Champagne

In marketing Champagne, two issues rose above others in importance: visual branding and

distribution channels. Visual branding, through packaging, often determines the consumer’s

choice of brand at the point of purchase; and the channels themselves actively shape the

consumer’s perception of the brand. Brand awareness is also seen as crucial for consumers

due to the brand’s multiple roles as a source of familiarity, a social class cue, and indicator of

wealth and status through a known price.

There seems to be a fine balance between high brand awareness and the image of

exclusivity. One PSI sees their brand as the “best kept secret in Champagne”, but continues,

“We’d like, though, this secret to be shared with a few more people.”

It is important to note that what drives short-term seasonal sales is very different from

what drives longer-term sales. In the short term, new packaging and press coverage are major

forces driving the lifestyle-driven consumer, and wine press and retail endorsements are

major forces driving the quality-driven consumers.

Over the longer term, the quality of wine becomes a more critical factor – “unless you

have a monster budget” (PSI). In addition to quality, integrity and consistency are seen as

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crucial for the build-up of reputation. Consistency refers especially to the positioning as a

luxury brand, avoiding the brand-damaging discounting and over-exposure in the wrong

channels. A good long-term strategy also targets the future generation of consumers, in

addition to the current drinkers.

Marketing mistakes

Asking the interviewees to reflect on the past with hindsight allowed for identifying some

key mistakes brands have fallen victim to. The main mistake for brands is choosing the

wrong channels, leading to over-exposure in a low-prestige environment and aggressive price

promotions. A PSI crystallises it: “If you say you’re the best, stand by it”. The combination

of poor channel management and uncoordinated pricing is especially detrimental for the

perception of quality. Pushing for higher volumes through supermarket promotions has

implications both on the supply and demand side: “on the supply side you have to stretch the

quality of your product, and on the demand side you have to burn brand equity to build your

market share” (PSI).

Another looming threat is forgetting or alienating the core consumer, often by

excessive preoccupation with the prestige niche products. Rapid price changes and

turnarounds in packaging may create a short-term buzz, but may come on the expense of the

loyal core consumer.

A third threat is complacency. The Champenois have been on the top for so long that

few appreciate the massive educational task there is if consumers are to be educated to trade

up to the higher value-added styles.

The Champagne market

When asking how the Champagne market was, “buoyant” was the word most often used to

describe it. It is also seen as very dependent on the economy, as Champagne is to first wine to

go with the tightening of the belt.

Different rules seem to apply to wine and Champagne markets, as one PSI notes: “We

as a trade have set ourselves apart from wine – the sort of consumer who spends £5 on a

bottle of wine is happy to spend £35 on a bottle of Champagne. It constantly amazes me”.

Consumers are unlikely to compare Champagne to wine in terms of value for money, because

they have been taught that Champagne is the only beverage for certain occasions. The sound

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of cork coming off has an effect on people, and bubbles make it harder for consumers to

evaluate Champagne’s vinosity. Any threat of substitutes is at the very lowest end of the

Champagne market, to the inexpensive own-label Champagnes. It is peculiar that although

Champagne was seen to be at least as much a luxury as a wine, not a single interviewee

suggested that other non-drinkable luxury items, such as shoes or handbags, could be a

substitute for consumers.

The market is also highly stratified between brand-loyal people – consumers drink the

brand rather than the wine. “The idea of the brand is important for the majority of people”,

one RSI notes; “it could all taste the same and people would still be brand-loyal.”

The Champagne market is often viewed as four major price brackets: the value

Champagnes below £25; the grande marque non-vintages at £25–£40; the sparsely populated

specialist range of £40–£70; and the prestige cuvées from £70 upward.

The Champagne consumer

The Champagne market seems to incorporate all of Vigneron and Johnson’s (1999) luxury

consumer types, and bandwagons form the bulk of the market. Especially the RSIs see the

consumption of prestige cuvées as very ostentatious: “Quite frankly, if they burned £100 and

everyone was watching them, the same social function would be fulfilled.” The brands see

their consumers more as more hedonist types who do not have to prove themselves to others

– the PSIs’ perception of the consumers’ direction of self-consciousness is not as strongly

external as the RSIs’ perception. There is also a small market niche of snob and perfectionist

consumers, who may also collect Champagnes.

Inter-personal motives seem to be more important for most consumers, as the visible

external aspects of Champagne brands are easier to understand. The risk is, however, that

consumers with a purely public focus of self-consciousness will not become as emotionally

attached or brand loyal as other consumers: “The Chinese and Japanese don’t really like

Champagne, but they like the idea of being seen drinking Champagne. So the risk in those

markets is that you’re not going to get a regular consumer” (PSI).

The retailer side interviewees observed that consumers seem to follow a certain

pattern of consumption sophistication, trading up from the push-marketing bandwagon

brands such as Moët & Chandon or Veuve Clicquot to discover more discrete niche brands

such as Ruinart, Gosset, or Billecart-Salmon. One SSI describes this brand progression as a

form of social advancement: “People, who mingle in social circles, evolve. They might start

Tarvainen (2008)

41

off with Veuve Clicquot until someone turns up his nose up on it – that’s a Kensington thing.

In the world of luxury, everyone likes to turn up his nose to something.” It was intriguing to

learn that consumers trade up from one brand to another rather than within the same brand’s

products, indicating that consumers might use the producer’s brand rather than the wine style

for signalling social status and locating others in the social hierarchy (Dittmar 1994).

Although the consumer might trade up to slightly more niche brands, the bandwagon motives

of signalling belonging to a certain group seem to remain the same (Liebenstein 1950;

Vigneron and Johnson 1999).

Champagne is still a celebratory occasional drink for consumers, but increasingly

being consumed throughout the week. It is not only drunk on special occasions, but also to

make occasions special. The growth in smaller is expected to bring about new drinking

occasions, but Champagne’s role as a food wine is likely to remain small.

Purchasing Champagne

Visual branding seems to be the key for purchasing Champagne – and brand loyalty is

directed more toward what the brand looks like than what it tastes like. Much Champagne is

being bought as a gift, and consumers want packaging to communicate a high price. Most

successful offerings combine the important quality assurance of the brand with the

excitement of the packaging. Accessibility is seen as contributing to Champagne’s success –

compared to other luxury items such as sports cars, Champagne is a more affordable but

equally visible statement of luxury. In effect, Champagne enables communicating wealth

without having to us too much of it – this behaviour is what Veblen (1899) calls “pecuniary

emulation”. The role of the brand for Champagne converge suggests purchasing Champagne

is more like buying a luxury product than wine; the brand’s personal role a source of

familiarity (Gluckman 1990; Mitchell and Greatorex 1989) is not as important as its

interpersonal role as a strong communicator of social class (Dittmar 1994) or power through

wealth (Veblen 1899).

Price is also a major consideration in purchasing Champagne, but different consumers

react very differently to pricing. The lower-end consumers are more price-sensitive, but the

higher end purchases prestige cuvées almost solely because of their price signal, especially in

nightclubs. This strongly supports a key trend that emerges from the interview data – non-

vintage consumers are typically bandwagons whereas prestige cuvée consumers are

Veblenians.

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42

In more specialist venues, staff can shape consumers’ preferences, but for most

consumers, the inside of a bottle is less important than the outside. One RSI puts it quite

blatantly: “(The consumer) will stand in front of you and say that (quality) is not as important

as brand recognition. In essence, what they’re saying is, “What’s on the surface is more

important than what’s in the bottle.” Depending on the consumer, other important

considerations when buying include peer pressure, perceived exclusivity, recommendations

and endorsements, promotional deals, and personal taste. It seems that the purchasing process

for the bandwagon and the Veblenian consumers is more clearly defined, whereas the factors

affecting the brand choice for the perfectionist and snob consumers are more intricate.

(Leibenstein 1950; Vigneron and Johnson 1999.)

Indicators of quality and prestige

The Champagne market differs dramatically from the wine market in that the product’s

quality is judged much less on the actual taste than external cues such as brand and price.

When asked how consumers judge the quality of Champagne, one RSI simply answered, “I

don’t think they do judge the quality of Champagne.” Even to many who do judge the

quality, it seems to be very hard to assess. Packaging enhances the quality perception – if

money is invested in the packaging, consumers expect the wine to be worth that packaging.

Personal or wine press endorsement is only important for some consumers.

The main indicator of prestige is price, especially at the top end of the market. Many

even noted increases in demand when the price of a prestige cuvée was increased; this

converges with Leibenstein’s economic models of the Veblenian consumers. The second

prestige cue is packaging – and prestige cuvées practically always come in large boxes. For

lesser-known brands, salesperson endorsement can enhance the prestige perception, but for

the more established brands, celebrity endorsement is a stronger indicator of prestige.

Limited availability can signal prestige to some consumers; these are mainly snob consumers.

(Liebenstein 1950.)

Linking brands to other entities

Linking brands to other entities through partnerships is seen as a good way to market a

product. Crucial for successful brand partnerships is a compatible customer lifestyle and a

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43

similar level of luxury. Exclusive collaborations can drive press and differentiate the brand in

the short term, but the long-term sustainability of brand partnerships is seen as unproven.

Champagne brands are most often linked to people. One PSI describes a high-profile

prestige cuvée campaign with a famous supermodel as “elegant, sophisticated – a real fit”,

and for another PSI, associations with the British royal family drive differentiation globally.

However, brands such as Cristal can lose control of their marketing through overtly strong

associations with certain people.

Consumers also associate Champagne brands to distribution channels: one PSI

describes channels as “very, very strategic” for their brand. Branded bars, especially at luxury

department stores, have more potential in terms of PR and sales – they can be effective

marketing tools as long as they have some rarity value.

Consumers associate the distribution channel to the brand, but brands can also be

linked to events such as product launch parties and event sponsorships. Sponsoring events is

exclusively about creating awareness among a selected audience; launches can also nurture

relationships with existing customers. Carefully selected sponsorships can even enhance the

brand’s quality perception.

Product lines

There is a clear trend toward diversification toward more specialist styles in the market, and

there are sound reasons for producers to diversify. As the mass-selling non-vintage is the

entry-level Champagne for any brand, diversification always means higher value. Product

launches can create a positive buzz around the brand, and having more styles allows targeting

more consumers with the brand.

However, significant risks accompany extending the brand into new styles. A vast

product offering might confuse the core consumer through brand dilution, price confusion, or

over-exposure in availability. To avoid these risks, companies should make a clear distinction

between their core product line and the extensions. One PSI had very positive experiences of

streamlining the product offering: “Now that we’ve removed the … vintage, life’s gotten a lot

easier for us.” A RSI describes selling smaller styles as “an uphill struggle”; they require

educating consumers about the benefits, and no brand loyalty is guaranteed when consumers

trade up.

Vintage Champagne is the logical trade-up from non-vintage, as prestige cuvées are

typically several times the non-vintage’s price. The vintage category has been squeezed

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44

between the non-vintage and prestige cuvée, and lacks the typical customer profile. The

consumer does not understand the value proposition of the vintage Champagne – more than

one interviewee mentioned that Bollinger’s vintage La Grande Année became much easier to

sell after it was positioned as a prestige cuvée. Many interviewees mentioned the vintage

Champagne as offering “the best value”, and these could potentially be targeted more toward

the perfectionist consumer. (Vigneron and Johnson 1999)

Prestige cuvées do not only create profit and allow targeting the highest consumer

segments – they can symbolise the house’s values to the consumer and build the mother

brand. A prestige cuvée can represent the brand’s history, highest-quality winemaking, or

what one PSI describes as “ultimate luxury”. The perceived link between the prestige cuvée

and the mother brand is weakening, and they are increasingly being marketed, sold, and

perceived as stand-alone brands. “It might be that the prestige of their prestige cuvées spills

over to their regular brands”, says one PSI, “– but how much, I’m not sure.” Overall, the

suggestion of Simmons et al. (2000) of lower-established brands benefiting from a

commonality with a higher-established brand are not seen to be as common as might have

been assumed.

Most consumers do not seem to mind less scarcity in this growing sector so long as

the prices and image are exclusive – this is more Veblenian than snob behaviour (Vigneron

and Johnson 1999). There is, however, a small but clearly defined sector of snob consumers,

to whom very limited edition cuvées might send a well-targeted message: one brand’s

limited-edition prestige cuvée is “very much about making a statement about the traditional

vineyard focus of (the producer), and that’s really all it is. It makes a statement to … 0.001%

of the (the brand’s) consumers that (our brand) is a traditional, vineyard-focused producer”

(PSI). A perceived drop in the quality of some prestige cuvées may cause some longer-term

implications, as might their wild proliferation from lower-level producers.

A new direction for Champagne brand extensions is the new world – this is natural as

most new world sparkling wines imitate the Champagne style. A new world expansion may

offer a chance for the mother brands to leverage some of their prestige on sparkling wines,

but consumers do not perceive this link to the mother brand to be strong. The clearly different

price points and target markets limit the risk of brand dilution, and some see the expansion

into the new world as sounder in the long term than an expansion of the delimited

Champagne appellation.

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Perception differences

By and large, the interviewees had very similar perceptions of marketing Champagne, the

market, and the consumer. Some differences between the perceptions of the PSIs and RSIs

did, however, exist. It is important to note that these differences are by no means

contradictory or incompatible; they merely bring out different sides of the underlying

phenomenon. Table 3 summarises the areas where differences in the PSI/RSI perceptions did

exist and what the perceptions were. It should also be noted that the sample size for people

representing each side of Table 3 was very small and many people had worked on both sides

of the trade – thus the table does not imply an exact statistical difference in the perceptions,

but merely identifies possible locations of bias. The PSIs tended to be even more wine

connoisseur types than the RSIs; thus they might have projected some of their own values on

their consumers. This was taken into account in the analysis and recommendations.

Table 3: Interviewee perception differences by role in the industry

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Validity and reliability

Validity is the extent to which an instrument measures what it claims to measure, in terms of

internal validity or credibility, and external or transferability. Internal validity measures the

extent to which conclusions about cause-effect relations are likely to be true, including how

well selected measures match selected conceptualisations (Neuendorf 2001). External

validity measures the extent to which the findings can be generalised to other settings.

Reliability measures the consistency of the measuring instrument. (Kassarjian 1977; Lincoln

and Guba 1985)

This report used interviews as the only method in primary data gathering, and

excluded customers from the interviews, which were conducted in one geographical location

and within one month. Although customers were excluded from the interviews, the long

experience of most interviewees had given them insight on how consumers were likely to

react to marketing efforts. Although consumer motives and perceptions were speculated on,

what is crucial for marketers is how the consumers react in terms of sales.

All the interviews took place in London, and eight of the 13 interviewees were

British. The UK, however, is the largest export market for Champagne at almost twice the

size of the second-largest export market (Straker 2007 a), and the international character of

London brings UK managers in touch with international customers. These factors mean that

the findings might be generalisable to other export markets to some extent, but the

dissertation is most suited for UK brand managers.

The interviewees, both from the supplier and producer side, represented high-end

brands and channels; no own-label producers or supermarket managers were interviewed.

However, the market share of own-labels in the UK was only 4.3% and decreasing in 2005,

and big brands dominate the market (Mintel 2006). The results here might not be fully

transferable to the lower-luxury parts of the trade.

Off-trade represents 55% of the UK Champagne sales by volume (Mintel 2006), and

more interviewees from the retailer side were from the on-trade side rather than the off-trade.

However, much of the wine merchants’ business was with on-trade customers, and brand

managers collaborated closely with the on-trade as well.

It is important to note that when the interviews were conducted in February and

March 2008, there was great ambiguity surrounding the future of the global economy (Giles

2008). Speculation on the economic threats and opportunities to the Champagne market was

rife within the wine business in spring 2008, and the first major articles highlighting this risk

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to Champagne started to come out only weeks the interviews (e.g., The Economist 11 Mar

2008; Straker 2008; Williams 2008). Although the views of many interviewees might have

changed somewhat during the spring 2008, the interviews focused more on areas on which

the interviewees’ views are more likely to remain reliably stable, such as consumer

behaviour, brand management, and product lines. The seasonal effect is not likely to have

played a crucial role, as the questions concerned long-term issues.

Including the years worked in the industry as one codebook variable gave some

insight into how the perceptions of more junior interviewees differed from those of more

senior interviewees (Table 4). The mood among those who had experienced the boom and

bust of 1999–2000 was somewhat cautious, even more so among those who had experienced

the crisis of the early 1990s. These differences were taken into account in the data analysis

and interpretation.

Table 4: Interviewee perception differences by experience

Because the same discussion guide with the same open-ended questions was used for

the interviews, the differences in findings are more likely to reflect an underlying trend rather

than merely the interpreter’s bias. Especially with the producer side interviewees, there was a

predictable tendency of portraying one’s own brand and customers in a good light, and this

bias was addressed by asking them to describe the brands and consumers of others as well.

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48

One interviewee puts this explicitly when asked about internal and external motivations for

purchasing Champagne: “We would like to think that our consumers purchase on the basis of

inherent quality, but I suspect that most of them buy because of external reasons.”

It is also important to note that the researcher himself is an active Champagne

consumer and personal bias is naturally an important issue. The researcher’s own preferences

toward connoisseurs’ Champagnes and snob and his perfectionist-type luxury consumer

behaviour were recognised and addressed – even more self-critical scrutiny went in the areas

where the researcher was highly opinionated as an individual. (Neuendorf 2001; Whittemore

et al. 2001.)

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PART V: RECOMMENDATIONS

Understanding the views of the interviewees and analysing them in the light of relevant

theoretical and industry knowledge has given rise to four recommendations on areas where

Champagne marketing could generally be improved on. Branding the mid-sector of the

Champagne market is imperative if producers are to get consumers to trade up. Tailoring the

offering to the customer’s values enables targeting the marketing message more directly to

the right consumer. Communicating the speciality is important for markets where consumer

knowledge of the product is very low. Finally, sending a consistent message builds the brand

in the long term.

Brand the mid-sector

The non-vintage and the prestige cuvée are the two clearly understood styles, and value

propositions of these styles are quite easy to communicate. Although rosé is growing, most

rosé Champagne falls into the non-vintage and prestige cuvée brackets; Laurent-Perrier

Cuvée Rosé Brut and Dom Pérignon Rosé are arguably the most visible sector leaders. Mid-

sector Champagnes are mores specialist cuvées, such as the vintage.

The interviewees described the £40–£70 mid-sector between the non-vintage and

prestige cuvée as the hardest sector to market; it was even described as a “no man’s land”

(RSI). The findings show that consumers are very much driven by visually recognisable

brands throughout all Champagne styles and price points, but the mid-section has a striking

relative absence of strong brands. Moët & Chandon’s 2007 re-branding of Brut Impérial

Vintage as the Grand Vintage could be seen as an early-mover attempt to brand this sector

more strongly (Schmitt 2007 b), but other examples are few and far between.

Although the much-discussed consumer education about other styles is undoubtedly

very important, branding the mid-sector with clearly defined wine identities is likely to have

a more direct appeal to Champagne consumers. Having the same product name for a house’s

non-vintage and vintage (e.g., Brut Impérial and Brut Impérial Vintage) does not indicate a

higher level of prestige for the vintage wine, nor does it strongly indicate superior quality to

the consumer. More distance should thus be created between the non-vintage and vintage

brands to support the vintage brand’s value proposition of superior quality and prestige.

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The most important aspect in branding the mid-sector is creating more distinct

packaging to support a strong visual brand image for the vintage wine. Consumers are loyal

to how the brand looks like rather than how it tastes; thus the wine’s visual image should both

communicate the reputation of the mother brand and signal superior quality and prestige to

the consumer. One good way to signal this is packaging. By introducing the larger gift box

for the 1999 La Grande Année, Bollinger wanted to signal to consumers that the wine was

competing in the prestige cuvée category, rather than with mere vintage Champagnes (PSI).

The findings suggest that consumers trade up from one brand to another rather than

within a brand; a stronger brand image for the mid-sector wines would be the first step of

closing this gap of defecting customers. In advertising the wine, the value proposal of

superior quality and prestige can be reinforced by creating and communicating the new usage

occasion for the wine.

Tailor your offering to your customer’s values

Understanding the main values of the core consumer enables targeting the marketing message

to the consumer more efficiently (Guido 2006; Vigneron and Johnson 1999 & 2004). Every

retail manager interviewed mentioned Veuve Clicquot as a company with consistently

excellent marketing campaigns; the brand fits neatly into the bandwagon category, and the

brand’s signature yellow colour can now be extended to innovative and fun packaging ideas.

The yellow colour, patented hundreds of years ago, has become an unbeatable “branded

differentiator” (Aaker 2003; Juhlin 2004). Veuve Clicquot is a good example of brand whose

visual image and marketing activities are clearly targeted to their core consumer type, the

bandwagon. (Liebenstein 1950.)

Not only do different brands appear more compatible with the luxury consumer types,

but also with different Champagne styles (Table 5). By recognising the primary luxury value

the brand’s customer seeks, marketing communications and new products can be tailored to

that customer. The houses established hundreds of years ago usually have a clear identity and

have found their loyal customer type, but now that many are introducing new styles, some

clashes are happening.

One example of such a clash is the Trilogy. The Trilogy is a range of three single-

vineyard Champagnes from Moët & Chandon, i.e., a snob-appealing range from a leading

bandwagon producer. One RSI puts it very clearly: “Veuve Clicquot and Moët & Chandon

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represent the mass-market, commerce-driven side of Champagne, and so their single vineyard

wines would be hard to sell”.

Table 5: Consumer types and Champagne

Communicate your speciality

Consumers seem to take Champagne’s special role as the celebratory beverage for granted,

without analysing the actual quality or value of the product too much. This is very well as

long as the economy does well, but marketing Champagne as merely an occasional drink

exposes it to economic volatility much more than any other wine. It is thus important to

clearly communicate what makes Champagne different from other wines, and also what

makes a particular brand or cuvée different from others. When a brand is better understood

by a consumer, a stronger emotional tie can then be built between them.

Those interviewees with more experience in the market suggested that

communicating the speciality of a Champagne’s quality sets the brand on a firmer basis. This

is consistent with the retailers’ desire for the houses to participate in educating the consumer

about the virtues of higher-value styles. It is not enough to propose that some difference

exists – the difference should also be understood to add value by the consumer. Lanson’s “Un

style unique…” marketing campaign has not been a success, not least because the proposed

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uniqueness is presented in such vague terms that consumer does not understand what value

this adds (Godsell 2007; Lanson 2007). In contrast, Veuve Clicquot’s “The season”

campaigns communicated clearly the social value of having fun and belonging to a social

group (Boothman 2005; Clicquot 2007).

When demand is booming, houses can manage without feeling the pressure to educate

consumers about their speciality. But, as one PSI puts it, “[the Champenoise] have been on

the top for so long that they don’t realise what an enormous educational problem there is.”

Send a consistent message

To build the brand in the long term, it is important to send a message that consistently builds

the consumer’s perception of the brand. The brand’s message should be consistent with

regard to three key areas: pricing, distribution channels, and the product line.

The findings show that for most Champagne consumers, price is a stronger indicator

of quality and prestige than even the taste of the product. Thus, even if a product’s actual

quality would stay the same or even improve over time, exposure to price discounts can still

weaken the product’s perceived quality. As perceived quality is a key component of a brand’s

long-term success, diluting the message of superior quality through price promotions is a

serious threat indeed. Successful promotional campaigns differ from unsuccessful ones in

that the successful campaigns increase the perceived value, whereas the unsuccessful

campaigns typically decrease prices.

Distribution channels are strategically very important in managing the brand’s long-

term image. Presence in high-prestige on- and off-trade venues can increase the prestige of a

product, as consumers make an association between the brand and other entities very easily

(Simmons et al. 2000). Similarly, over-exposure at low-prestige venues such as corner stores

or supermarkets can damage the perception of exclusivity.

It has become clear that getting consumers to trade up is important in managing the

currently surging demand for Champagne. Adding new products to the product line can allow

for targeting more consumers, but a proliferating product portfolio can also dilute the mother

brand and confuse the consumer. The findings suggest that it is important to make a

distinction between the core product line of the brand and add-on products. Perhaps brand

managers should look into the fashion industry, where Armani has had great success in

managing five clearly distinct Armani sub-brands, each with a clear offering to a well-

defined target audience (Michaels 2008).

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CONCLUSION

The Champagne industry has done phenomenally well, and the limited supply is struggling to

keep up with the soaring demand. This dissertation has researched marketing strategies for

Champagne by combining past research and current industry knowledge with the findings of

12 trade interviews, and arrived to four recommendations based on that research.

Research into luxuries, brands, and wine provided perspective to the findings of the

interviews. The data suggests that Champagne is more of a luxury commodity than a wine,

and most consumers drink Champagne more for inter-personal reasons than sheer inherent

quality. Certainly, the theory of luxury consumption seems to be very applicable to

Champagne consumers – the five luxury consumer types of Vigneron and Johnson (1999) are

all present in the Champagne markets, with bandwagons and Veblenians the most visible

consumer groups. Especially for the bandwagon consumers, Champagne acts as a device to

locate people in the social hierarchy (Dittmar’s 1994).

For marketing Champagne, visual branding and distribution channels are of great

importance, with consistency and product quality becoming more important in the longer

term. Subjecting to supermarket price promotions is seen as the most common mistake for

Champagne brands, as price also acts as a key indicator for both quality and prestige. By and

large, people consume Champagne primarily for its external attributes, and a high-quality but

badly marketed Champagne will find it hard to survive in the marketplace. The major

underlying issue for consumer purchasing criteria is how the product looks in terms of

packaging and branding – but the importance of packaging seems not to be fully appreciated

by some producers.

To answer the research question, “What makes for a good marketing strategy for

Champagne?”, four recommendations were presented for areas of improvement:

o Brand the mid-sector. Consumers are driven by brands, but there is a striking

absence of strong brands in the £40–£70 mid-sector of the Champagne market.

Imperative for building strong brands in this sector is creating a clear visual image

that communicates the value to consumer through superior quality and prestige.

o Tailor your offering to your customer’s values. The five major luxury consumer

types (Vigneron and Johnson 1999) seek different values from consuming luxury

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products. It is important for the producers to understand, along these dimensions, just

who their customer is, and how the customer’s sought values can be communicated

both in terms of the mother brand and in terms of new product offering.

o Communicate your speciality. Champagne has been so successful in the past that

many marketers have become complacent, not communicating what makes their

brand and products special. The current boom should not be expected to last forever,

and producers should collaborate with the distribution channels in educating the

consumer about the speciality of Champagne and the benefits of trading up.

o Send a consistent message. To build a strong brand in the long term, the marketing

communications need to be consistent. Consistency in pricing can enhance the

perceptions of prestige and quality; consistency in distribution channels avoids over-

exposure and the loss of an exclusive image; and consistency in the product line

means distinguishing the core product line from the add-on products. These will help

avoid customer confusion when more added-value styles are promoted.

Further research

This research paper is subject to limitations in terms of the sample size, geographical

location, and occupation. To understand Champagne marketing in more depth, a larger

sample size would be important, in addition to using more research methods such as focus

groups or surveys. All the interviewees work currently in London, and although most of them

also have some international exposure in their jobs, it would be interesting to research

whether other geographical markets give rise to similar findings.

For a more complete view, it would also be important to understand more thoroughly

how consumers themselves perceive Champagne, and how applicable the Vigneron and

Johnson (1999) consumer types are for Champagne consumers at a deeper level. As product

lines are currently proliferating, an interesting area of research would also be how consumers

perceive the new but increasing styles of Champagne, such as the vintage, single vineyard,

and single grape Champagnes, to name but a few.

The prospects for future research into marketing Champagne are fascinating

indeed.!

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55

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APPENDICES

Appendix 1: History of Champagne

History of Champagne

Archaeological findings indicate that wine was first made more than 7,000 years ago in

modern-day Iran, and the Romans are likely to have brought viticulture to the Champagne

region in the first century AD. The reputation of the region’s wines grew over the first

millennium, and Louis XIV’s declaration that “Champagne is the only conceivable beverage”

first brought Champagne into fashion in the 17th century. (Juhlin 2004; Robinson 2006;

Stevenson 2002.)

The process

It is important to note that up until the 17th century, the coming from the Champagne region

was still. The effervescence emerged to Champagne through a lengthy and partly accidental

process, which the French monks perfected over time. Dom Pérignon and others developed

the viticulture and vinification processes in the 17th century into new heights. Although not

the sole producer of sparkling wines, the terroir of Champagne meant that the region could

produce sparkling wines of better quality than other regions. (Juhlin 2004; Stevenson 2002.)

The trade

A law prohibiting the transport of wine in bottles was finally revoked in 1728, the first

Champagne house was created the year after. Ruinart was the first in 1729, and by the end of

the 18th century, many of today’s leading houses had been established. The early success

stories of Champagne marketing tell of great customer relationship management; Moët &

Chandon’s rise to the global leader of the Champagne industry can be traced to the keen

friendship of Jean-Rémy Moët and Napoleon in the 1810s. Wars helped spread Champagne’s

reputation, and over the 19th century it would spread into Russia, Britain, and North America.

The champenois soon understood the importance of tailoring their product to the tastes of

different markets, and had by the 19th century developed the concepts of goût américain, goût

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anglais, and goût français to reflect the tastes of these key markets (Stevenson 2003). (Juhlin

2004; Stevenson 2002.)

History of Champagne brands

Two factors have been particularly influential in bringing brands into the special role they

have in Champagne today. Firstly, the improvements in production processes throughout the

19th century greatly favoured economies of scale, and this brought a natural oligopoly to the

Champagne industry. Secondly, the “Champagne revolt” of 1911 and the 1927 amendment

dictated that almost all Champagne would be sold under the generic AC Champagne

denomination. Before these amendments, Champagne had denominations for lesser-quality

wines as well. (Juhlin 2004; Stevenson 2002)

This is in stark contrast to the denomination system of other French wine-producing

regions – since the denomination did not mark the difference between an average and an

exceptional bottle of Champagne, the consumer learned to rely exclusively on the producer’s

brand as the indicator of quality.

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Appendix 2: Environmental analysis

Political

President Sarkozy’s era has seen France take a more central stage in global and EU politics,

being exceptionally active in promoting the French industries (The Economist 30 Aug 2007

a). Relationships have warmed with the United States after the icier Chirac-Bush era (The

Economist 30 Aug 2007 b), where political disputes between France and the United States

led to American boycotts of French wines (Friedman 2003; Ebenkamp 2003; Amine 2005).

The European Union’s plans to radically restructure the European wine industry have caused

great controversy among the member countries and producers (Atkin 2007; Forbes 2007; The

Economist 14 Jun 2007). EU countries have higher bargaining power as union members than

they would as stand-alone parties in bilateral trade agreements with external parties (Johnson

and Turner 2006), and the new bargaining power of the EU persuaded India to shed its import

duty of up to 550% on drinks imported from the EU (Walsh 2007). Further, alcohol is subject

to political supervision, which especially affects the advertising of alcohol products (EU PHP

2006; Finlex 1994).

Economic

The biggest economic woe for the Champenois seems to be the crise de prosperité – the

current surging growth rates will be impossible to sustain without dramatic changes in

production legislation, prices, or demand (Beckett 2005 a & 2006; Williams 2007 a). Whilst

speculation is rife about a “worldwide shortage” (Harpers 13 Aug 2007) or even a need for

“Champagne rationing” (Hickman 2007 b), the trade officials and producers are quick to

dismiss these as rumours (Gaffney 2007). The appreciation of the euro against the export

market currencies has made Champagne relatively more expensive abroad, and this issue is

compounded by the often dollar-based pricing of new world wines (O’Doherty 2008;

Eiteman et al. 2007). Despite the relative price inelasticity of demand for luxury products

(Liebenstein 1950), Champagne has become more affordable and democratised among the

middle classes (Juhlin 2004; Stevenson 2005 b), and may thus be more exposed to exchange

rate changes with more price-sensitive consumers. At the dawn of a possible recession, there

is much speculation about whether the Champenois could shrug off a downturn (Williams

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2008; Straker 2008; The Economist 11 Mar 2008), and whether the demand for Champagne

in the emerging economies will act as a buffer to western volatility (Hey 2008).

Social

The social factors are a crucial force shaping the Champagne market, and this report

elaborates in the social factors more on the literature review part. Still largely an infrequently

consumed special occasion drink, a slight change in drinking habits might have a dramatic

impact on the Champagne market (Mintel 2006). The strongest growth potential in arguably

lying in the emerging markets (Ligeron 2007) – the Russian market for Champagne tripled

between 2005–07 (The Drinks Business 2007 a), and the Chinese and Indian markets grew by

30% and 19% in 2007 (Kevany 2008) and by 50% and 125% in 2006 (Harpers, 13 Aug

2007). High income inequalities mean that these markets are skewed toward the prestige

cuvées (Krueger and Perri 2006; The Drinks Business 2007. New social contexts and

religions, not least in the Islamic countries, present a particular challenge for the Champagne

industry (Hey 2008; Hofstede 1998).

Technological

Although the harvest still has to be done by hand, technological advantages in Champagne

production continue to have a profound effect in quality improvements and cost-cutting

(Redman 2002; Juhlin 2004). Technology can make a point of difference for producers: the

modern Pol Roger uses stainless steel tanks and accredits the finesse of its Champagnes to the

particularly meticulous temperature controls of its cellars (Avellan 2007 a), whereas the

conservative Krug uses oak barrels and resists mechanisation by insisting that all of its

Champagnes continue to be riddled by hand (Juhlin 2004). The innovations that technology

enables are generally seen as very important in the wine industry (Loftus 2007; Cawood 2007

a). However, the recent cracking of Pinot Noir’s genome has not only created hopes for better

vine health – it has also raised fears among some growers that technological advances will be

at the cost of lost tradition (The Economist 19 Dec 2007 a & b; Harpers 28 Aug 2007).

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Environmental

The climate change’s impact also extends to the Champagne industry, and the 2007 harvest

was rather dramatically the earliest on record (Harpers, 24 Aug 2007). Some see rising

temperatures as a future opportunity for a possible northward expansion of the appellation

(Woodard 2006), but a higher temperature would pose a threat to maintaining crucial acidity

levels in the current appellation area (Woodard 2007 a). Some even venture so far as to

propose Kent, England to become the “new Champagne” if temperatures rise excessively

high in Champagne itself (Adams 2007) – and Roederer, for one, is eyeing English vineyards

for purchase (Hickman 2007 a). The Champagne region has a somewhat dark environmental

past (Curtis 2005), but the CIVC is now campaigning for more environmentally friendly

viticulture (Redman 2002). The current growth in organic products extends to Champagne

(Mintel 2006), and both new businesses (Pigott 2008) and new designs (Harpers 2005 a) have

risen to capitalise on this trend. The area continues to be debated (The Economist 7 Dec

2006).

Legal

The major legal dispute in Champagne regards the intellectual copyrights of the term

Champagne itself. Although many major countries do not recognise the Treaty of Madrid

(1891), the EU has had recent success in throwing its whole weight behind the rights of the

Champenois. The European Commission (EC) struck a deal with Australia in 2007 to stop

Australian vintners from using European names such as Champagne (Kumar 2007), and

joined forces with American producers to launch the Center for Wine Origins in the US to

promote authenticity of wines from both sides of the Atlantic (Stevenson 2006). The US

agreed in 2006 that most of its sparkling wines should be called “sparkling wines” (McIntyre

2008), but the 2008 crackdown on illegally labelled “California Champagne” where Belgian

authorities destroying the illegal imports goes to show that there is still some way to go in

consolidating the US–EU intellectual property rights (Stadnyk 2008). The CIVC has also

played a role in the legal tussles; it blocked Indian ownership of Taittinger in 2005, citing

India’s failings to recognise the Champagne appellation (Stevenson 2006). Inside Europe, the

producers from the Swiss village of Champagne recently lost the right to use that name in

their wines (Harpers, 29 Aug 2007).

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Demographic

The luxury goods sector has doubled with the concomitant doubling of global millionaires

since 1996 (Demos 2007), amid signs of further consumption inequalities (Krueger and Perri

2006). Conspicuous consumption of prestige cuvées has surged, as Champagne has reached

unprecedented popularity among these so-called mega-rich (Schmitt 2007 a). ACORN ABs

appear the key to the whole branded market, while ABC1s are also important for lower-

equity brands such as own label Champagnes (Mintel 2006). Whilst some rely on the

increasing buying power of the upper classes of emerging economies, others see the current

growth rates as unsustainable in the long term (The Economist 6 Dec 2007).

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Appendix 3: Industry analysis

Suppliers

The Champagne houses depend on growers on grape supplies, and the prices for the grapes

are often negotiated separately each year (Juhlin 2004). This has led to some growers

speculate by holding back grapes when global demand is soaring, creating price hikes

through artificial shortages (Beckett 2006). Many are calling for a return to fixed grape

pricing as a solution to the increasing prices (Beckett 2005 b; Fallowfield 2005 a), but this

conflicts with the EU’s agenda to promote freer markets (Johnson and Turner 2006).

Buyers

Despite there being some 100 Champagne houses, the exports are heavily concentrated

among the largest of them – Moët & Chandon and Lanson together accounted for 47% of UK

on-trade sales in 2005 (Mintel 2006). Champagne is increasingly sold through supermarkets,

and their combination of size, range, and low supplier-switching costs gives them increasing

bargaining power (Datamonitor 2007 a & b). However, the strong trend toward further

consolidation among Champagne houses counters this power (Fallowfield 2007 a).

New entrants

With the current price of Champagne vineyards ranging from ! 100,000 to over ! 1 million

per hectare, it is the most expensive wine area in the world (Hickman 2007 a; Juhlin 2004;

Harpers 18 Sep 2007). Cost of land may thus deter entrants, but the fragmentation of the key

domestic market makes market access easier for small growers (Fallowfield 2007 a).

Although most of today’s largest houses were established in the 18th century, Nicolas

Feuillatte’s surge from a tiny cooperative in 1971 to 8 million bottles in 2006 shows that new

players can still enter the market (Juhlin 2004; Fallowfield 2007 a). The expansion of the AC

Champagne by 40 villages will shake the industry’s established structures with a surge in

entrants, but this expansion is likely to come at just the wrong point of the economic and

demand cycles (Hickman 2007 b; Stevenson 2007).

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Substitutes

There is no real substitute for Champagne as a luxury sparkling wine (Hey 2007) – only 10%

of Britons see sparkling wine as a cheap substitute for Champagne (Mintel 2006). “Its

celebratory appeal has rendered it a luxury commodity that is closer to caviar, diamonds, and

haute couture than wine per se”, comments Tom Stevenson (2005 b p. 44). This special

status of Champagne has distinctly isolated it from the competition from other wine areas

(Rose 2005). The launch of elite Champagne packaging seems to create far greater media

attention than that of elite-quality Champagnes – Veuve Clicquot’s non-vintage Yellowboam

with gold and exotic leathers created far more media buzz than Krug’s 1996 Clos du Mesnil,

despite their equal magnum price (Wine & Spirit 2007; Harpers, 17 Jul 2007). Despite

Champagne’s past differentiation successes, many future growth markets do not really

understand the difference between Champagne and sparkling wine (Hey 2007).

Industry rivalry

The European wine industry is experiencing a crisis after competition from new world

producers has resulted in a European “wine lake” – a huge oversupply of mainly low-quality

European wine (Rose 2005). The Champagne industry, however, has shown healthy profits in

the midst this European wine crisis (Rose 2005; Straker 2007 a), despite its heavy reliance on

special promotions in sales (The Drinks Business 2007 b; Mintel 2006). This prevalence of

heavy promotions, bar in the prestige cuvée sector, runs counter to the price-inflating

pressures of soaring demand with relatively stable supply (Stevenson 2005 a; Straker 2007 a).

There is a common understanding in the industry that the direction of growth must be toward

more value rather than higher quantities (Fallowfield 2006 a), and educating consumers about

the different, more premium styles is seen as a major task for the champenoise (Evans 2007;

The Drinks Business 2007 b). A focus on differentiation rather than cost advantage generally

allows for higher profitability within an industry (Porter 1985). The major organisational

trend in the industry has been consolidation among the big houses, and giants such as LVMH

are gulping up ever more Champagne houses into their portfolios (Fallowfield 2007 a). The

trend in corporate governance has been from the French family ownership model toward a

more Anglo-American model of market-based regimes, but the holding companies also

understand the family’s significance as winemakers and ambassadors of the brand (Brook

2004; Eiteman et al. 2007).

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Appendix 4: Champagne styles

Non-vintage

The non-vintage still accounts for over 80% of Champagne production (Fallowfield 2007 b).

This category represents the house style that the consumer relies on buying (Parkinson 2005),

and as such is invaluable for the mother brand’s image. Some Champagne houses have

detected a gap and launched a second non-vintage – Gosset positioned its non-vintage Grande

Réserve between the traditional non-vintage and vintage price points (Gosset 2008).

Prestige cuvée

Tsar Alexander II ordered a luxury cuvée from Louis Roederer in crystal bottles in 1873, and

over the 20th century, prestige cuvées became a success (Juhlin 2004). Now practically every

house has a cuvée de prestige, which today is invaluable in communicating prestige to the

consumer (Avellan 2007 b). Serena Sutcliffe (2005 p. 62) describes prestige cuvées as “more

aspirational, more ‘look at me’”. Although prestige cuvées are typically the houses best

Champagne, some houses such as Krug and Salon only produce prestige Champagnes (Juhlin

2004). Bollinger sees its entry-level vintage La Grande Année as its prestige cuvée, since its

higher-end Champagnes are for such niche markets (Sutcliffe 2005). Prestige cuvées are

increasingly marketed as stand-alone brands, and many houses are targeting luxury cuvées

especially to the Asian markets (Spurrier 2006). Celebrity endorsement of prestige cuvées

helps boost sales, but can make some brand managers uncomfortable – in 2006, rapper Jay-Z

called for a boycott of Cristal after interpreting remarks of the producer as racist (Gumbel

2007).

Vintage

On those years when the wine’s balance is so good that no blending of vintages is needed, a

house may launch a vintage wine (Juhlin 2004). Many leading critics agree that vintage

Champagne offers the best value for money (Stevenson 2005 c; Juhlin 2004), but vintage

Champagne has been somewhat stuck in the middle with the consumer market polarising

between the non-vintage and prestige cuvées (Schmitt 2005). To counter this, the Champagne

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Information Bureau (CIB) has launched an official initiative to “demystify the vintage”

(Evans 2007 p. 6).

Rosé

Demand for rosé Champagne has soared to such an extent that Champagne houses now have

to extend their cellars to accommodate the growth (Sutcliffe 2007). In stark contrast to still

rosé wine, rosé Champagne comes at a hefty premium of the white version (Stevenson 2004)

– although production costs are a third higher, prices can be up to twice as high (Fallowfield

2006 c). Since most rosé is non-vintage and non-prestige, it offers a unique possibility to

produce very large quantities of premium-priced Champagne (Fallowfield 2006).

Blanc de blancs, blanc de noirs

The blancs de blancs are made solely of white grapes (Chardonnay), and blancs de noirs of

solely red grapes (Pinot Noir and/or Pinot Meunier). As most Champagne is a blend not only

of different vintages but also of different grape varieties, it can be challenging to

communicate the speciality different grape varieties to consumers (Juhlin 2004). Pommery

has tackled this issue by branding these cuvées as part of the Seasonal range (Schmitt 2007

b). It has named the lighter blanc de blancs Summertime, “for those lazy hours when the sun

shines” (Pommery 2008 a), and the fuller blanc de noirs Wintertime, “for those warm winter

moments spent by the fireside” (Pommery 2008 b).

Ultra brut

Although almost all Champagne is brut (dry), a recent trend has been growth in the ultra brut

(bone dry) sector. Laurent-Perrier’s Ultra Brut is the pioneer of this sector, and without the

masking effect of added sugar, the inherent quality of the wine comes more into the spotlight

(Fallowfield 2007 b).

Sec and demi-sec

Although very popular in France (Juhlin 2004), the sweeter versions of Champagne remain

something of an enigma to customers in the export markets (The Drinks Business 2007 c).

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The houses see this as a possibility to bring Champagne into new consumption occasions,

such as afternoon teas and desserts (Schmitt 2007 b).

Mono-crus

Mono-cru Champagnes come from a single village, and some Champagnes even come from a

single vineyard in a village. Mono-cru Champagnes have higher appeal among connoisseurs,

and single vineyard wines such as Krug Clos du Mesnil and Bollinger Vieilles Vignes

Françaises represent the absolute elite in terms of price and rarity (Juhlin 2004). Some

commercially-minded houses such as Moët & Chandon and Nicolas Feuillatte have recently

rolled out their sets of single vineyard Champagnes (Schmitt 2007 b), but some other

producers see these as a mere marketing gimmick to attract snob consumers to the brand

(Avellan 2006).

New combinations

As very few of the above styles are mutually exclusive, some houses have created new

market spaces by combining the different styles in an innovative and unexpected way. Duval-

Leroy’s Lady Rosé is an unusual half-dry rosé in only half bottles (Duval-Leroy 2008), while

Gosset’s Célébris Blanc de Blancs occupies an even smaller niche – it is a non-vintage ultra-

dry blanc de blanc prestige cuvée (Gosset 2008 b).

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Appendix 5: Discussion guide

• (Ethical disclosure) • What is your background and professional

experience with Champagne?

1. Champagne marketing

• What is the most important in marketing Champagne?

• What makes for a marketing strategy good in this sector?

o What are the most common mistakes? o How can these be improved on?

• Reflecting on the past with hindsight, what would you change?

2. Champagne markets

• How would you describe the Champagne market? o What makes it different from other

markets? • What makes a good market? What should one look

for in a market? • What are the key challenges? • Which elements of the market most affect the

producers? o How?

• Are there substitutes? ! Is that sustainable? • What trends shape the market?

o What are the key underliers? 3. Consumer motives

• What will be the role of Champagne for consumers? o What will be the occasions?

• How do consumers buy Champagne? o What aspects are more important to them? o Is there a trend in how consumers buy

Champagne? o Should companies adjust to changing

consumer wants? • Are there differences between consumers? • Do consumers buy Champagne for more internal or

external motives? o How can you reach these? o Can you do this with the same brand?

• What consumers judge the quality of Champagne on?

• What indicates prestige to consumers? • What does price indicate?

o Can it indicate prestige? o How would they buy with higher prices?

• If the product is popular with one consumer group, will others imitate them?

o Which ones? o Are there any dangers?

4. Linking brands to other entities

• Do you think brand partnerships are a good way to market Champagne?

o What makes for a good partnership? What aspects must be compatible?

o What are the benefits? o Are there downsides/risks?

• How do you see sponsoring events? o What are the benefits? o What is the potential? o Are there downsides/risks?

• How do you see branded bars? o What are the benefits? o What is the potential? o Are there downsides/risks?

5. Product lines and brand extensions

• Do you see any trends toward diversification or consolidation?

• What do you see happening in the product lines? o How do you see any extensions into new

styles? o What are the implications for brand

identity? o How will it affect the consumer?

• What is the role of prestige cuvées for brands? o What are the implications of growth in

this sector? o How do they affect the mother brand?

How are the links? o What are the implications of stand-alone

branding? • How do you see the expansion of Champagne

brands to the new world? o What are the implications to the mother

brand? o How will it affect the consumer?

Closing

• What advice would you give to a new marketing manager in this sector?

• What is your vision for Champagne? Prompts

• Why? / Why not the other one? / How? • What is driving this? Are there other underliers? • How sustainable is it? • How does this affect/translate into profitability?

• How does this affect the brand?

• How does this affect the consumer?

• Is this specific to you or more general?

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Appendix 6: Approach letter

Dear Sir/Madam,

I am writing to you regarding an academic research project on Champagne marketing I am

working on at the moment. The research has a commercial focus, and seeks to link the

modern theory of strategic marketing into today's Champagne markets. The aim of my

research is to help brand managers and other luxury product decision-makers make more

informed decisions.

Considering (–––), I would be keen to interview a (brand) manager from you. The interviews

typically last for some 45 minutes, are done in London, and I hope to do the remaining

interviews in (–––). I would be happy to interview you as soon as convenient.

I currently study at Cass Business School, London, and have also completed the WSET

Advanced Certificate in Wines & Spirits with distinction in all units. The undergraduate

business programme at Cass is ranked 1st in London by The Guardian.

I hope we can arrange an interview soon. You would, naturally, also receive a copy of the

final dissertation upon its completion this spring.

Best regards,

William Tarvainen

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Appendix 7: Interview codebook

The following gives a simplified example of how the data was worked with. It is important to note that the interview transcripts were gone through several times to find additional insight in the light of the previous findings. Variables in the codebook (example excerpt from the actual codebook in italic)

1) Interview section and subsection

o 5.3.1 (What are the implications of growth in this sector?)

2) Interviewee initials

o JL (Jeremy Lithgow)

3) Retailer/supplier side

o RS

4) How many years in the industry

o 12y

5) Aspect mentioned first

o 1! (1 = quality; ! = might suffer)

6) Secondary aspect(s) mentioned

o –

7) Other implications

o –

Steps in comparing the answers

1) Get the answers of all respondents for the topic area

2) See general trend: What is the most important?

3) See biases: Do the retailer/supplier answers differ?

4) See biases: Do the senior/junior answers differ?

5) Are the secondary aspects significant?

6) Is this consistent with the rest of the answers?

7) What are the implications with the literature?

a. How does this fit with luxury theory?

b. How does this fit with brand theory?

c. How does this fit with wine theory?

8) What recommendations can be drawn from this?