Why have spirits brands been "more powerful" in the marketplace than wine brands?

Commercial alcoholic beverages have all sorts of marketplace characteristics, one of which is their ability to dominate their markets. This feature was investigated in a survey of the world’s leading drinks brands, published annually from 2006-2015 by the international company strategists Intangible Business. This was called The Power 100, in which each brand was given a power score, allowing them to be ranked.

Intangible Business apparently researched c. 10,000 spirit and wine brands across the globe, to assess both the financial contribution of each brand and its strength in the eyes of the consumer. To do this, they combined scores from a panel of drinks industry experts along with global sales data (see Methodology, and Panelists).

The Brand Score (out of 100) was produced by the panelists, who scored each brand for these characteristics (each a scale: 0–10):

• Share of market: a volume based measure of market share
• Future Growth: projected growth based on 10 years of historical data and future trends
• Premium Price Positioning: a measure of a brand’s ability to command a premium
• Market Scope: number of markets in which the brand has a significant presence
• Brand Awareness: a combination of prompted and spontaneous awareness
• Brand Relevancy: capacity to relate to the brand and a propensity to purchase
• Brand Heritage: a brand’s longevity and a measure of how it is embedded in local culture
• Brand Perception: loyalty and how close a strong brand image is to a desire for ownership.

This Score was then turned into a Total Score (out of 100) by multiplying it by the brand’s weighted sales volume — the weighting was apparently designed to adjust the volumes to a comparable level. It was the Total Score that was used for the final Power list, with the top 100 being listed each year.

Across the 10 years, 141 brands appeared at least once, although only 68 (48%) of them appeared in all 10 surveys, with another 8 appearing in 9/10 years. That is, only half of the brands had any sustained Power — these are listed at the bottom of this post. In the other cases, the brands either appeared in the early surveys only, or in the later surveys only — very few came and went from year to year (implying that they were just on the border of the top 100).

Perhaps the first thing to note about the results is that Power comes mostly from sales volume. This is illustrated in the graph, which plots Brand Score (horizontally) and Total Score (vertically). Each point represents the results for one brand in one year (ie. there are 1,000 points).

Note that Total Score increases very rapidly — indeed, this increase is greater than exponential. Those brands above the dashed line (eg. Smirnoff vodka, Johnnie Walker whisky, Bacardi rum) have their Brand Score massively enhanced by sales — this makes them consistently by far the most powerful brands. However, also note that it is only brands with a high Brand Score that have large sales volumes, and therefore a high Total Score.

To consider which types of brands make it into the lists, we can categorize them:

• Wine (Champagne, Other Sparkling, Still Light Wine, Fortified Wine)
• Whiskey / Whisky
• Spirit (Cognac, Other Brandy, Gin / Genever, Rum / Cane, Tequila, Vodka)
• Flavored (Aniseed, Bitters / Spirit Aperitifs, Light Aperitif, Liqueurs, Alcopop).

The results for these categories are listed in the first table.

Number of brands Average no. years /10 Occur in all 10 years (%) Average rank /100

Wine 39 6.0 26 61.0

Whisky 31 8.2 65 46.6

Spirit 49 6.8 47 44.3

Flavored 22 8.0 68 53.9

Note that the Wine category does very poorly. There are a good number of brands, but they do not have much power, compared to the spirits categories. That is, fewer brands appeared in all 10 years, and their ranks were mostly lower than for the other categories. [Note: in the wine world, the word “brand” is often used to refer to the company, while “label” refers to what are here called brands.]

This is not necessarily unexpected, if real power comes from sales volume. There are many more wine brands on this planet than there are spirits brands, and therefore they split the market between them into much smaller segments. Competition ensures that none of these segments is very large. Making matters even more extreme, many wineries market wines from a series of different vineyards each under their own name (citing the supremacy of terroir in the wine world), even if they use the same overall brand name — this potentially fragments the market even more.

Many larger wine companies have been acquiring small independent producers with a high reputation, but this consolidation would result in brand power only if they are marketed under the same brand name. However, the plan generally seems to be to keep them as boutique brands within a large premium portfolio.

So, which wine brands did consistently made it onto the Power lists? This next table shows how many of the wine brands appeared in all 10 surveys. For example, for the Still Light Wines, 20 brands appeared at least once, and 6 of these appeared in all 10 years. The table then lists the average rank across the surveys for those brands that did make it all 10 times. So, for example, Moët fared best (had the best average rank), followed by Gallo and Concha y Toro, who all managed to crack the top 20 (out of 100).

Still Light Wine   Gallo   Concha y Toro   Hardys   Robert Mondavi   Jacobs Creek   Blossom Hill Champagne   Moët et Chandon   Veuve Clicquot   Mumm Other Sparkling   Freixenet Fortified Wine

6 / 20   19.0   21.0   29.4   32.6   54.4   66.9 3 / 14   16.5   27.7   80.3 1 / 2   51.0 0 / 3

This list may not impress you very much. Notably, there were none of the premium wine brands included in any of the Top 100 lists, except a few from the Champagne region of France. The wines of Bordeaux, Burgundy and the Napa Valley, for example, simply do not sell enough volume to achieve any real market power. The media write about them a lot, but most consumers know little about them; and real power rests with the masses, not the media.

Conclusion

Simply put, there are more wine brands in the world than spirits brands, so that none of them can have a sufficient part of the market to achieve great market power. That is, diversity and power are inversely related. So, spirits continue to rule in the global power game.

Note that these 2006-2015 surveys are not particularly current. However, since then, things have not improved to any extent for wine volume sales. Millennial and Generation Z consumers increasingly favor spirits and, more recently, hard seltzers. And remember, the Millennials have now officially taken over the marketplace (Millennials overtake Baby Boomers as America’s largest generation).

---

Brands that appeared in all 10 of The Power 100 lists.

Wine Moët et Chandon Mumm Veuve Clicquot Freixenet Blossom Hill Concha y Toro Gallo Hardys Jacobs Creek Robert Mondavi

Whisky Glenfiddich 100 Pipers Ballantine’s Bell's Chivas Regal Dewars Famous Grouse Grant’s Scotch J & B Johnnie Walker Teacher's Jameson Black Velvet Canadian Club Canadian Mist Crown Royal Jack Daniel's Jim Beam Maker's Mark Wild Turkey

Spirit Courvoisier Hennessy Martell Rémy Martin Dreher E & J Brandy Beefeater Bombay Sapphire Gordon's Gin Seagram Gin Tanqueray Bacardi Captain Morgan Havana Club Cuervo Sauza Absolut Finlandia Grey Goose Ketel One Skyy Smirnoff Vodka Stolichnaya

Flavored Ricard Campari Bitters Fernet-Branca Jägermeister Cinzano Vermouth Martini Vermouth Baileys Bols Liqueurs Cointreau De Kuyper Disaronno Grand Marnier Kahlua Malibu Southern Comfort

Medical practitioners and malt whisky

Greetings of the season.

For Christmas this year I thought that I might follow up on two previous posts that have proved to be quite popular on my other blog, which are about the detectable qualities of Scotch whiskies:

• Network analysis of scotch whiskies
• Single-malt scotch whiskies — a network

Medical practitioners have been known to partake of these tipples; and along the way some of them have pondered the question as to whether it it possible for people to reliably distinguish among the various whiskies, in even the most basic way. For example, two medical groups have done some experiments, and published them in the Christmas issue of the British Medical Journal:

• Stephen J Chadwick, Hugh A Dudley (1983) Can malt whisky be discriminated from blended whisky? The proof. A modification of Ronald Fisher's hypothetical tea tasting experiment. British Medical Journal 287:1912-1913.
• EJ Moran Campbell, Diana ME Campbell, Robin S Roberts (1994) Ability to distinguish whisky (uisge beatha) from brandy (cognac). British Medical Journal 309:1686-1688.

For those of you who think you know your whiskies, it turns out to be a lot harder to discriminate them than you think.

Here is the abstract of the first paper:

A modified version of Fisher's tea tasting experiment was performed to test the confident assertions of some members of an academic surgical unit that they could easily distinguish malt from blended whisky. Eight male volunteers from the unit, divided into regular and inexperienced whisky drinkers, were blindfolded and given a glass of each of six whiskies. The whiskies included three malts and three blends, and each subject tasted each whisky six times. They were asked whether the whisky was malt or blended, whether they could identify the distillery, and whether they liked it (ranked on a nine-point scale). Statistical analysis of the data suggested that within the [surgical] unit malt whisky could not be distinguished from blended whisky, and that experience did not alter powers of discrimination. These results suggest that, although "uisgebeatha" has unique properties, the inexpert drinker should choose his whisky to suit his taste and pocket and not his self image.

Here is the abstract of the second paper:

Objective: To assess the ability to distinguish between first rate malt whisky and brandy and between different brands of each. Design: Crossover with two sessions of 12 blindfold tastings of two whiskies and two brandies before and after supper, repeated not more than seven days later. Participants: four volunteers aged 50-68 years, all moderate drinkers of alcohol and members of a wine club. Results: Only one participant produced irrefutable statistical evidence of being able to distinguish between whisky and brandy, correctly identifying 50/51 (98%) samples. The participant who was best able to distinguish between whisky and brandy was also best able to identify correctly the brand of whisky (100%). Conclusion: The results show that some participants could distinguish neither between malt whisky and brandy nor between different brands of whisky and brandy. However, the success of one participant [a Scotsman] shows that "it can be done", and that his whisky specific ability is acquired not innate.

These experiments received comments from some of their medical colleagues, for those of you who might like to read them:

• James Howie (1983) Good motivation but indifferent methods. British Medical Journal 287:1913-1914.
• Douglas G Altman (1983) How blind were the volunteers? British Medical Journal 287:1914-1915.
• Stephen J Chadwick, Hugh A Dudley (1983) In defense of the whisky drinker on the Clapham omnibus. British Medical Journal 287:1915.
• Ken MacRae (1994) A spirited attempt. British Medical Journal 309:1688.

Of these, perhaps the most pertinent one is from both Howie and MacRae, who point out that some of the drinks chosen were rather similar. Obviously, this point alone obviates the need for an experiment at all — if it is known beforehand that whiskies are similar to each other (as shown in the two blog posts linked above), then why do we need an experiment to show it? Except for the fun of doing the tasting, of course!

Finally, Altman notes that "last Christmas I helped to perform a small experiment that demonstrated that white wine and red wine cannot always be distinguished (unpublishable results)." Christmas can have that effect on you.