Sustainable differentiation. That was the buzzword of the day and an important component of Tom Shelton’s talk on branding and identifying market niches. In short Tom, the President and CEO of Joseph Phelps Vineyards, argued that only sustainable points of differentiation (things that make your wine or story sustainably unique) will allow a brand to remain strong for any substantial length of time.

Tom’s focus is understandably on the luxury end of the market, with Joseph Phelps Insignia being chosen as wine of the year by Wine Spectator last year, but his suggestions can be applied to other price points. Tom was incredibly open with information and advice, and hearing his take on branding that works in the long run was extremely interesting.

Below is his list of marketing tactics, from least to most sustainable (and though he didn’t say so, I’ll go ahead and add the caveat that the list isn’t exhaustive – Also, the comments after each are my own).

• Bottle size – easily copied
• Varietal designation – everyone now does it
• Star winemaker – someone else can hire her, she could leave and start her own label, or she might be so expensive you never actually make any money. Moreover, using a star winemaker as a selling point is a good tactic but a very poor strategy according to Tom. You need to say something more compelling about your wine than simply “Helen Turley made this”.
• Image appellation (terroir). This is sustainable, but is something over which you have little control after you’ve purchased your land or contracted for your grapes. Still, having Napa or Russian River Valley on your label will add dollars to the price your wine will fetch in the marketplace.
• An Estate Designation. This will be “critical in the future” according to Tom. It assures the discriminating consumer that you had a hand in every aspect of the winemaking and grape growing, and that this should lead to higher quality. But, Tom argues, it is not enough. Others can call their wine Estate Bottled and many do. What you really need is…
• A proprietary Name. Reserve has become meaningless through overuse in the marketplace. Having a unique term is the best way around this problem. Insignia is one of the best examples. No one else can use it, it conveys the same quality information as “Reserve” once did, and it makes the product more memorable. Naming bottlings after vineyard blocks or after family members is a variation on this theme.

Some other interesting tidbits about Joseph Phelps are

• That they sell around 35% of their wine direct
• Sales of Insignia makes up around 80% of their revenue
• Their average consumer is over 35 and makes much more than 100K a year
• In any given year Insignia is blended with anywhere from 100% Cabernet Sauvignon to nearly 100% Merlot (a quote: “Consumers will drink Merlot, as long as they don’t know it’s Merlot”)
• Production of Insignia varies from 17,000 to 25,000 cases depending on the year.

Tomorrow: Brand Management with talks by Leslie Litwak, Senior VP of Icon Estates, among others.