Words of Wisdom from the Godfather himself: M. Chapoutier

Godfather Chapoutier after a little Champagne (he drinks 3 bottles a day... I think this was #2)

Michel Chapoutier is the godfather of my MBA program (in French, he’d be the parrain). I think this may be more of a French concept because when I hear “godfather” I immediately think of Brando and the mob—I guess if this was the U.S., then Mr. Chapoutier would be akin to the person giving the commencement speech at graduation.

Either way, as the program’s godfather, he’s twice traveled to Bordeaux from his home in the Rhone Valley to address our class. I couldn’t comment much on his first presentation because it was in French, and well… my language skills back then weren’t quite ready for talks on progressive winemaking and comparative terroir (which I think was what he spoke about… not quite sure).

However, M. Chapoutier recently came to visit us for a second speech (in English) focused on two different marketing strategies French producers should pursue according to the wine they produce: either based on brand or on AOC.

Brand Marketing

Chapoutier explained how New World wine producers have capitalized on the concept of brand marketing, specifically stating that the success of the U.S. wine industry was the result of big wineries investing heavily in marketing to turn beer drinkers into wine drinkers. Beer drinkers generally don’t like complication, so terroir was out—yet, offering an easy-drinking Chard together with a “goes great with steak” Cab was both simple and appealing.

In other words, Brand marketing = DEMAND marketing. Wine producers developing brands must first know their consumers’ tastes and then create a product to match their preferences. Sounds simple enough, only how should this concept be applied to the French wine industry? French wine brands are few in number, and in a country with almost 400 wine appellations, you’d think most producers would take pride in developing a wine that best represents the place it comes from.

However, Chapoutier expressed that the notion of social welfare has killed the French AOC system. Each year, approximately 20% of French AOC wine is rejected by supermarkets due to poor quality (do you think Toyota has the same failure rate?). However, rather than kick these producers out of the AOC, the government continues to subsidize their production without requiring them to improve upon their quality. This means that the AOC system no longer is a true guarantee of quality, which historically has been the biggest selling point for French wines.

Chapoutier feels the best solution would be to let those producers having difficulty making AOC wine to de-classify themselves and make vin de pays wine instead. This means they would no longer have to produce according to stringent AOC regulations, and would instead have the freedom to create wines that match consumers’ tastes (add sugar for instance), use whichever grapes they want (and label according to the grape variety), and produce in larger quantities—all better positioning these producers to develop branded wines for the international market.

AOC Marketing

Yet, at the heart and soul of French winemaking is the notion of terroir, which the AOC system strives to promote. According to the most recent INAO statistics, France currently has 394 viticultural appellations, of which the majority is designated to wine. That’s 394 types of terroir! (and this is without diving deeper into various microclimates, single estates, etc.) Chapoutier believes the greatest strength of the AOC system is its diversity because, “the diversity of the consumer is a million times for complex than the diversity of the wine.”

Therefore, for producers capable of making quality AOC wine, he recommends they pursue an OFFER marketing strategy. In other words, you don’t change the taste of your wine, you change the consumer. A strong sales effort is required because you need to connect the wine with an appreciating consumer. The wine should be positioned as a niche product based on specific attributes resulting from its unique terroir. The objective is to have the AOC be understood by the consumer.

The concept makes sense, but I wondered how successful this strategy would be given that most consumers’ preferences change—and knowing myself, quite frequently. Chapoutier responded that the “evolution of the palate” is part of the equation and the only constant factor is that consumers’ palates evolve in the same direction: from most basic to more sophisticated.

Therefore, it must be accepted that consumers will come and go as their palates change. However, a producer employing an AOC marketing strategy should stay true to the wine by focusing on its unique terroir—and just as people’s palates evolve, so will new consumers.

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