A/B Testing on Wine Labels

As a huge wine non-snob, my first stop in the grocery store is always the wine discount shelf. The way I look at it, it’s like the store paid me to age their wine. Win-win!

Wine and marketing collideDuring a recent trip, however, my interests in wine and marketing collided as I spotted two wines from the same brand, Mia’s Playground, sporting wildly different labels. As you can see in the photo, their Cabernet, on the left, has a fun, playful, non-intimidating label, while the chardonnay on the right has a more serious, formal design.

I’d never heard of Mia’s Playground wine, but at $4.99, pretty much any wine is worth a shot. A quick web search shows that Mia’s chardonnay usually retails for $16, while their Cabernet goes for about $15. That’s a pretty steep discount, and makes the differences in the labels even more interesting. Why are two wines priced similarly yet sporting different label designs, and why are they both heavily discounted? Is this Mia’s A/B test gone horribly wrong? Are they trying to position the different varietals for different market segments?

As I thought about it more, I wondered if the label even makes a difference. I was confident that it did, but as a quant, I needed to see the numbers…

What Do the Academics Say?

Since wine is a $32.5 billion industry in the US alone, it’s no surprise that plenty of research has been put into wine marketing. Think about the logistics of the typical wine purchase: it’s highly-subjective, there are tons of choices, even at small stores, and each wine has a new vintage every year. As a wine consumer, you’d probably lean towards known wines that you’re familiar with (which just increases the marketing efforts required by competing wines) or, without additional information (like reviews or Wine Spectator scores), you’d just choose the one with the best marketing+price combo.

Here are a few tidbits from some semi-recent studies that show how much impact labels have on wine sales:

  • From a 2007 UC Berkeley study: “…the illustration used on the label had the greatest impact on both purchase intent and perceptions of brand personality.”
  • A 2007 study from University of Reims, France, found “that when the label is authentic, young consumers don’t see any risk buying the wine because the presence of the label is a definitive indication of the product’s authenticity.”
  • A paper presented at the 2010 International Academy of Wine Business Research Conference stated that “packaging can be related to between 26% and 42% of predicted price differences.”

To add some confusion to the mix, or just to show that even the consumers themselves don’t know what they want, I found these two conclusions from separate Cal Poly studies:

  • One study found that “Americans did not rank ‘has an animal on it’ as a desirable feature but two of the top three brands, Yellow Tail and Toasted Head, had an animal on them.”
  • Another study found that “there is little to no correlation between wine label design aesthetics and price.” However, this study focused more on font, colors, and layout over label content, and was written by an undergrad (gasp!). One interesting finding of their research was that tasting scores by Robert Parker were higher for wines with labels that were designed in a top-to-bottom format over a left-to-right format. What’s up with that?

Where Was I?

OK, I’m off the rails here. Back to Mia.

As I started writing this post and googling “Mia’s Playground,” I learned a few things:

Having worked a stint in the wine industry consulting for Robert Mondavi Wines, I immediately recognized Sebastiani as one of the biggest wine producers in the US. With 1.3 million cases sold in 2011, that puts them at #14 on the Wine Business Monthly list of the largest North American wine producers. Sebastiani’s website has them at 2 million cases in 2007, so the Great Recession has, apparently, not been kind.

Their most-recognizable brand is probably Smoking Loon, but their website shows nine brands, of which Mia’s Playground is not seen. Digging deeper, I found that Mia is actually Don Sebastiani’s daughter, and that her name also adorns a wine-based cooking sauce.

Wine.com shows Mia’s Playground as “no longer available,” and they and Snooth.com list vintages from 2002 through 2008.

$15 is “Luxury” Wine?

Marketing plays a huge role in the wine industry, obviously. This wine industry publicist says that 2% of a wine’s retail price is dedicated to marketing, which translates into $650 million spent on wine marketing in the US. With that amount of spend, there’s definitely room for consultants, focus groups, and, yes, even A/B testing.

Quality Segments of the Global Wine Market
Quality Segments of the Global Wine Market, Wine Communications Group

More googling seems to indicate that Mia’s Playground switched label designs with the 2005 or 2006 vintage from the fun version to the serious version, maybe in an attempt to spur sales or justify the price.

Sadly for Mia, a wine priced at $15-16 is considered an “ultra-premium” wine by the Wine Communications Group. (Other sources peg $15 as either “luxury” or “super-premium,” so this segmentation system is clearly unclear.)

It’s very telling about the US wine consumers’ palate (or wallet) that 94% of wine sold is under $14 per bottle. Or, maybe it’s indicating that, for those who are willing to spend more than $15 for a bottle of wine, price ceases to be a key decision-making factor? Either that, or I’ve been over-paying for wine for the past 10 years.

Bottom Line

Mia may have simply been another victim of the Great Recession, since the timing fits perfectly. As the economy started to slow, and instead of lowering the price, Mia tried to up-level her brand with a serious label befitting a $15 wine. With a 2008 vintage hitting the shelves in 2009, and with Sebastiani’s sales dropping 35% between 2007 and 2011, Mia’s bosses may have had to cut under-performing brands.

In any event, wasn’t this a fun exercise!? Let me know what you think with a comment below.

I’d really love to see the sales numbers before and after the label change. But, as a marketer myself, if the change of label had minimal or even negative impact, it was obviously a sales execution problem! 😉

I’ve sent an email to Sebastiani to get the real story on Mia’s Playground and will update this post if/when they respond…

Cheers!

Why Consumers Should Embrace Location-based Services

Privacy.  It seems as if it’s the media’s only focus every time a location-based or social app or service is mentioned.  With RFID tags, GPS apps, Foursquare, Facebook’s Places, and now iTunes’ Ping, everyone thinks that sharing a bit of info about your likes, dislikes or whereabouts is going to lead to the downfall of civilization.  While everyone must be careful with their personal info, how much detail they share (such as city vs. eight-decimal GPS precision), and how often they share it, there are so many more benefits than drawbacks to these services.  Plus, the risk that the company owning or using the data will do anything that’s harmful and directed at an individual really isn’t even an option.

In 2000, while at business school (and long before Facebook and Twitter and Foursquare), I took a ‘marketing data analytics’ course that focused on clickstream analysis.  Even then, privacy was beginning to become an issue and our instructor summed it up in such a way that I’ve always referred back to his quote:

In the good old days, you went in to your neighborhood market, the owner knew you and what you purchased.  If a product that you liked was back in stock, and the owner mentioned it, you’d be grateful.  If the owner said that, since you liked plums and apricots, you’d also probably like pluots, you’d respond with a big ‘thank you.’

But, if a computer or corporation does the same things, people think it’s creepy.

I may be naïve, but consumers shouldn’t worry about ‘big brother’ drilling down to find out that John Doe purchases too much beer or eats too many donuts. Being a B2B marketer with 50,000+ contacts in my company’s marketing database, I can assure you that the last thing I do is focus on marketing to individuals – it’s all about the numbers and aiming at segments.

For B2C, my 50,000 contact names are nothing.  Facebook has 500 million names – and growing. Marketing a marketing analytics solution for the past two-plus years, we’ve analyzed the behavior, purchasing, and response patterns of millions or individuals – and we’ve never seen a single name.  At best, we have a many-digit number, spread across multiple fields, that has no personally-identifiable information (PII).  Even our customers themselves have a daunting task of tying a name to an activity.  Having worked in tech for over a decade, the privacy fear-mongers obviously have no clue as to the cleanliness, integration, and access challenges companies have with their own data.  In the vast majority of corporate analyses, the data is aggregated or sampled such that connecting information back to a single person is impossible.

Again, consumers must be diligent to protect their privacy through each app’s settings (something that should be much easier than it is today).  But, I can think of dozens of reasons why consumers should embrace these services – from a discount as you walk by a store to interactive dressing rooms at retailers that use RFID tags to suggest complimentary products (and help reduce theft).

Bottom Line:  I look forward to the day that I opt-in to offers from the local coffee shop and am hit with a “free apple fritter with purchase of your double non-fat latte” offer on a Saturday morning.  That’s a privacy risk I’m willing to take! 😉