Having studied what was important to wine consumers working at Oddbins, a British wine retailer, Nicholas Hammeken, Founder and Director of Innovation at Hammeken Cellars, founded a company focused on crafting Spanish wines that match consumer preferences. He develops concepts with unique selling propositions, plays to modern tastes, and tries to be an ambassador of affordable luxury. Nicholas tells us all about how he thinks through creating the concept, developing the product, and bringing the wines to market globally.
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Detailed Show Notes:
- Nicholas’ background
- Danish-born, cellar master, worked at Taste of Wine in Denmark
- Worked in the Mosel (Germany), Burgundy, Bordeaux, and Penedes (Cava, Spain)
- Worked at Oddbins in the UK - where he learned about consumer preferences
- Fell in love w/ Spain and moved there when his wife got a job there
- Hammeken Cellar Overview
- Spanish wine in the 1990’s - a little rustic, but could taste the tremendous potential
- Motto - “modern Spanish wines…developed through an understanding of consumers needs” -> want to respect the history of the region, but take data to match to consumer preferences
- Based in Valencia
- Winemakers live in different parts of Spain
- Exports 1.5M cases to 30 countries
- Historically strong in Scandinavia
- Germany and Holland are big markets, US and Canada are important, while Asia has been consistent with Japan being strong for many years
- China rising as wine consumption growing (vs. gifting of wine)
- In 2021 - 50% of production are organic wines, sustainability is an important trend for Hammeken
- Consumer preferences by market
- Europe - like a more lean style
- US - prefers riper, more bold style
- Often the style preferences match with the profile of local cuisine
- Wines have a base element and then have components to fine-tune the wines for specific markets
- Organic trend
- N Europe was the driving force, particularly the monopoly markets, which gave distribution preference for organic wines
- US/Europe now more aligned with regulations on organic wines
- Whole Foods was a pioneer in the US
- Brand development process
- E.g., “I’m Your Organic” brand
- Had nice juice to make an approachable wine made the tannins softer to create a very juicy style of wine
- Could make it cost $10-12
- Need to communicate a message to consumers to create a competitive edge -> every bottle (or bag in a box) sold, they will plant a tree
- Leverages Global Data
- to mine macro and micro consumer trends (e.g., organic product trend)
- Used to support decision making
- Does other consumer research - “lots of reading” - real all magazines, including grocery store magazines
- Importance of the story -> need to have a purpose of the product, more USPs (unique selling propositions) -> e.g., where does the product come from (i.e., sense of place, which gives traceability), winemaker, etc. -> something apart from a pretty label
- Wants to be an ambassador of affordable luxury, $9.99 or $11.99 wines that taste and feel like $14.99 wines
- Packaging - requires a lot of trial and error to test
- The more exclusive products tend to look more straightforward and more elegant
- Scale buying power allows for lower costs for high-end closures, packaging
- E.g. - Mirada Rose from La Mancha
- Defined specific fruit flavors - berry citrus
- Want a “Provence” like color
- Uses extended time on lees
- It has a unique bottle
- Uses repeat buying to measure success - Mirada is seeing steady increases year over year in sales
- Wines mostly have a DO/DOC designation - they need to taste like the region, but in a modern way
- Finding new names - “a major headache” - legal names for the US, Europe, and Asia has become a lot more complex than ten years ago
- Creating the wine
- The company is asset-light, leverage other people’s facilities
- Go for a more modern, fresh style of wine
- Once they have a clear idea of what they want to do, they search for vineyards
- Try to source from a diverse set of vineyards to reduce nature risk (e.g., hail)
- Old vines are key -> gives a more unique expression, more balanced fruit
- Have their own winemakers, but rent facilities
- Vineyard sourcing a mix of long-term rentals, short term agreements, and spot market purchases at harvest
- Have a contract agronomist to direct grape growing
- Go-to-market (“GTM”) Strategy
- Link up with partners, people who want to be first movers on the product
- Often have a dialogue in place before developing new concepts
- Target markets
- For new concepts - test in smaller markets
- For clear ideas - go for 3-5 markets to have volume from the beginning
- Keys for product placements
- Monopoly markets - can lobby for 2-3 years to provoke a tender that you’ve helped define (therefore more likely to wine)
- 3rd party endorsement is important (e.g., critic ratings)
- Critic ratings big in US / Canada initially, but rest of the world has followed -> important because some buyers are risk-averse
- Asia - likes to see success in other markets first
- Marketing & Promotion
- Social media is important
- Need to invest for products on the shelves
- More important channels - product placement (the right place at the right price point), then a mix of endorsement with points and price proposition (e.g., discounts) can drive more significant sales
- E.g., LCBO (largest buyer in the world) - showed them a gap in their portfolio (mix of packaging, style, and price point) and was willing to invest in promotions to be successful
- Wine critic influence
- American media (e.g., Wine Enthusiast, Robert Parker, Wine Spectator, James Suckling) strong in US / Canada, but also have a global influence
- Decanter - more important outside the US
- Jancis Robinson - w/ 20 point score, need $25+ bottles for consumers to understand what this means
- Brand lifecycle
- Most brands are regional stars, a few work worldwide
- Lifecycle is usually 3-5 years
- Product segments get overcrowded and make the brand lose market share
- Signal of downtrend - when the effectiveness of promotion falls
- Corporate Social Responsibility
- Try to allow consumers to make an active choice, e.g., I’m Your Organic and planting a tree
- Uses Goodwings to offset the carbon footprint of corporate travel
- Wants to do a detailed mapping of CO2 footprint of product production and use this as a tool to educate wine buyers
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