The market for wine can be divided into numerous segments, each looking for something else in the wine they buy and enjoy.
The key to the successful manufacturing and marketing of wine is understanding what’s unique about each segment and targeting them with the right products and messages.
One of the most popular methods for performing wine market segmentation uses psychographic factors like likes/dislikes, personality and lifestyle.
Other methods use demographic factors like gender, income level and education level.
In this article, we will segment the market for wine using the following 9 variables:
Type of Grapes, Region of Origin, Color, Age, Price, Flavor profile, Organic (or not), Occasion, and Brand.
But first, let’s start by understanding why it is important to use market segmentation when making or selling wine.
The Importance of Segmentation of the Market for Wine
The segmentation of the market for wine is essential because it allows grape growers, winemakers and wine resellers to target specific groups of consumers with laser precision.
By understanding the needs and wants of different segments, vineyards and winemakers can create wines that are more likely to appeal to them, and retailers and wine stores can stock wines that their customers are most likely to buy.
The market for wine ranges from those looking for a simple table wine to someone searching for an expensive bottle of champagne for a special celebration.
But all types of wine are not equally popular with all wine connoisseurs. For instance, many people prefer white wine but find red wine too strong. Others don’t mind sparkling wine from different regions of the world, while some others are sticklers for champagne or prosecco.
The segmentation of the market for wine allows businesses to identify and target these different groups with wines that are more likely to appeal to them.
Variables for Wine Market Segmentation
Wine market segmentation can be performed along the following 9 axes:
- Type of Grapes
- Region of Origin
- Color of the wine
- Age of the wine
- Price Range
- Flavor profile
- Organic (or not)
- Occasion (of purchase)
- Brand
Most winemakers are limited in terms of the types of wine they can produce based on the grape varietals, the structure of the soil, the availability of land, the local weather, and the condition of the market in which they sell.
In Europe, they are also limited by what are called “Appellations” which define the wine that can be made in a particular area.
For instance, in France, there are Appellations for Champagne, Bordeaux and Burgundy wine, each with different rules about the type of grapes that can be used, how the wine is made, and what it can be called.
This means winemakers deliberately choose not to cater to all types of wine lovers, but rather focus on those segments that are most likely to buy their products.
This also has an impact on branding because different brands have different associations in the consumer’s mind.
For example, a Champagne from the region of Champagne region of France will always be able to fetch a higher price than an equally good sparkling from the Rhine region of Germany.
Why?
It’s all in the brand!
And many people equate brand and therefore price to quality. So winemakers, distributors and retailers perform price segmentation and divide the market based on a customer’s willingness to pay, which is greater for some types of wines than others.
Let’s now look in detail at each of the 9 variables used in wine market segmentation.
#1. Segmentation Based on Type of Grapes
The type of grape or grapes used in making wine is often the most important determinant of the wine’s flavor, body, and color.
Some commonly used grape varietals for making wine are:
- Chardonnay
- Sauvignon Blanc
- Pinot Grigio
- Riesling
- Moscato
- Merlot
- Cabernet Sauvignon
- Zinfandel
Wines made with these grapes can be found in most wine shops and supermarkets.
However, there are many other types of grapes used to make wine, including:
- Chenin Blanc
- Gewürztraminer
- Malbec
- Pinot Noir
- Syrah/Shiraz
- Tempranillo
The type of grape used isn’t everything. How it is grown, where it is grown, how the wine is made and the region’s brand value all play a role in the character and price of the wine.
For instance, Chardonnay is a common grape from which many different types of house wines are made. But did you know that Chardonnay is also the grape used in making Champagne?
So while the type of grape is an important variable in wine market segmentation, there are others too. Let’s see them now.
#2. Segmentation Based on Region of Origin
Wine grapes grown in different regions have different flavor profiles.
So wine market segmentation based on the region of origin is important for wine drinkers who want to enjoy the unique tastes of wines from different regions.
For instance, wine from the region of Alsace in France is white and tastes quite different than wine from Friuli in Italy, which is also white but has a very different flavor profile. Similarly, a red wine from Napa Valley California will have a different bouquet than a strong Bordeaux or a Cahors from France.
Wine market segmentation based on the region of origin is also important for wine producers because it allows them to focus on producing wine that is distinctive and appeals to the taste buds of wine lovers from a particular region.
This is why many governments, especially in Europe, have created protective labels called “Appellations” that wine producers must follow in order to ensure that the wine they are selling is from the region that it claims to be from. This protects both the winemakers and the consumer.
#3. Segmentation Based on Wine Color
Broadly speaking wine comes in 3 distinct colors: red, white and rosé. The color of the wine depends on the type of grape used.
White grapes give white wine. Red grapes give red wine. But red grapes are also used to make rosés where a bit of the color from the skin is allowed to creep into the wine.
The color of a wine indirectly tells us how the wine will taste. For instance, white grapes are typically grown in cooler climates like the Rhine region of Germany, Alsace in France, Upstate New York and Washington State in the US. The weather and the types or grapes used makes white wines lighter, fruitier and easy on the palate.
Red wines require a lot of sunshine and so we find that some of the best reds come from sunny regions of the world like Italy, Spain, Southern France and California. Red wines are fuller and stronger in taste.
Rosés are in between reds and whites when it comes to taste but many people think they are prettier to look at.
So segmentation based on wine color is important because people’s perception of the taste of wine and therefore their buying behavior is governed by it.
How often do we hear people say – “Oh, I prefer whites” or “I prefer reds”. This means color matters when it comes to wine selection and therefore color is an important wine market segmentation variable.
#4. Segmentation Based on the Age (of the wine)
Wine matures as it ages and so wine market segmentation based on age is important for wine producers and wine drinkers alike.
For wine producers, it is important because they need to know how long a wine will take to mature and be at its best before they can release it for sale.
For wine drinkers, it is important because the flavor of wine changes as it ages and so they like to know how long a wine should have aged before they buy it.
Wine segmentation based on age is, therefore, an important way for wine producers and wine drinkers to ensure that they are getting the best wine possible.
There are broadly speaking three types of wines: young, middle-aged and old.
Young wines have not been aged for long and so they have a fresh, fruity flavor. Many whites are sold young.
Middle-aged wines have been aged for longer and so they have a more complex flavor.
Old wines have been aged for the longest time and so they tend to have a stronger fuller flavor. Many reds are either middle-aged or old where the tannin in them acts as a preserving agent.
Some wines, including good ones, are sold soon after they are bottled. A good example is the Beaujolais Nouveau from France which is aged only for a few weeks and released for sale each year in mid-November.
#5. Wine Market Segmentation Based on Price
Wine is a food product that, perhaps, has one of the widest price ranges imaginable. You can find wine that sells for a few dollars a bottle and wine that sells for thousands of dollars a bottle.
The price of wine is governed by many factors like the grape used, the region where it is grown, the weather conditions in that region, the aging process, the vintage, and so on.
Some winemakers focus on producing a limited number of bottles each year because they know that their bottles will fetch an excellent premium because of their brand, their geographic location, and the quality of the wine.
Other winemakers choose to maximize their wine production and prioritize volume over quality and make their money through large sales and lower margins. Sometimes the wine fetches such a low price that mass production is necessary to ensure the profitability of the vineyard.
This way there is always a wine for every budget and wine drinkers can choose from a range of wines from different parts of the world.
#6. Segmentation Based on Wine Flavor Profile
Wine flavors can be classified into these broad categories fruity, oaky, spicy, earthy or floral.
A wine’s flavor is largely dependent on the type of grape used, the climate where it was grown, and the wine-making process.
Wine producers often use wine market segmentation based on wine flavor profiles to target a particular group of wine drinkers.
For example, a wine producer may make a light white fruity wine that appeals to a certain segment of the market and goes well with fish or cheese, or they may make a full-bodied red wine with strong tannins that appeals to a different segment of the market and can be paired with meats and spices.
By segmenting the market based on the flavor or taste of the wine, winemakers can reach different audiences based on their likes or dislike of a certain taste. After all, wine is a drink to be enjoyed and many people make a decision based on their palate.
#7. Wine Market Segmentation Based on Organic (or not)
Organic wine is a wine that is grown following organic farming techniques and without the use of pesticides or other chemicals.
The growing trend of consumers switching to organic food whenever they can has not left the wine industry out.
By growing wine organically, winemakers can appeal to the segment of the market that prefers all things organic.
Organic wine usually costs more than non-organic wine because it is more labor-intensive to grow wine organically.
#8. Wine Market Segmentation Based on Occasion
Most wine is bought for an occasion. The occasion could be as simple as a dinner at home or as fancy as a wedding.
Selling wine for an occasion is a wine market segmentation strategy that is used by wine producers and retailers to target specific occasions when they are most likely to sell their wine.
For example, wines that are bought as gifts for weddings or anniversaries are usually more expensive than those that are bought for everyday drinking.
Similarly, wines that are sold for special occasions like Christmas or New Year’s Eve are usually of better quality and therefore cost more than wines that are bought for a casual dinner party.
Wine producers and retailers use occasion segmentation to target specific wine drinkers who are willing to spend more on wine for a special occasion.
This is why you will often see wine promotions and discounts around holidays like Christmas and Thanksgiving.
#9. Segmentation Based on Brand
Earlier in this article, we talked about the region of origin and the “Appellation” system of wine classification.
In the wine industry, the region of origin is often a more important brand than a specific vineyard or winemaker. Or even the grape/varietal used.
For instance, wine from the Champagne region of France is usually more expensive than wine from other regions because it has a higher prestige. And this is irrespective of the vineyard.
So when performing wine market segmentation based on brand, doing so using the “region brand” is perhaps the best way.
Conclusion
As you can see, the market for wine can be segmented using many variables and can be analyzed from different angles.
In this article, we performed wine market segmentation following these 9 factors: Type of Grapes, Region of Origin, Color, Age, Price, Flavor profile, Organic (or not), Occasion, and Brand.
By segmenting the market, winemakers and wine shops are able to create new wine products to better suit the needs and tastes of consumers. Similarly, wine stores, bars, and restaurants are able to carry the brands and types of wines that are likely to be most attractive to their client base.