While researching for our midterm, I started to think about the Icewine case - specifically, what producers with niche products and/or from lesser-known regions can learn from Inniskillin. This passage quickly came to mind:
“‘In my new marketing role, I wondered how we would make a name for Vincor internationally. We first thought about table wine as an option, but it was too difficult to market Canadian table wine internationally, since Canada was not considered a strong producer of wine... Icewine was at the other end of the spectrum and did not have a global market. Yet we figured that it would offer a more sustainable competitive advantage against other countries, and the high margins it would generate could be reinvested into building the category.’ At the time, Provost was intrigued by the popularity of Icewine with Japanese tourists. Each year, approximately 35,000 Japanese tourists would pass through Inniskillin’s Niagara Winery cellar store and purchase almost all of the stocks of Icewine. The product had acquired cult status among the Japanese.”
In class we discussed this data on Japanese tourists as the cornerstone of Provost's strategy to partner with DFS, but without a cellar store in Niagara, would Provost have ever discovered Icewine's appeal to Japanese consumers? Wine tourism itself aside, I think we should keep an eye on how tourism more generally does or could play a role in product launch and export strategy. I would suggest that wineries with new products and/or from lesser known regions with little tourism seek to establish a presence in a high traffic tourist destination (whether by investing in cellar stores or through partnerships with hotels/restaurants/airports) to quickly and efficiently gather product-specific information on a diverse sample of potential consumers, which they can then leverage to inform their target market decisions and distribution and marketing strategies.
In assessing the potential of an up-and-coming product or region, I would also bet that proximity to a luxury tourist destination significantly increases likelihood of success (could be tested pretty easily by running a regression if we had the data...). This is the main reason I feel confident about the potential of Croatian wine. With its historic towns, temperate climate, Mediterranean cuisine, cerulean waters and limestone mountains, the Dalmatian islands have become a popular luxury destination for foreign tourists and are being increasingly added to cruise line and tour itineraries. Dalmatia is a top international tourist destination and leads Croatian tourism, with a focus on yachting and leisure – attracting visitors with a higher likelihood of interest in and the means to afford luxury goods such as exclusive regional wines. Dalmatia also benefits from a long vacation season, a plethora of trendy tourism activity options, and proximity to Split and Dubrovnik. One Travel & Leisure journalist even suggested that Dalmatia could become “the next Riveira.”
Between 2000-2015, investments in hotel development in Croatia amounted to $5.5 billion, with an addition $2.2 billion expected between 2015-2020. In 2016, Croatia hosted 16 million foreign tourists; that figures is on pace to double by 2020 as Croatia continues to emerge from recession, is bolstered by its EU membership, and receives foreign investment in restaurants, hotels, and other tourism-tangential industries. In response to new demand, the Croatian government is increasing its development of tourism infrastructure, investing in highways, wine roads and multi-lingual signage comparable to other wine tourism destinations within the EU, as well as a reliable ferry system running between the Dalmatian islands and to some Italian ports, and increasing local ports for cruise ships to drive more tourists to the islands in Dalmatia.
Wine's relationship with luxury tourism is mutually beneficial: tourism drives traffic to its wineries, and exclusive wine experiences enhance the area's image as a luxury destination, attract investment, and bolster the local economy through tourist expenditures in non-wine businesses like hotels, restaurants, and visits to historic sites. As this relationship strengthens, hotel and restaurant investors expand toward vineyards as they did in the development of Napa, Tuscany and Bordeaux.
DTC sales from wine visits also help small, local wineries build brand awareness, drive revenue and achieve higher profit margins so that they can expand, increase asset utilization, and invest in new technologies, marketing, and distribution. As vineyards see increasing visits and bring in new sales, they will have both means and incentive to invest in larger tasting rooms and vineyard experiences, to lengthen their hours, expand their tourism-friendly offerings and facilities, and hire more staff. Their successes will in turn be complemented by an increase in local hotels and restaurants to support and growth momentum.
Leveraging local tourism gives small vineyards the tools to be intentional with their long-term expansion. Tourism is a simply first step for small wineries to build brand and varietal interest and loyalty among foreign consumers, and to gather data on consumers from winery visits and in-house purchases to inform future export/distribution strategy.
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