If there is a product whose provenance consumers care about, it is wine. There are two methods of classifying wine, cépage and terroir. The cépage (varietals) method identifies the wine by the type of grape used in its production. In contrast, the terroir (land-based) method highlights the geographical origin of the wine, its region-specific taste and the winemaker’s skill.

Traditionally, in France, wine is classified by its terroir. This classification emerged over the centuries as villages developed specific approaches to winemaking, resulting in regionally unique wines. Consequently, sophisticated French consumers developed a rich understanding of these regions, which enabled them to identify the nuances between wines and the geographic impact on their flavors. As viticulture developed in the New World — in countries and cultures that did not traditionally consume wine — cépage emerged as the principal means of differentiating and marketing wines. Initially this approach sought to overcome the lack of traditional terroirs in the New World. However, in the last 50 years, it has emerged as the dominant marketing trend in the wine industry. In fact, the industry consensus is that the average consumer in 2012 is more likely to select his wine based on its cépage and the brand that the winemaker has developed than on the wine’s terroir.

In defiance of marketing trends in the wine industry, many French winemakers continue to identify and market their wine based on terroir.This desire to perpetuate tradition maintains a degree of complexity in understanding French wine, limiting its accessibility to new consumers and hindering sales. Rather than looking to adapt, many French winemakers and critics revert to terroirisme and overemphasize the importance of terroir in defining wine. This approach does not seek to make good wine, but rather emphasizes the traditional aspects of geographically centered wine production, ignoring modern trends.

In a growing market, a terroiriste approach to winemaking would not hinder the French wine industry. However, the French wine market is in crisis. Between 1980 and 2010, the percentage of non-consumers of wine doubled in France, increasing from 19% to 38% of the adult population. French consumers drink less and have become more demanding. Like consumers the world over, they are searching for a high-quality wine at a reasonable price. As cépage-based competition from the New World and from other European countries pours into France, winemakers need to rethink their marketing strategies in order to succeed in an ever-more challenging marketplace. Some French winemakers are adapting and producing increasingly more cépage-based wine, but the majority remains rooted in tradition.

To understand the opportunities available to these winemakers, it is important to examine first, why a winemaker would choose a marketing strategy based on cépage rather than terroir, and second,where maintaining a terroir-driven approach adds value. Is there one approach that French winemakers should adopt uniformly, or should they develop individual strategies that play to the strengths of their wine while meeting the needs of the modern consumer?

Cépage Delivers Value for the Money

The choice to identify and market a wine based on its cépage makes it accessible to a greater number of consumers. The world of wine can easily overwhelm neophyte consumers with varietal and geographic nuances. To understand this world, and to appreciate the influences that define a wine’s flavor, requires education, according to Franck Ramage, head of the wine department at Le Cordon Bleu Paris.

Marketing a wine based on its cépage allows winemakers to limit the complexity of their products and access consumers who are interested in wine but lack knowledge. While the domestic French wine market stagnates, wine is a booming industry in many countries that do not have a tradition of winemaking. A marketing strategy based on cépage facilitates French winemakers’ entries into these markets, where knowledge of a specific cépage — such as Chardonnaymay be commonplace, but a terroir such as Chabliswould be unusual. Furthermore, producing cépage-branded wine reduces production costs for winemakers. They can procure grapes from a large geographic region rather than being tied to a specific and often-small terroir, and they can work with an oenologueto manufacture a modern flavor that appeals to the broadest range of consumers.

According to Pierre Salles, general director of the Association of Winemakers of the l’Île de Beauté in Corsica,  marketing a cépage-branded wine also allows winemakers to abandon traditional, sober French labeling and bottles, and replace them with eye-catching logos and innovative bottle designs to develop the wine’s brand identity. The result in France is the creation of branded cépage wine that appeals to the greatest number of consumers, at a lower price point than the terroir alternative.

The French region that exemplifies the transition to cépage-based wine is Languedoc-Roussillon, described by Ramage as “a breath of fresh air in a stagnant market.” Producers in this region have specifically positioned their cépage wines against entry-level wines from the New World — such as Gallo (from California) and Yellowtail (from Australia) — competing on low cost derived from the region’s large size and agricultural strength. In addition, these producers work actively with oenologues to ensure that their wines conform to modern taste and to the needs of companies with global distribution networks and maintain a consistent flavor, rather than varying by the year.

Although some terroiriste critics have attacked the cépage wine from Languedoc-Roussillon, claiming it debases French viticulture, it is important to understand the support this wine provides to the French wine industry. With 35% growth from 2008 to 2009 (the most recent statistical data available), it provides a growing market that allows winemakers without a known terroir to produce and sell their wine, and it creates jobs in a struggling industry and low-growth economy.

Cépage-branded wine is intended as a table wine and is frequently sold in France for between €5 (US$6.50) and €10 (US$13) per bottle. However, when winemakers try to raise the price point of their cépage wine above €10, they struggle against competitors with more terroir-oriented products. According to Stephane Girard, founder of Wine by ONE, a chain wine club, bar and shop in Paris,”a consumer who passes from €10 to a superior price requires an increase in quality. This consumer is no longer looking for just a nice, refreshing drink. Rather, the consumer wants something unique and different.”

Winemakers in the New World, such as Bodega Catena Zapata in Argentina and Robert Mondavi in the U.S., have successfully developed premium-branded wines that indicate their cépage. In France, however, premium consumers remain attached to terroir and the influence of geography on a wine’s flavor. French consumers — particularly wine connoisseurs who are willing to pay high prices — understand terroir and appreciate its subtlety. Consequently, cépage wine remains a solidly cheap and cheerful option in the French market, while struggling to increase its price point.

Terroir: Elitism or Simply Making High-quality Wine?

A winemaker’s choice to produce and market a wine by terroir is deeply rooted in centuries of tradition intended to highlight the uniqueness and complexity of wine produced in a particular geography. Producers of these wines have a more limited reach to consumers, as they require more-knowledgeable purchasers who can appreciate their wines’ nuances and be willing to pay higher prices. In light of global trends among new wine consumers, this poses a challenge for winemakers who market and produce wine by terroir.

At the same time, successful terroir wines — such as those from Bordeaux and Bourgogne — have shown the prominent place of this marketing strategy, especially in the high-end domestic and international markets, according to Salles. For example, at the Galleries Lafayette, the luxury department store in Paris, a boutique called the Bordeauxthèque sells wine from the region of Bordeaux, which can cost up to €25,000 (US$32,445) per bottle. Lesser-known terroirs, on the other hand, may command much lower prices but will remain slightly above the price point of cépage wines in the French market.

In France terroir wine is more sophisticated than cépage wine. Winemakers from the Châteauneuf-du-Pape area traditionally use a combination of up to 12 different grapes. Located in the Rhône region, this stretch of land has produced wines with grape varieties such as Grenache and Cinsault, which are known for their sweetness, warmth and mellowness, and Clairette and Bourboulenc, which are known for their finesse, fire and brilliance. This example also illustrates that the ability to shape a terroir wine depends on a multitude of factors other than geography. Beyond the physical factors such as soil and climate, the winemaker can shape the taste of a terroir wine through the choice of grape, the winemaking techniques and the process of aging.

Consumer preferences in the mass market have shifted. The number of regular consumers of wine in the French market has been declining over the past 20 years, with a higher proportion of moderate consumers and non-consumers. In addition, there is an influx of newer consumers of wine in the global market. In light of these trends, the ability for producers of terroir wine to market to and educate consumers is becoming more difficult. Because there are nearly 500 types of officially recognized terroir wines in France, such an education takes time to establish and may be costly and difficult to implement, given that terroir producers are often fragmented and on a smaller scale. While this may be facilitated through professional and government associations, success remains limited.

In the case of the French wine market, according to Girard, only 3% of wine consumers know what terroir is, versus 30% who understand the notion of wine classified by cépage. For newer wine producers, the choice of marketing and producing their wine by terroir may be risky. The brand and reputation of a particular terroir take time to establish, both in the local French wine market and on a global scale. As certain preferred terroirs are well-established in the local and global markets, the winemakers’ ability to market and win over consumers is a challenging goal.

Can Cépage and Terroir Coexist?

Given the stagnation in the domestic French wine market and the market’s growth outside France, it is clear that marketing strategies must evolve if winemakers wish to increase their sales. In a concentrated and differentiated market, where there can be literally hundreds of wines on a supermarket shelf, an average wine cannot survive. According to Girard, the modern consumer is looking for a wine that corresponds with her preference in both taste and quality and where value reigns supreme. Girard acknowledges that there will always be wines that employ cépage-only and terroir-only marketing strategies, where cheaper wines will be cépage and more expensive wines will be terroir. However, if winemakers begin to rethink and reformulate their marketing strategies, they will be able to attract new consumers.

Despite historic trends that have shown French winemakers greatly favoring terroir over cépage, some terroir French winemakers have recognized and responded to the global trend of cépage. Cahors, a commune in South Central France, is an excellent example of a terroir that has adapted to current market trends. Wine from this area is made predominantly with the cépage Malbec, which is originally from France. However, Argentine winemakers in Mendoza have popularized the cépage to such a degree that the Cahors winemakers have capitalized on the cépage’s current popularity and added Malbec to the labels of their traditionally terroir wines.

Jérémy Arnaud, head of marketing for the wines of Cahors, explained that they were the first vineyards in France to believe in the mixture of appellation and cépage, with the specific goal of increasing international sales. As a result of this innovative approach to marketing, Cahors has witnessed strong growth in its exports since the decision in early 2009 to indicate the cépage Malbec with the name Cahors on their bottle labels. Between 2010 and 2011, sales of Cahors in the U.S. increased 7.9%.

The question, therefore, becomes what does a winemaker in France do today with a terroir that is not well-known or understood internationally? There is a need to blend tradition with modern marketing techniques and the tendencies of the modern marketplace. France is no longer the only country in the world with good wines, as evidenced by the growth in global competitors in wine production and the current crisis in the French wine market. The rise of wine markets in the U.S., South America, South Africa and Oceania has created a more competitive marketplace, and the onus is on winemakers to make their products both accessible and comprehensible to today’s consumers. Consumers are seeking ways to discover and learn about wine in order to find what is the most pleasing. This discovery can be accomplished in a variety of ways: through an attractive label design, a wine-tasting event or an education in the various nuances that differentiate one wine from another.

The notion of terroirisme does not account for the major evolutions in today’s wine marketplace, but neither is the cépage approach a panacea. In essence, there are certain key elements to producing a successful wine: a knowledgeable winemaker, a salient marketing strategy and an ability to seduce the clientele.

What becomes increasingly important is how the wine is positioned. A segmented market may be the best way to target French consumers. A cépage wine caters to consumers who simply want to spend an agreeable moment with friends, while a terroir wine tends to be used to celebrate bigger and more important events in one’s life. The interesting case study is the middle market, where winemakers will need to convey to their consumers the wine’s history, taste and image in a creative and novel manner. Perhaps adopting a mixed approach, as found with the wines from Cahors, should inspire winemakers — retaining some tradition, but increasing the wine’s accessibility. At the end of the day, what matters most to modern consumers is the right wine for the right moment.

This article was written by Michael Cohen, Girish Nanda and James Wilson, members of the Lauder Class of 2014.