B / Option for entering the wine’ Chinese market
As all markets around the world, the Chinese wine market offers multiple way of entering for a new wine product. As pinpointed above with the new trends affecting the Chinese wine market, there is a need for any winery who wish to sell its products in China to develop long term relationship building for trust, accountability and brand awareness among Chinese consumers.
A way to enter the Chinese wine market is to establish a company or tying up with an existing company. The Australian wine companies have to establish their own trading company in China to start importing and distributing the wine. The options that are available for the Australian brands to enter the country are wholly foreign
…show more content…
As there is a trend in the Chinese wine consumer for education and an eager for discovering new wines, this techniques will help definitively to build their brand recognition on the Chinese market.
B/ Financial viability of the Chinese case export for Southern Peninsula Wine and Recommendations
In the case of Southern Peninsula Wine, and related of the few information provided by the case study in term of cost of production, marketing budget, sale price of the products only an estimated viability of the project can be done.
Firstly if the Chinese market can represent real opportunities for foreigner’ wineries, it can be assumed that there are costs to enter this market.
These costs can be very high in the Southern Peninsula Wine decides to enter the Chinese wine market on their own, because they will need to create an export entity on the Chinese soil to deliver their product on the market.
Furthermore, costs of distribution to suppliers, marketing promotion, negotiations with diverse retailers or wine boutique may be added with no insurance to obtain a level of sales for their wines, as new and unknown products for the Chinese consumers, to covert these
…show more content…
To overcome these issues, the most suitable option for the Southern Peninsula Wine and its owners, is to choose the option of delivering their products on the Chinese market with the use of an existing Chinese distributors.
For instance the choice of a distributors like ASC Fine Wines, founded in the 1996 and currently marketing themselves as both purveyors of fine wine and educators, could be made.
If this option may represent less control in term of sale prices, product image and place on the market, it have multiple advantages for them:
• Lower costs to enter the market, reduced to the minimum required by the Australian and Chinese authorities in term of rights and licensing.
• Access to an existing network of retailers and wine boutiques across the Chines market that will insure a better penetration of their wines on this market.
• Fixed prices for their products on the Chinese market with the assurance of being paid defined by contract
• A more competitive, efficient and profitable business with less competition in the domestic markets.
Discuss one significant obstacle each firm would face if they were to market their products in China. (Please note these obstacles may be different in each case.)
The domestic wine market for Australian wines is approximately $2.8 billion. Australians consume around 530 million litres annually of which 16.6% is imported. Research indicates winery tourism is increasing (see table 1)
A couple of Squares has a limited capacity for which to produce their products and smaller companies tend to have larger fixed costs than bigger companies. Therefore, A Couple of Squares must maximize profits in order to ensure that they will stay in business. A profit-oriented pricing objective is also useful because of A Couple of Squares’ increased sales goals. A Couple of Squares increased their sales goals due to recent financial troubles. Maximizing profits is the easiest way to meet these sales goals due to the fact that A Couple of Squares has limited production capacity. The last key consideration favors a profit-oriented pricing objective because A Couple of Squares offers a specialty product. A specialty product often has limited competition, therefore can be priced on customer value. Pricing at customer value will maximize profits as well as customer satisfaction. A Couple of Squares’ lack of production capacity, increased sales goals, and specialty product favor a profit-oriented pricing
A “problem” is identified in the beginning of the case, indicating that there is titanic shift in the global wine industry. The drastic change inevitably caused both the New World and the Old World to clash for market share and profitable stake in the $230 billion global industry. Amidst the battle, the New World gained the competitive advantage, and challenged the Old World’s traditional ways and former dominance.
It’s easy to understand why Mondavi is primarily involved in the domestic market, with a small number of select partnerships and limited involvement with other wineries in different foreign markets. The company has always considered itself a family operation with an emphasis on high-end quality, and looked to work with similarly voiced companies that operated with similar motives. The partnerships are almost all in the ultra-premium and luxury premium segments, such as the highly prestigious Opus One offering, the minority interest in the Italy’s Ornellaia, and the Frescobaldi partnership that produced three more high-end wines in Montalcino, Italy. Amongst all their partnerships, only the Chilean joint venture produced any offering for the growing popular premium segment, with a Caliterra brand that sold 25% of their product in the United States.
...price, it also allows for them to increase their sales and enter into new markets, which in turn would help to increase their profits.
In order to achieve this objective Robert believed that he needed to build a Robert Mondavi brand in the premium wine market segment. This resulted in the initial pro¬duction of a limited quantity of premium wines using the best grapes, which brought the highest prices in the market and had the highest profit margins per bottle. How¬ever, he soon realized that this strategy, while establishing the brand, did not allow the company to generate enough cash flow to expand the business. In order to solve this problem Robert decided to produce less expensive wines that he could sell in higher volumes. He dedicated time and effort to finding the best vineyards in Napa Valley for the company's production of grapes. In addition, he signed long-term con¬tracts with growers in Napa Valley and worked closely with each grower to improve grape quality.
America’s winemakers are making superior wines and reaping global acclaim. In a single generation the United States wine industry’s global success is a fascinating story of entrepreneurial vision and savvy marketing. The American industry has new innovations, new competition, and new markets, which make the future look bright for the wine industry.
Shirley Ye, Sheng, and Yan Ma. "China Vs. The United States: Market Connections And Trade Relations." International Journal Of China Marketing 2.1 (2011): 45-57. Business Source Complete. Web. 13 Dec. 2013.
"Study: Wine Has $13 Billion Impact on Sonoma County Economy." The North Bay Business Journal. N.p., 09 Jan. 2014. Web. 16 Dec. 2016.
Cultivation of Grapes The process involved in the cultivation, production and science of Grapes is called Viticulture. Grape cultivations one of the oldest cultivation in mankind after grains, that dates back to 7000 years during the Neolithic period. Viticulture originated from the Mediterranean region & spread across Middle East & Asia & gradually to the world. It’s in the records that the 1st grape harvest occurred 5400 B.C in region where present day Georgia & Armenia countries are called.
When initially analyzing the Old World Wine Industry versus the New World Wine Industry, the differences are evident. Strong representations of this include factors such as size, production methods, brand equity, and production orientation. Through conducting an analysis using Porter’s Five Forces, one can clearly see the clear delineating factors between the Old and New World.
Consumption pattern in the Philippines is shifting over time. Once, the main priority for expenditure is on food, then education and health. Now, part of the expenditure pattern of an average Filipino is to spend a portion of their income on leisure and relaxation. Part of leisure expenditures are the buying of alcoholic beverages. And one of the newest entrants in this commerce is the wine industry. It has posted the fastest growth rate of 15% in 2005 among the alcoholic drinks. The population now has increasingly warmed to wine. It has shifted from the mass spirits (beer) to the more sophisticated, affordable and healthier alcoholic beverage.
It provides significant efficiencies in cost and delivery in exchange for minimal customization and represents a shift of operational risks from the consumer to the provider.