Category: Wine

Introduction

The French wine industry is respected for its competitiveness and its lead position within the global market (Heien & Martin, 2003), (Anderson, 2004). In terms of the market share, French wine has been known to take up the largest portion; it currently stands at approximately seventeen percent of all the world’s wines. Spain and Italy are some of the few wine producing nations that have come close to reproducing France’s success.

The latter country has secured such a position in the industry due to its high quality brands. Some of the common names include Champagne and Bordeaux (Jenster, 1993). However, Auriol et al. (2004) and Orange.com (2006) point out that recent trends may give France a reason to worry over the possibility of maintaining this position.

Not only does the country rely on the wine industry for economic stability, it also considers wine to be an essential part of its culture. It must therefore work towards reorganizing itself and getting back the market share it is loosing to other competitors. One way of achieving this is through first understanding what could have led to the drop of French wine in the industry.

Literature review

Warren and Melewar (2006) carried out a comprehensive research on the French wine industry. Their interest was to determine how the poor performance of the French wine industry was related to marketing failure. The researchers looked at the French wine industry through an analysis of English and French literature as a well as a small analysis of current drinking habits.

It was found that independent wine producers were having a difficult time in marketing their product because they did not have the leverage that older wine makers did. Additionally, it was found that there were problems with overall marketability of French wines because instead of integrating into local cultures, most French wines were marketed on the basis of the country of origin.

While this piece was very insightful, it mostly focused on marketing. There is a need to look at a more comprehensive outlook on poor performance of French wine in the global market and this will be done in the research.

Other kinds of articles that have done the same include: Swaminathan (1995), Bevarland (2000) and Dodd (1999). The first two authors blamed overall failure in wineries to marketing challenges but the research will not just be restricted to this angle.

Jenster and Jenster (1993) did research on the European wine industry. They were mostly concerned with general emerging trends in the global industry. To this end, the literature did not focus on the global wine leader and its dwindling sales. This research will attempt to specify this aspect even more.

Moran (1993) focused on appellation legislations and how they affect the most powerful groups in the French wine industry. Although this research was quite useful in understanding the working of winemaking regions in France, other dynamics of the industry were not discussed in the article.

This research will focus on sealing those gaps by not just looking at the territorial aspect but by examining economic, social and political reasons behind the poor performance of French wine makers in the global market.

Chollette (1993) worked on a comparison between the French wine industry as well as the Californian one. It looked at matters revolving around the business cycles and market patterns. Although this article is pretty insightful on the business aspect of French wine, its emphasis on the comparisons has led to a compromise on France as a wine producer of its own.

This article has also disregarded other elements of the industry such as marketing. In other words, it is more inclined towards the business side but not the marketing side yet the latter is just as important. The research will focus on covering that gap by focusing on none business related as well as business related factors in French wine making.

Hall (2007) wrote a book on wine tourism around the world. This book is insightful and does mention tourism in the French context. However, very little attention goes to other emerging trends in the French wine industry. It would be crucial to bridge that gap by making a comprehensive list or compilation of all other patterns affecting this industry. This is what will be done in the research.

All business. com (2001) covered a story on how France is losing its market share. The article is quite good for understanding some of the basics on France’s performance in the global market. However, it will not be useful in revealing some of the deeper issues that could be causing these poor results. Therefore, the research will aim at covering that up by offering a deeper analysis of the patterns within the global wine industry.

Charteau – Barbey (2009) describe the wine industry in general. Here they talk about the cultural significance of the commodity to the French and then go further to look at certain elements such as wineries. The major difference between this article and the research to be carried forward is that no solutions are identified or no deep analyses are made in the former. These issues will be incorporated in subsequent sections of the research.

Goode (2006) does a very good job of highlighting what the major issues in the French wine industry really are. However, he does not cover them with regard to global challenges.

The research will attempt to inculcate these aspects into a study of the French wine industry. It will also attempt to include some of the missing issues related to the international wine market. Furthermore, the research will be more objective than the article because a myriad of factors will be incorporated.

Orange.com (2006) looked at the crisis that is currently being faced by the French wine industry and they asserted that this has been brought on by the new world.

Although the author’s points are quite insightful, it is essential to understand that he mostly focuses on the new world as being the major cause of these problems. However, there are still numerous other internal reasons that are causing the French wine crisis. These are the aspects that the research will focus on.

Bisson et al (2002) have studied overall trends within the wine industry and have therefore used current trends to predict future ones. However, these authors did not focus on one of the world leaders; the French. Theirs is more of a generalisation rather than a specific examination of the issues in this country.

Essentially, what this implies is that there is a need to narrow down on the former heavy weight – France and this will be done quite easily in the research.

Research method

The research will mostly focus on secondary data through the use of content analysis. In this regard, because there are a series of issues that need to be investigated, then it will be insightful to look into some of the written documents that will be related to the research topic.

Hypothesis testing is often quite easily done through content analysis because it makes it possible for one to compare the legitimate causes with the illegitimate ones. Certain themes are often prevalent in articles to be used in the paper and they will act as the major background against which one can gauge public sentiments.

Alternatively, it is essential to look at some of the explanations that have been sought by writers as explanations for the decline of the French wine industry within the global scene. However, because content analysis heavily depends on the character of authors then a myriad of such writings will be utilised in the process of coming up with answers and solutions to the French wine crisis (Sridhar, 2007).

This method was selected because there was a need to place matters within a certain context and also to ensure that the biases associated with case study or overemphasis on primary data collection were overcome.

Problem Statement

The wine industry is now characterized by entrance of new players such the United States, Australia and Argentina. These stakeholders have been responsible for a twenty percent upset in market share because that is the percentage that they account for (Allbusiness.com, 2001).

Sometimes, market leaders may still perform well when other entrants emerge but this is not the case with French wine. It has consistently been recording reduced market share for over twenty years and clearly something must be done in order to alter this.

Rationale

As described by Chateau-Barbey (2009) wine reserves a very special place in French culture. Consequently, its failure is something that would tarnish the country’s identity in the international arena.

The economy heavily depends on the wine industry so low performance in the wine industry denotes low performance for the entire economy and this is not good for the French. By understanding the factors behind this low performance, France can be in a position to revitalise its stagnating performance because it will have reached the root of the problem (Goode, 2006).

Industry analysis

In the 1980s, France, Spain and Italy were largely considered as the major players in the wine industry. However, in the next decade, it became evident that Argentina, Australia and the US were forces to reckon with in this industry (Beverland, 1993 and Mercer, 2006). They managed to upset market shares for their older competitors by utilising good market strategies (Resnick, 2006).

Research Structure

The research will first focus on giving an overview of the global wine industry. This will be essential in placing all other subsequent matters in context. It will look at a history of wine and then give special focus to performances of French wine.

This overview will then be followed by an examination of recent trends in the wine industry. Once again, the level of inconsistency in performances of major players will be reviewed especially with regard to France. The third aspect will be to focus on the French wine industry specifically.

This will range from production, demand and supply laws as well raw material acquisition and the degree of competitiveness within the industry. Some issues such as brand awareness and consumer patterns will be given particular emphasis.

The fourth section will entail specific barriers that are causing the French wine market to stagnate in the world market. Lastly, the paper will give its recommendations on possible solutions to regaining a strong market leadership for France.

Research Objectives

1. To understand global trends in the wine industry
2. To explain France’s drop in global wine market share
3. To recommend an action plan to recover France’s wine industry loss in the global market share.

Research questions

• What is the character of the global wine industry?
• What is France’s place in the global wine industry?
• Who are France’s major competitors in global wine markets?
• What factors contributed to the French wine industry’s drop in competitiveness?

Results

Overview of the global wine industry

Benjamin and Podolny (1999) assert that the wine industry is characterised by ties between its market actors such that services and goods are transmitted between them. However, the higher the degree of relationships a wine stakeholder possesses, the greater the status that stakeholder will be accorded.

Throughout the history of the wine industry, status and perceptions of sellers have played a critical role in determining how much business will flow their way and how many resources will be invested in those organisations.

Wine production can either be an art or a science. It is a science because one must control processes and use various technologies in order to produce a high quality product. On the other hand, it is an art because organisations must be creative in delivering a product that can be appreciated by wine enthusiasts (Bisson et al., 2002). However, this does not mean that the business aspect of wine production should take third place.

Those who make it in the global wine industry usually find a way of combining all three factors. They are also immensely aware of the extrinsic or intrinsic motivators of consumption as this marketplace is quite dynamic and resilient.

Swaminathan and Delacroix (1991) claim that the degree of differentiation can make the difference between survival and non existence of a company. The period between the 1940s and 1980s in the wine industry was characterised by a high degree of competition.

Consequently, different wineries responded to these pressures by curving out their own niches and differentiating. The latter trend has caught on and continues to make small organisations adaptable to the conditions in the global wine market.

Demand in the wine industry within the past two decades has been altering back and forth. The latter observation has been brought on by two major phenomena as described by Chollette (1993). The latter author believes that economic improvements and increases in various parts of the world have affected consumers’ capacity to purchase wine.

Also, market expansion has caused these changes especially due to the cyclical nature of expansion opportunities. In other words, many wineries have taken on international markets and have decided to pursue growth through entry into different parts of the world. Therefore, regional shares have become more and more unimportant as wineries embrace globalisation fully.

Normally organisations in the 90s and 2000s have been doing this through partnerships, acquisitions or mergers depending on the nature of their business strategy. A case in point is the partnership that occurred between the United States (California) specifically and Australia to create the champagne drink. This had been done in order to garner access to the best land for production of wine grapes.

Another case in point was an acquisition made by Penfolds of the Lindeman wines (Spawton, 2007). In light of such moves, the wine industry has recorded a dramatic alteration of distribution networks since suppliers create their offerings in a totally different way.

Most importantly though, these alliances have led to greater focus especially in terms of ownership. It has also altered brand ownership as more intensification of the latter has occurred.

Anderson (2001) explains that the past two decades in the wine industry have been characterised by frequent alterations in booms and busts for various entrants. What normally happens is that when a boom occurs, grape growers experience a high number of plantings and this depresses market prices which eventually lead to very low returns.

Similarly, winemakers are also affected by these fluctuations because grape growers will be disheartened by the low returns and may then choose to go for other kinds of products. Governments within these countries may sometimes have to step in just so that they can encourage the farmers to continue with their vineyards so that the wine industry may continue to be sustained (Delacroix & Swaminathan, 1991).

Recent trends in the wine industry

Diminished consumption of wine

Spawton (2007) looked at consumption patterns of wine worldwide and found that the overall amount of alcohol being taken has gone down over the past decade. However, in terms of the type of alcoholic drink being consumed, beer and wines are beginning to have more or less the same ratios.

Initially, beer was seen as the alcoholic drink of choice; however, this has changed today. Consumers in countries previously associated with beer drinking have made a paradigm shift especially in areas like the United Kingdom. The United States and Australia have also cultivated a wine drinking culture.

Spawton (2007) warns that one should not just stop at this statistic, that is, increased wine consumption. He believes that one should go deeper into the matter. For instance, the average wine consumer has developed greater expertise in the product and is therefore quite selective. Now consumers are very keen on the quality of the wine or its brand name for that matter. Indeed, having good taste in wine is seen as a sign of great wealth.

Specialist companies

Swaminathan (1995) states that the wine industry is experiencing a resurgence of small, specialist organisations. This can be regarded as some sort of reverse industry maturity; a trend that arises when preferences in markets or technologies alter.

Some two decades ago, the wine industry could have been described as a purely mature industry especially since it was characterised by a high degree of standardisation as seen through production processes and the products themselves. However, consumers today need different qualities from previous ones.

Additionally, industry stakeholders are engaging in greater innovation and this has caused a proliferation of specialist industries. The small size of these wine producers makes their entry and exit into the industry relatively easy so this challenges conventional assumptions. It also necessities change from existing players (Güngör & Güngör, 2004).

Butler and Brown (1995) add that the wine industry has reported a different kind of competition where small firms liaise together to become formidable forces in the industry. In other words, through these combined networks, such corporations may be able to outcompete those large firms that have established themselves firmly in the industry.

It should be noted that the coming together of industry players may not simply be done haphazardly. Studies carried out in Australia indicate that regional clustering is sometimes common (Roberts & Enright, 2004) especially in regions known for the production of wine.

Examples include North Adelaide and Queensland. Thanks to the latter phenomenon, the economies of these areas have dramatically altered and have thus shown that competitor alliances can indeed yield very positive outcomes to the respective organizations under consideration.

The role of technology

Vivier and Pretorius (2002) argue that technology has penetrated virtually all sorts of sectors and the wine industry is no exception. One particular area that has generated a lot of interest is genetic modification of grapevines. Environmentalists, consumers and wineries have reaped the benefits because this technology increases the quality of grapes and hence yields better wine.

Wine tourism

Bruwer (2002) also looks at a very interesting trend emerging in the wine industry; wine tourism. One of the leading countries engaging in this practice include Italy, France, South Africa and many more (Toit & Ewert, 2005).

The latter has concentrated on respective wine routes that have been linked to the various visitors that come from Europe. It has started becoming a reliable source of income and will grow to be even more influential in the future (Charters & O’Neill, 2000).

Role of retailers

In the global wine market, attention has shifted from wine makers to wine retailers as affirmed by Jenster and Jenster (1993). Spawton (2007) further backs this by adding that the shift to a retail system in the industry has led to higher prices because different markets have to contend with small niche providers who then offer their products only to a small number of people.

The trend is quite common in the European continent and has caused wine producers to collaborate with the last members of their distribution chain so as to preserve their unique positions within the industry. Here, those with the most innovative marketing strategies are the ones that are likely to survive.

Companies have therefore embraced direct marketing where they coordinate with financial institutions in order to make use of the credit card market. This means that consumers have been encouraged to buy in bulk and to place the products at home thus contributing towards greater sales of the commodity.

Complex forces

Odorici and Corrado (2004) explain that the wine industry is becoming more complicated than would be expected because the laws of supply and demand are not the only ones that determine trends in the sector. One influential phenomenon is the effect of intermediaries. These authors affirm that consumers and producers often need to know about industry standards.

They need to have experts who can ascertain whether a specific wine product is worth considering or not. Sometimes, these opinions may be made available in wine guide books, magazines and other publications. Normally, the experts will rate a particular wine product depending on the nature of the particular product.

However, what makes the process quite complicated is the fact that rating systems alter substantially in different countries let alone different parts of the world. Consequently, wine evaluation complicates supply and demand and may lead to very different market perceptions (Odorici and Corrado, 2004).

Concern over taxation matters is an important factor shaping the global wine industry these days. Spawton (2007) explains that numerous governments are looking towards this industry as a source of revenue owing to the fact that wine is an alcoholic drink. Most alcoholic industries are frequently targeted by their governments and wines are not an exception.

Internationalisation of wine consumption

Internationalisation of wine production has also become another important element in this industry (Jan Visser and Langen, 2006). This means that wine producers are now more susceptible to external factors than ever before. Matters revolving around governance regimes have had to be re-evaluated because those companies that venture into unfriendly areas may have to contend with complications in operations.

It is also essential to remember that some wineries have benefitted greatly from this trend especially if they happen to come from emerging markets. A country like Chile has benefited from internalisation because the global markets have been developing; this has been reflected in its performance.

The latter phenomenon is also good for the global industry because major world players are coming together and seeking ways to improve performance. In areas such as innovation or training, corporations have formed alliances so as to improve them.

Nonetheless, this is solely a prerogative of the investor who must first identify an aspect about the global market that would benefit him. One must also create an investment opportunity when possible (Thach & Matz, 2003).

Purchasing behaviour

Recent analyses on consumption patterns illustrate that there is indeed a correlation between wine knowledge and purchasing behaviours. Rasmussen and Lockshin (2007) carried out research among twenty wine purchasers in order to determine the kind of qualities they look for in a certain wine product. It was found that almost half of the respondents relied on the region of the wine in order to make a purchasing decision.

This means that buyers now associate geographical regions with particular wines. Availability of information in the wine bottle also causes many consumers to buy these products. Most of them tend to look for the region, style, price, brand or label of the wine when deciding. Some respondents also give precedence to information acquired from wine magazines, newspapers and the like.

Sophistication of the wine purchasing process can also be seen by the fact that a number of drinkers derive pleasure from the actual process of selecting wine and even think of it as a hobby. Even the amount of time spent selecting these wines implies that consumers have changed buying habits. Average buyers are spending thirty minutes selecting wines in retail outlets thus denoting that this is an activity they take seriously.

New world producers

Most new entrants into the wine industry are recording relatively positive outcomes because of a number of reasons (Anderson, 2001). Countries such as Australia and the United States are not particularly known for being wine drinking nations. This means that local demand for the product may not be as high as expected.

Furthermore, since the latter are relatively new players, one would expect that the popularity of their brands would be quite low especially since they are struggling with other brands. However, it has been shown that these countries are doing relatively well because they decided to focus on exports and they have now become forces to reckon with (Hugh, 2001).

The French wine industry

Tourism

There is no doubt that French is one of the preferred destinations of the world today. Tourists come to visit it as result of the rich cultural heritage as well as its long history. This means that elements regarded as uniquely French are likely to solicit a lot of interest from visitors; one of this is wine consumption and production in the country (Getz et al., 1999)

Wine producers in France have realised that people would like to get more information about the wine industry. In this regard, wineries have exposed themselves to the outside world through visitations (Hall, 2007). Some producers in Burgundy can receive an average of about two thousand visitors annually. It should be noted that these numbers are rather small owing to the fact that small wine cellars are being considered.

Most of the time, visitors can get into the cellars for free and may be permitted to engage in some wine tasting (Emerth, 2004). To enjoy the latter activity, tourists are normally expected to part with a small fee. However, large wine producers have turned visitations into a thriving business by entertaining close to one hundred and fifty thousand visitors annually.

Here, an area is reengineered so as to make it more attractive to tourists (Bretherton & Simpson, 2004). Those who are interested may purchase items from a shop. These areas have also installed some visitors’ centres for those who would like to make their experiences unique (Hall et al., 2005).

Also, in other areas like Bordeaux, visitors can amount to eighty thousand annually (Charlsen, 2004). A lot of investment is normally made by the latter groups and they may often benefit by encouraging buys of high quality wines (Frichot, 2001). They also get revenue through the amounts collected from the latter arrangement.

Competition

France is regarded as a traditional wine producer; new and emerging countries are becoming important forces to reckon with. Most of them resort to very powerful marketing procedures and this puts them at a very influential position in the world wine industry.

Furthermore, this increasing competition has caused prices to go down thus putting into question the degree of choice that French wine producers have in deciding on the level of quality. There is only so much effort or investment that can be put into wine production if there is no sure way of ensuring that the quality and the asking price match.

To this end, large markets like the United Kingdom are offering small margins of profit to wine producers because a high number of them now rely on large chain supermarkets as their sources of supply for wine (Bisson et al., 2002).

Less demand

Several analyses show that the demand for French wine has been dwindling. This pattern has spread out even in France itself. In the 1980s, French wine takers would consume approximately ninety litres per year- per person. However, in the nineties, these numbers have dropped by a whooping thirty litres per person, per head. Furthermore the same has been replicated in countries across the world.

Higher interest in wine

Several wine consumers around the world are now taking particular interest in high quality wines although this is yet to be translated into tangible monetary incomes. Consequently, traditional players like France are getting a lot of attention from these enthusiasts (Smith & Bentzen, 2002). Greater publicity for French wine has also been achieved through recent scientific studies on the French paradox (Lockshin et al., 1999).

Members of the medical community have sought to explain why there are very few cases of coronary heart diseases in France and they have found that this has been brought on by the strong wine consuming culture among the French. Scientists are therefore sending the message that wine is good for one’s health and the French can benefit from this is they use the message to their advantage (Hall & Mitchell, 2004).

When consumers are asked about the qualities they look for in French wine most of them cite a number of factors. Some assert that it is the geographical location of the winery and in this case; wines from well known areas in France are usually considered to have a higher value (Babor, 1986).

Also, consumers claim that they now look for the name of the brand. Well known, large scale producers are highly respected and their wines are thought to possess more value than other typical wines available in the market today.

Increased production

Surveys do indicate that French wine producers are overproducing when their numbers are compared to the degree of demand that is available out there (MacNeil, 2001). Most world markets may not necessarily be going through this problem because they are using a different approach. In France, wine makers often think of the consumer as the last option but in competing areas, market forces are the first consideration.

In other words, market forces and an understanding of it are what cause these producers to decide on the quantity, quality, grape variety or any other aspect that may be deemed important to the client.

This has prepared them to deal with changes in consumer markets. French wine makers still do not place too much emphasis on wine markets thus explaining why they currently do not understand the full extent of the demand for their products and are overproducing.

Political forces

Legislations in France have deeply affected the manner in which the wine industry operates thus denoting the importance of political influences. In this regard, appellation legislations were passed so as to ascertain that certain areas continued to benefit from their respective positions. This has yielded immense political power amongst those groups to the point of causing a degree of territorialisation (Baron, 2003).

Therefore, the legislations may work for certain powerful figures but may not necessarily work for everyone. In this regard, wine regions have been established mostly as a result of interference by government. One only has to visit vineyards in France to see the extent of specialisation found in such locations (Moran 1993).

Studies indicate that sales of French wine products often get affected by political events from time to time. A case in point was the refusal of the French to engage in the US led Invasion of Iraq in 2003 (Leslie and Chavis, 2008). The US responded to these decisions by boycotting the purchase of French wines (Smith & Bentzen, 2007).

The boycott went on for half a year and resulted in 13-26 percent drops in sale of the French wines (Chavis and Leslie, 2007), (Ciccarella et al, 2007). The incident was a classic indication of the importance of external factors in determining the sales of particular items (Friedman & Pruitt, 1986).

Grower’s concerns

Most grape growers in France belong to cooperatives. They consider these groups as unique part of their identity and also a distinct part of their history. However, these cooperatives are usually created differently depending on the kind of region that wine growers belongs to (Ulin, 2002).

White et al (2006) affirms that wine normally grows well in regions that are considered to be climatically appropriate for the product. For instance, there should be minimal heat accumulation, minimal extreme heat as well as low instances of frost to the crops. Wine growers must therefore strike a fine balance between all these issues yet it may be a little tricky for them to achieve that.

Climatic changes have been going on in various parts of the world and these are affecting wine quality in traditional wine growing parts of the world like France. If hot days keep increasing then this could reduce the possible areas of wine production that can harm farmers. That kind of sensitivity of grape production has led certain farmers to abandon the crop for other less sensitive ones.

Marketing challenges

Warren and Melewar (2006) explain that marketing strategies for the French are not exactly the best. Some brands may stand out internationally but this has not always been the case for all. Others do not forge strong names for themselves and may therefore confuse consumers when they try to get their products out.

Point of sale contacts between consumers and marketers are also rather poor and may not give much promise for the future. This scenario is true for small producers compared to their more established counterparts.

Few French manufacturers have given direct marketing a chance. This means that they have little control over the image that their brands project. They also have minimal say in determining what services are offered to consumers at the point of sale. Furthermore, because they are detached from the final consumer, the possibility of establishing a long term relationship with them is put into jeopardy and this ruins their chances.

Additionally, the opportunity to create with consumers is also lost in such cases. The wine producers do not have an ability to assess consumer wants and hence provide them with the right product. Furthermore, the complexity of the system is what is bringing French wine producers a lot of challenges that have contributed to the poor performance and confusion in the market.

Terroir

This term incorporates all the key aspects of production that are needed in order to make wine within a specific vineyard. In this regard, wine producers often pay attention to the nature of the soil and hence the rock that can be found in their areas of interest. They also give attention to the landscape of any area and the degree of slopes that these products are expected to garner.

Furthermore, it is imperative for wine makers to consider the micro climate of their regions as this can alter the nature of the grapes produced. Some important aspects like sun orientation can into play. This forms the logic behind the AOC system; an appellation system based on the fact that no two regions can produce exactly the same grape variety (Robinson, 2006).

Terroir has been transferred to other parts of the world and has been shown to be a critical part of wine production. However, this has sparked a lot of controversy within the industry and may even be a source of disadvantage to wine producers.

For example, wine producers in a particular region always have several vineyards to choose from since grape varieties even in vineyards of close proximity are radically different. It implies that the kind of wine that can come from such places is also different as seen within the Burgundy region (Oz & Spurrier, 2001). Most of the wine that comes from here varies very differently from what others have considered important in the past.

Rich history

France takes pride in the fact that it has been producing wine for centuries on end. In fact, vineyard cultivators often think of the wine making process as an issue of family interest.

These growers and producers often transfer the knowledge to their kinsmen in the hope of perpetuating the rich tradition of wine making (Charles, 1952). Such a phenomenon may either be a source of competitive advantage as it causes consumers to respect this rich heritage or it may also be a disadvantage to the said groups.

In fact the rich history of wine production in France has contributed to the degree of respect accorded to French wines. Most wine lovers easily recognise Bordeaux which is by far the most well known wine brand in the world (Kibler, 2006). Clearly, the makers from this region may not have too much to worry about as their commodities are still flying off the shelves in retail outlets and other point of sale locations.

Immense variety

French winemakers can boast of a very high level of variety that they can offer consumers who are interesting in purchasing their commodities. For instance, consumers who have a preference for dry wines can find them there. Those who would prefer sweet wines, red wines, white wines or even sparkling ones can meet all their needs among French wine producers.

Furthermore even the degree of quality has been altered dramatically depending on the price level of the purpose that a particular type of wine will serve. Consequently, wine enthusiasts can always find what they are looking for in this part of the world (Cambourne et al., 2000)

Varieties also refer to the number of grapes available in this country. More often than not, grape varieties are limited to the type of region that a vineyard belongs to especially in light of the appellation rules currently in place. However, since the grape growing regions are so many, then the grape varieties also vary correspondingly.

Some grapes can be easily identified by foreigners because they may not be unique to France while others may be unique only to that specific region. Because of these wide varieties, some French wine makers have opted to combine grapes so as to create varietal wines. Consumers can therefore enjoy the benefit of judging for themselves what appeals to their taste buds and hence can be able to satisfy their needs.

Specific barriers to international growth of French wine

Overemphasis on high end wines

The wine industry is one of the most complex product industries in the world. This is because of the nature of the products and the degree of dynamism needed in order to get a product out to the market. Currently, France is still well known for producing high end wines. These types of wines are heavily priced because they have been cultivated and produced in the same vineyards and a lot of care is put into the process.

However, consumers and buyers of wine may want to indulge in a little wine tasting without necessarily spending too much on it. Most of these individuals tend to go for cheaper wines and may not be too keen on whether the wine was made in the same vineyard or not.

These kinds of consumers have actually been responsible for the surge in wine consumption globally especially because they buy their wines from supermarkets rather than wine retail outlets (Dean & Bart, 1998). Other emerging wine producers have noticed this shift and have therefore produced wine that meets such unrefined tastes (Stevenson, 2005). They are driving the world market and making profits for themsleves.

France is somehow stuck onto successes of the past because it still believes that the highest percentages of wine consumers are the ones in the high end of the market. This mistaken thinking is what has blocked France from becoming the most formidable force in the global wine market. As soon as they reshape their thinking, then things could potentially start to change.

Furthermore, even the rules for wine production are still centred on makers of high end wine while cheap producers are pushed to the periphery. The latter government has not realised that there is no one size- fits all scenario in wine making so they should adjust some of these rules (Espey, 1989).

Differential branding in France and the rest of world

Some of the most well known brands in the international market are actually controlled by wine producers themselves. Countries like Australia and the United States have added value to their products by taking control of their branding systems (Mowle & Merrilees, 2005). In France, things are done in a totally different way. Wine producers usually concentrate on the wine production process and leave the rest to external parties.

This causes the producers to be detached from their particular brand and thus reduces the motivation to please the customer (Swaminathan & Delacroix, 1991). Over the years, this has led to lower quality wines and is therefore impeding the capacity to grow in the international market.

Failure to improve standards

The truth of the matter is that wine standards have changed dramatically over the years. What was previously considered average in the past is now almost intolerable. Wine consumers are savvy about what it takes to make good quality wines (Bruwer, 2004).

Wine producers in emerging markets came when this was already the preference and therefore responded well to it by giving relatively high standards of medium or commercial wines. France on the other hand has not adjusted accordingly and the same medium scale wine produced two decades ago is still the same one that consumers are exposed to.

Attitudinal issues

As stated earlier, French wine growers and producers have been doing this for generations. They may therefore feel that they have fully grasped the intricacies of the wine market and everything it has to offer. These growers have developed a know-it -all attitude that could be costing them international expansion. If they accepted the fact that they did not have all the answers then that would be a sure way of making things work (Shaw, 2000).

However, a report made in several international newspapers has indicated that sometimes these kinds of attitudes may cause France to suffer severe losses. For example, the latter industry has recently been going through a range of controversial lawsuits (Iversion, 2010). In the past a foreign wine maker who dared to break the AOC would be quickly taken to court.

This caused an immense level of distrust and fear for wines produced from these regions. In recent times, this has been reversed; for example a French wine maker was taken to court by New Zealand over using their brand to label their products (Iversion, 2010). This caused a lot of spur over the double standards used by the French in terms of the latter trade.

Complex marketing terms

Most consumers nowadays are busy working two jobs or handling their personal responsibilities to give too much time and effort towards the process of indentifying wines. Conversely, these consumers would still like to understand the origin of the product that they are buying. In this regard, labelling products or displaying information on bottles needs to be made as simple as is reasonably possible (Belk King, 1997).

French wine producers and marketers have not paid particular attention to these issues. The AOC often use rules that make it so hard to detect whether a wine is say a Burgundy wine or not. One type of wine may have a name that is even too long to read and may not contain information that makes it easily comprehensible to the consumer.

Some have asserted that it may be an indication of arrogance on the part of the French wine producers who have refused to accept that their market is changing and that other kinds of strategies may have to be sought (Gregg, 1990). Consumers want simple processes that are not laden with complexities and the like (Engelmann & Tyran, 2005).

Failure to plan for cyclical changes

Over the past two decades wine producers in various parts of the world have been going through ups and downs in business. Sometimes there is an undersupply of the commodity and an oversupply in other scenarios. Large wine producing countries like France feel these fluctuations even more intensely than others.

Since the business cycle is rather predictable, then failure to adjust accordingly to the market alterations could be leading to the minimal profit margins that these business men and women go through. More often than not, such producers may adjust but the time lag between their responses and market changes is the cause behind their problems. Usually, the government steps in in these time lags so as to deal with the oversupply.

However when this is done over and over then farmers and wine producers can get comfortable with the arrangement and may never think of the degree of demand for the commodity. In this case, the French government has not dealt with foreseeable cyclical changes in a practical manner and this has led to current observations within the industry (Vermeulen, 2006).

Lack of a tangible export plan

Statistics indicate that wine consumption in the host country France has been declining so the future would be in export markets. In fact, this is the reason why traditional beer drinkers like Australia and the United States have managed to penetrate this complex industry (Baumgartner & Burns, 1975). They realised the inefficiencies in their local market and opted to look elsewhere.

Sadly, France is aware of this too but has enacted minimal plans in response to these adjustments. The exporting scheme is laden with too much bureaucracy and this clearly hampers their ability to engage more exporters. Also, French wine producers have not been told about the benefits of such a system and it may be imperative to think of it in the future (Cholette et al., 2005).

Failure to use traditional marketing channels

A number of wine producers are encompassing new and revolutionary marketing methods. However, this does not undermine the fact that traditional marketing tools like television advertisements cannot still work for the industry. Because the wine industry has been around for so long, wine producers have assumed that the international world is already aware of the quality of their products.

They have been underutilising the potential of television to access the international community. France rarely creates captivating adverts that would most likely make the public aware of their brands and how critical these are to the wine industry. International markets as well as domestic ones would be better informed and captivated through these traditional channels creatively.

The French ought to use their geography as specific marketing points. However, not all producers are able to display the information for users to make use and in the end; this hinders the ability of the consumer to differentiate between these categories of wine (Bevarland, 2000).

Types of wine created

The nature of wines that French wineries are concentrating on may be the reason behind their dismal performance of late. As asserted earlier, the market for high end wines is still prevalent. Middle type wines are also considered to be an important part of the process. Table wines on the other hand represent the opposite side of the scale; most local French consumers no longer purchase this type of product in large numbers.

Also, the international market has lost interest in this product as well. The French considered table wine and fine wine as the major categories of wine production and still continue focusing on these types today. However, studies show that not everything may turn out as expected especially in a changing market (Adams beverage group, 2003).

Some wines that were thought to be poor quality wines are now essential parts of the wine drinking culture especially in the commercial end of wine productions. One such case is the Rose wine which is grown in the Bordeaux region of the world (Kindersly, 2004). Surveys indicate that young consumers are embracing these types of wine over the traditional wine types (Anon, 1990).

Consequently, marketers should have targeted the latter population with the uniqueness of their flavour and other important aspects. However, since this has not been done, then very few markets have been fully tapped and the wine varieties given precedence are not the most important.

Low internet sales

Many wine producers around the world are realising the potential of internet sales especially if they are selling their commodities to persons outside their native countries (McNeil, 2007). In recent analyses it was shown that websites designed solely for the purpose of selling wine to consumers recorded sales of about 175, 333 bottles annually.

While some of the latter producers were French, others were not and it is members of the emerging markets who are realising the potential of this kind of market. France has been left behind in the new wave (Wood & Bruwer, 2005).

Lack of a single brand

The French wine industry is laden with a diverse array of products. Some of them are easily recognisable but some are not. In fact, a country that has been doing this business for decades needs to possess a brand that is synonymous to the country.

France does not have a national brand. The very name France – is a crucial selling point in wine so having a drink that symbolises this country’s tradition and richness would be extremely helpful. However, these plans may be in the making especially owing to the reports the government has made on creating one such market (Mercer, 2007).

There is a lack of one unique blend of wine that is distinctly French making the latter country miss out on useful opportunities. Plenty of advantages can easily be seen from such an approach even at a glance. For example, if there was one blend sourcing wines from different parts of the country, the wine producers would be in a position to dispense their excess produce.

This would mean fewer losses and a mitigation of the oversupply problem which frequently plagues the country from time to time. Furthermore, some wine growers may not always want to stick to the same wine manufacturers as before (Teaff et al., 2005). This sort of brand would be a unique opportunity for them to utilise wine suppliers that are effective.

A brand representing France would be a good idea to wine makers especially because it has been tried and tested in other parts of the world and has been shown to be very effective. Countries like Spain have already implemented these strategies and are doing fine as is the case.

Levelling the competitive arena

The various types of wine available in the French wine can appeal to varying tastes and there is always a reason why they still exist in the market today. However, when some wines are treated in an inferior manner owing to the use of a certain grape variety that does not belong to another region then this may create some sort of bias to those products even without considering the kind of quality dispensed by these types of wine producers.

Too much bureaucracy in French wine manufacture has made it an unattractive destination for investors or stakeholders. Business environments like Spain are highly respected for their government support and their level playing fields; a concept that is almost alien to France and its inhabitants (Benjamin & Podolny, 1999).

Poor link between brand perception and brand strategies

Although the wine industry is quite complex, there are certain essential rules of marketing that still apply. These rules must be obeyed if the latter entities have any hope of revamping their diminishing wine sales.

One of the first principles in marketing is that the price of a certain commodity is an indication of the value of the product. In other words, if there is great value addition, then it would only be fair to increase the price of the product (Lusch & Virgo, 2004). It is the reason why some wines like Champagne have very high price tags but consumers are still willing to purchase them regardless (Farmer, 1994).

Secondly, price is also an indication of the brand responsible for production of the commodity (Faith, 1992). This means that consumers would be willing to pay for a certain commodity if they think that it has high quality even when this is not necessarily true. The problem with French wine makers is that most of them presume that they all belong to these kinds of strong brands yet this is not always true.

If a wine maker has not yet established a name for himself in the international arena then it should sell its commodities at prices that reflect its brand perception (Ehrenberg & Bird, 1970). Some wines from Australia are available in world markets at affordable prices in line with their brands and this causes high sales.

However, low quality, poorly branded wines from France are sold to the rest of the world at exorbitant prices and this causes most of them to remain in supermarkets or retail outlets because there is only a small link between how the public perceives these brands and how the winemakers do.

Lack of information in the public domain

Most members of the public may not necessarily understand the intricacies of the wine making process. However, they would be in a position to appreciate this information if it was made easily available (Greatorex and Mitchell, 1988).

Some industries in the past have not just considered marketing as a channel for getting their messages across concerning a particular commodity; they have also used it as a platform for giving out information. In fact, analyses indicate that consumers these days tend to value information based advertisements than conventional ones that clearly appear to have a bias towards a certain firm.

Objective advertising through the use of experts can be very beneficial to wine producers as well as consumers because the wine makers would appear genuine and believable while the consumers will be more informed about the industry (Juster, 1966). The French have rarely used marketing strategies that are information based hence the problems it may be going through today (Armstrong, 1991).

Recommendations on possible solutions

Direct selling to consumers

In order to stay ahead of the competition, French wine makers need to result to creative methods for marketing their goods and this means direct selling. Some French wine makers are already doing this as described by Hall (2005).

Alsac and Bargandy wines are now sold through this route since wine cellars are important places for getting the commodities to said consumers. This especially applies to those who come to France in order to participate in wine tourism by visiting various vintages.

Proactive stances

French wine was once known and respected for its high level of innovation as well as the boldness it possessed (Ulin, 2002). This was the reason why it was counted as a global leader (Warren and Melewar, 2006). In order for France to reclaim this position, it must lead the pack in terms of being proactive rather than wait for similar introductions. The only way to achieve this is through creation of a cultural shift.

Better quality

In order to differentiate itself from all the crowding in the market, French should reassert itself as the ultimate guarantor of quality. In the past, this is what removed French wines from their shelves and the same can reoccur if quality is reasserted. As established earlier, the problem is with the smaller producers who are not necessarily governed by very tight controls (Duthy, 2000).

The AOC needs to reinforce the nature of their controls and this ensures that all the brands emanating from France represent the same standard of quality that large producers do. High quality will also shield small producers from price related complications because they can afford to make their wines pricey.

This would be a reflection of the effort and degree of innovation that has been put into their wine making processes (Leibold et al, 2004).

Distribution systems

Currently most wine purchasers in the United States, UK and other big markets heavily rely on large scale supermarkets to access wine. French wine producers would be fighting a losing battle if they tried to negotiate with these chains. The best way of going about it is to look for a way of getting to consumers directly. Internet sales can be a great way to do this as access to markets is quite expansive.

They can also employ the use of new innovation in the latter sector such as social networking websites. Small scale producers should be especially considerate on this issue.

In fact, analyses show that the best bet in value addition does not lie with experts like marketers and researchers; it is in a mutually beneficial and a long term relationship between the producer and the consumer which can then be a source of information on what really matters to wine makers (Spawton et al, 1997).

The logic is that people are not likely to trust marketers because the latter tend to be after securing sales for their products. However, if a wine producer appears to be committed to a certain consumer then trust can result and an atmosphere of honesty will therefore be established.

Nonetheless, a direct selling distribution system may sometimes move too slowly as the amount of goods sold is only dependent on the ones that can reach clients at any one time. In order to overcome this inefficiency, small brands should consider integrated direct distribution (Patton & Boze, 1995).

Here, they can come together and decide on the main issues that they want to work on in the product; these should be the most valuable ones. They can then establish the right channels for this mix so that at the end of it, consumers will be the ones who can grow and benefit from the arrangement.

Planning for the opportunities will need to be done and the capacity of the products to create value should then be analysed at every single point. Although integrated direct marketing may not always be done formally since wine producers may rely on their past experiences, intuition and trial and error, this does not undermine the fact that the customer’s satisfaction is what carries the day.

Examples of channels that can be used in these scenarios include the internet, mail, trade exhibitions, organised direct selling markets and integrations of producers.

Match demand and supply

As established earlier, French wine makers are overproducing and this is causing a wide number of them to undergo great losses. If these producers simply understood the working of the present market then chances are that it would lead to accurate estimation of quantity (Madden et al., 1993).

In fact France is not alone in this kind of misconception; most other traditional wine producing countries of the world have been responsible for this.

They have continued to make wine while still remaining insensitive to the market around them and this has led to a drop in the profit margins attained by such groups. In fact, most wine producers need to correct this problem from the onset by reducing their product outcomes before they are released (Casini et al., 2006).

Free market economics

France should let free market economics rule because without it, any industry is bound to postpone problems into the future. Wine growers have used excuses such as poor climatic conditions, an unpredictable consumer market and international competition as excuses for their lack of profitability. In these circumstances, farmers and other wine producers have threatened to quit the wine producing trade all together owing to these changes.

In order to preserve its cultural heritage and the contribution that the wine industry makes to the economy, the French government has frequently intervened in the wine industry. The only problem with such an approach is that it ignores market economics. Most of the entities that seem to be having a problem making profit in this competitive industry actually are unsuccessful producers or growers.

The market should be allowed to eliminate such individuals because they saturate the market with their bad produce. French wine will be better off if it was associated with a few good producers than with many mediocre ones.

Currently, all the AOC rules are causing these farmers to hide behind the bureaucracy and government support. They are not taking responsibility for their mistakes and this is definitely hurting the industry (Spawton, 2007).

Re invention of the AOC rules

The French wine industry would definitely be better off if it changed the AOC rules dramatically. Some brands of wine may appeal to consumer’s taste buds but if they do not adhere to the strict criteria of the AOC then they may never reach the latter who would greatly respond to them. The government would do itself a lot of good if it applied these rules to the high end of the market.

However, any other commodities in between tend to be disastrous because it is the bad quality wines that can meet the AOC criteria while the genuinely good ones are forgotten. This other side of the market should be left to curve its own destiny (Spawton, 2007).

Carry out market research

Wine production in France has taken on a regional approach and it would be very difficult to change this in the short term. A workable solution would be to make those regional strongholds even more powerful (Spawton, 1991).

Information is always power and if French wine makers can engage in deep and serious market research then they may be in a position to change how the world embraces their commodities because they would be constantly monitoring it (Berglund, 2003).

This refrain from marketing of the goods could be harming the French wine industry more than anything else (East, 1997). Without solving the problem, little else can be accomplished in the business.

Abandon types of wines that do not yield results

By holding onto tradition, the French market is destroying its profitability. People no longer value table wines as they used so utmost precedence should be given to the growth and development of other types of wines that will be received in a much better manner than the traditional ones (Duthy, 2000).

The prerogative to change these types of wines may lie in the hands of the wine producers rather than other authorities, this means that it may be extremely difficult to control which wines are available and which ones are not. Therefore, one way the French government can achieve this is by offering support to those popular wines so that they can be nourished and grown.

Staying abreast of new production techniques

Australian wine producers are known for their high degree of innovation. They frequently think of the benefits that they would enjoy from a new practise and work towards improving it. Sadly enough, this is not the same case as what goes in France.

In fact, the latter country has become associated with non progressive ideas. Although it should be noted that wine makers in France are not immune to change, most of them merely borrow those practices from other producers around the world like Australia.

There may be no problem in borrowing ideas and best practices but the timing is always crucial. If one waits for one’s competitors to try and test ideas and to implement them fully then chances are that one would already have been left behind and this can only lead to subsequent failure.

French wineries should also be at the forefront of innovation in production techniques by dedicating specific personnel to be directly responsible over this (Lockshin, 1997).

Use New world patterns

Previously, wine producers from certain parts of the world were considered to be inexperienced and clueless on the wine making process. In this decade, new world marketers have become a formidable force to reckon with (Ramaswamy & Prahalad, 2004).

Their wine sales have increased by about twenty eight percent over the last two decades and this means that certain patterns inherent in this market could also work for French wine makers. Some of the strategies that were previously seen to be too simplistic can actually prove to be very useful to France.

These new markets have targeted new wine consumers who do not necessarily have a lot of experience with the commodity. Most of them are fully aware of the intricacies of marketing commodities to these kinds of consumers and have therefore gone in full throttle (Quinton, 2003).

Neutralise terroir

As stated earlier, this system is discriminatory and may prevent producers from sourcing for the best raw materials. In other industries like retail, large chain stores will usually look for the most effective producers so that they their merchandise will be of high quality. Companies like Starbucks often get their coffee beans from countries as far as Kenya and this makes them very effective.

In the French wine industry, not only is production limited to the country but to certain regions as well. Manufacturers are prevented from enjoying the benefits of sourcing from various parts of the world and this has actually led to poor results currently.

France could benefit tremendously by using a different strategy. Here, it could get its grapes from different parts of the country or even the world and then assemble them into one product. Some firms are already doing this and are recording a lot of success. A company like Chamarre is getting French grapes around the country and creating products that use all the good aspects from these various areas to create a formidable product.

In the end, the latter has received a lot of acclaim from various consumers across the world. Indeed, evidence of this has been denoted by the fact that the latter products are transported to about thirty countries.

When consumers are told about how the product was created, then chances are that they would deeply appreciate it and it would cause greater results. This represents a paradigm shift in the way wine products from France are presented to the rest of the world.

Massive campaigns

There could also be opposition from stakeholders that concentrating on relatively low end wines would be detrimental to the French wine industry. This means that some massive campaigns would have to be carried out in order to spread the message that low end wines need not be seen as low quality wines or wines that have relatively little market value (Reid & Ratcliffe, 2001), (Polhemius, 1988).

Campaigners could use the success of certain new varieties of French wines that are doing so well in the wine market. In fact a wine like Arrogant Frog is giving Australian wine makers a run for their money since most of it is sold in the latter country. Estimates shows that this type of wine has gained an enthusiasm of approximately one million annual consumers.

Internet sales

As stated earlier, internet sales have been underexploited by French sellers yet this could be a revolutionary way of getting their products directly to consumers. However, the internet is not just an instant answer to the problems by these wine producers. Additional work will need to be carried out.

First, French producers should make the websites user friendly so that consumers can view products and make purchases as fast and as conveniently as possible. Furthermore, it should attract the attention of online users who are quite difficult to please especially given the fact that most of them are bombarded by several advertisements on a daily basis (Sumner, et al., 2007).

They should also contain useful information about the product, its advantages and how consumers can purchase it. A website that displays such information would be quite appropriate and would be a sure way of giving consumers what they are really looking.

Online selling websites should also be advertised on other websites or they should also use recent inventions such as social networking websites. Face book and twitter can be very revolutionary outlets for letting the public know about French wines.

Make use of traditional retail outlets

Restaurants are still an important source of marketing wine to the public especially in the French wine market. The French wine taking culture is such that most individuals consume this drink with their food. Consequently, wine producers need to work with the latter groups in order to fully utilise this opportunity.

Consumers who come to order foods often request for wines to keep them busy (Demossier, 2004). Restaurant owners need to be persuaded to market the commodities to these patrons. One way of doing so would be by striking a deal with the latter individuals. They could share royalties on sales or such kinds of contracts.

Alternatively small and specialised shops have also been known to be critical points of contact between wine producers and their consumers. The latter groups need to be converted into advertising strongholds.

They should also be used as places for marketing promotions and other pricing strategies designed to woo the consumer. Supermarkets as well fall in the same category and intense use of this platform should be used by stakeholders in the French wine industry (Spawton, 1998).

Improve the situation at wineries

As stated earlier, wine tourism is an important area that can attract revenues for wineries (Charlsen, 2004). However, some producers are not fully embracing the phenomenon or channelling it into a profit making venture. First, wineries can advertise and attract many consumers to their respective areas by placing advertisements in local channels (Copla, 2000).

They can also add some incentives that would make their wineries ideal destinations for wine tourism. One way of doing this is to provide visitors adequate space in their wineries for wine tasting.

They should also have access to good parking space and should be provided with guides who can take them through the wine making process (Penn, 2003). This should not just be a preserve for those with large scale industries. Even small scale wine producers need to think of wine tourism as an additional source of expenditure for them (Dodd, 1999).

However, there should be a point of caution at this point; wine makers should refrain from introducing some big time leisure elements such as restaurants (Emerth, 2004). If they do so, then patrons will think of them as hoteliers first and wine makers second.

In fact, wine makers who make their wineries too comfortable often run the risk of never realising a return on their investment because the success of one industry i.e. the restaurant business normally comes at the price of the wine related side.

Exploit the local market

Surveys indicate that one of the most critical markets for French wines is within the French borders. However, the country has not fully used this market. For instance, in the decade 2000, a record twenty percent drop in wine purchases was made. This caused most wine producers to concentrate on external markets.

The only problem with such an approach is that there are several legal hurdles to the process both within France and in respective countries of destination. Wine makers would be spared from all the expenditure that comes with the sale of their commodities in other countries if they concentrated on these local markets (Kaplan & Vigna, 2007).

They would also revitalise the French culture of wine taking. These manufacturers can use several platforms to ensure this. One of them is through local marketing campaigns and promotions that can be sustained for very long periods of time (Pike & Melewar, 2006).

Conclusion

Not all is lost within the French wine making industry. In fact, it has the potential to regain its position as a leader in wine making if it goes through the latter steps as recommended. In essence, the problems are many and diverse in France’s wine making industry but most of them have been brought on by excessive government interference as well as overconfidence in decades of market leadership.

Once these approaches are corrected the manufacturers can be well on their way to establishing an industry that can withstand all external forces in this industry.

It can also be in a position to easily change the image of the country. Some initiatives already demonstrate that the government is heading in the right direction. French men and women should work on maintaining those strategies as well as boosting them so that only the most effective ones are realised.

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Abstract

The goal of this paper was to assist the ESW (English Sparking Wine) organization in creating greater interest and awareness of English sparkling wine both in local markets and abroad. While ESW was successful in outpacing champagne within its local markets, its consumption is still fairly limited due to competition from red wine, white wine and lager.

Introduction

Based on Mintel research data which has examined the impact of English sparkling wine (ESW) since it entered the market, 69% percent of present day consumers within the UK prefer sparkling wine compared to champagne. In fact, a gradual progression has been shown wherein since 2007 there have been more sparkling wine sales in the country as compared to champagne by a factor of 18 percent. This shows growing demand within the UK yet, when taking into consideration the rest of the wine market, is indicative of ESW only succeeding in a tiny portion of a much larger industry (Marks 2011). When examining the case of English sparkling wine, it can be seen that the product has a considerable level of potential given the generally positive responses to it as stated by the ESW industry (Marks 2011).

Combined with the increased awareness of the local population regarding the presence of a regionally distinctive type of wine that is unique to England, this would of course result in a considerable level of patriotism resulting in the possibility of increased local sales of English sparkling wine. It is based on this that this paper will examine the economic environment of the English sparkling wine industry, the current business strategies that it has been utilizing and make suggestions based on perceived opportunities that have yet to be tapped.

Environmental and Situational Analysis

Based on research data from Mintel, one of the current problems with English sparkling wine at the present is a lack of sufficient brand development due to its association with British wine. Consumers often think that English Sparkling Wine and British Wine, which is made from imported grapes, is actually the same thing. This is a detrimental association since the quality of British wine is towards the lower end of the spectrum as compared to its locally grown counterpart. This is indicative of the necessity of further brand development to the extent that consumers need to know the difference otherwise the association could damage the brand’s reputation in the long run (Marks 2011).

The main weakness of the ESW industry and the wine that it promotes is the fact that it is entering rather late “into the game” so speak when taking into consideration the presence of numerous international wine brands from Europe and even the U.S. (Hilger, Rafert & Villas-Boas 2011). When taking into consideration the amount of time these brands have had in establishing their respective markets, it can be seen that English sparkling wine has a long way to go due to the already overly saturated wine market

Research Aim

To increase the general awareness of English sparkling wine to domestic and international consumers.

Research Objectives

1. To examine the current method of marketing utilized by the English Sparkling Wine Industry.
2. To create an effective means of enticing the target population to purchase English sparkling wine on the basis of taste, convenience and novelty as compared to other types of wine.

Data Collection Methods

The primary means of data collection that will be utilized in this study will be from Mintel reports that have examined the English sparkling wine industry. Secondary sources will consist of academic journals that delve into different economic theories and the wine industry as a whole. It is anticipated that through this method of data collection, a broad understanding of the current viability and economic environment of the English sparkling wine industry can be developed.

Case Analysis

The theory of utility revolves around the concept of the perceived value that a consumer/client derives from the consumption or use of a particular commodity or service. Within the context of this case analysis, two distinct factors need to be taken into consideration:

1. The first being that English sparkling wine is a consumer good.
2. Secondly, its consumption has diminishing returns for its consumers since unlike utilities such as electricity and water; there is a finite amount of English sparkling wine that can be consumed by a single individual.

This analysis thus takes into consideration the consumption of other types of alcoholic beverages by consumers and how this may impact demand for English sparkling wine locally (Parker 2004). To understand the demand side of ESW market consumption, the theory of utility uses two distinct methods of measurement, namely Total Utility (TU) and Marginal Utility (MU).

Total utility can defined as the total level of satisfaction that a consumer can get from the use/consumption of a particular good or service, this comes in the form of consumers buying ESW or other types of wine. On the other hand, marginal utility is basically described as an add-on, namely it is the additional form of satisfaction that a consumer can get from the use/consumption of an added portion of a particular good or service.

To illustrate this point, one can imagine a person buying a bottle of English sparkling wine at wine store due to some sort of celebration (ex: Christmas, New Years, Boxing day, etc.) (Bicknell & MacDonald 2012). While initially the total utility and marginal utility are equal, if the person were to go back and kept on buying the same product for that day or for another celebration, the total utility would increase due to the consumption however the marginal utility would decrease over time as a result of the continuous consumption of the same product. This is based on notion that continuous consumption of the same product would eventually cause a person to get tired of consuming it, thus, the added value continues to decrease over the course of consumption.

For example, within the UK the consumption of champagne has normally been correlated with having it during special occasions or during some sort of celebration. However, this practice has continued for quite some time over the years and has resulted in a decrease in champagne’s marginal utility (Bouzdine-Chameeva & Galam 2011). Evidence of this decrease in marginal utility can be seen in the Mintel report below:

As it can be seen, sales of sparkling wine within the UK have shown a considerable increase within the past few years and Mintel data has shown that it has beaten Champagne in the local market by 8%. The reason behind this is connected to growing brand awareness, general taste and growing popularity in the local market (Bouzdine-Chameeva & Galam 2011). This means that English sparkling wine has the potential to go beyond the current local market and encapsulate a wider international audience. Another way of interpreting the report is that the overall marginal utility that consumers have been deriving from champagne over the years has steadily decreased.

Since ESW is being marketed as a more affordable alternative to champagne and the fact that the marginal utility of champagne has been decreasing over the years, this shows how the theory of utility is on the side of ESW since clearly it is beating champagne within its local market. This is not to say though that ESW has no problems expanding in its current market. As the next section will show, ESW has had considerable issues with competitors resulting in an inability to expand out of its current market niche.

Barriers to Expansion: Rational Behavior and Consumer Preference

The following data from Mintel shows that English Sparkling wine has a considerable level of local competition and controls only a small portion of the local wine market as compared to other types of wine. The inherent problem is the fact that other brands have simply been around longer resulting in better brand awareness. To understand how this impacts the capacity for the ESW industry to continue to be competitive, the theory of rational behavior will be utilized a means of examination. The primary idea behind the concept of rational behavior is that consumers are rational individuals who will try to derive the highest amount of utility from the service/product that they patronize. Within the context of this paper, this comes in the form of the consumption of ESW versus other wine brands.

This rational behavior is based on the fact that consumers will act in an economically competent manner in that they will not spend too much money on irrational purchases or services. This can take the form of stockpiling unneeded products or choosing certain services that are well beyond their budgetary means. One of the current issues within the UK at the present has been a declining economy which, when combined with intense local competition, creates numerous issues for the ESW industry since under the concept of rational behavior, it is unlikely that consumers would purchase an item that they cannot afford at the present or are hesitant to purchase due to the uncertain economic climate.

As such, the concept of rational behavior assumes all consumers engage in rational buying behaviors which becomes the basis for any future analysis of consumer patronage towards a particular type of product or utility. It is within the context of the current economic issues within the UK that it is unlikely that under the concept of rational behavior that a considerable increase in the amount of ESW will be bought. Another factor that should be taken into consideration when examining the chart above is the concept of preferences which is based on the fact that each individual consumer has his/her own personal preference towards a particular service or product that is currently available in the market from which they are able to derive the greatest amount of total utility/ satisfaction.

It is due to such a concept that red wine, white wine, lager, cider and vodka dominate the UK market since they are undoubtedly the “preferred” drink of consumers when it comes to any event and are not limited to celebration and special occasions. While an oligopoly of distributors does not exist within the UK wine market, there is an oligopoly in terms of the types of alcoholic beverages that are overwhelmingly consumed by the local population which is limited to lager, red wine and white wine (Agarwal, Ellig & Zywicki 2004). The reason behind this is connected to the concept of consumer preferences and total utility wherein UK consumers simply prefer those types of alcoholic beverages as compared to others. As a result, this limits the capacity for ESW to expand beyond its current competitive landscape aside from beating champagne.

Market Strategy of ESW

Under the concept of budget constraints, each consumer is assumed to have a fixed and finite income due to the limited amount of work in exchange for income each individual buyer is capable of achieving. In this case, it is assumed that there is unlimited demand for goods and services, however, this is offset by a limited income. Under the concept of prices, each individual consumer is considered part of the total demand that is occurring within a given market. Due to the limited amount of income each consumer is capable of achieving they must choose to obtain the best combination of goods that maximizes their total utility while at the same time remaining within a certain price range. It is within this context that when examining the current demand for ESW within the UK, it can be seen that its price is its primary selling point to consumers (Wei & Xueguang 2011). The following info graphic from Mintel proves this assertion:

As it can be seen, a majority of ESW is under the 10 pound range while a majority of champagne is priced from 10 to 30 pounds. Consumer responses indicate that they prefer ESW as compared to champagne since it is cheaper (Benfratello, Piacenza & Sacchetto 2009). This supports the earlier assertion that due to the current economic climate within the UK and under the concept of rational behavior, consumers would choose a more affordable method of consumption (Bruwer & Buller 2012).

The problem really is the fact the industry’s rivals are simply far too entrenched within their respective markets and have too much of a following in terms of the societal connotation involving their purchase and consumption (Clemente-Ricolfe, Escribá-Pérez, Rodriguez-Barrio & Buitrago-Vera 2012). The end result is that despite its efforts, the industry has had difficulty expanding into its cathartic local markets aside from its competition with champagne which it is winning due to its price advantage (Chahal 2012).

Discussion of Findings

Necessity of Shifting to New Consumer Markets

With low consumer spending and an atmosphere of intense market competition which pervades the domestic wine markets within the UK and other parts of Europe, this has resulted in wasteful operational costs for local wine producers within Britain in the form of storage, utilities, taxes, worker salaries and employee benefits for unsold products (Taplin 2012). The fact is, the current consumer market situation within the Britain is not conducive towards sales of new brands of wine and, as such, the ESW industry has suffered as a direct result (Ştefan & Coca 2011). One possible avenue of approach that was determined by this economic examination paper is to shift resources towards foreign wine markets which have not been as badly affected by the current proliferation of brands within Britain and focus efforts there instead.

Possible markets in which the industry could expand include China, Japan and other parts of South East Asia where there is a considerable level of demand for western goods with little knowledge regarding their intricacies (i.e. little information regarding particular wine brands and types) (Parker 2010).

Conclusion

Overall, this paper has successfully delved into the case of the UK English sparkling wine industry and has examined its market environment, current strategies and potential. For the industry to succeed in the future, it is recommended that the guidelines on expansion into new markets that have been outline in this paper be followed.

Reference List

Agarwal, A, Ellig, J, & Zywicki, T 2004, ‘Wine Wars: Uncorking E-commerce?’, Regulation, vol. 27, no. 4, pp. 10-11. Web.

Benfratello, L, Piacenza, M, & Sacchetto, S 2009, ‘Taste or reputation: what drives market prices in the wine industry? Estimation of a hedonic model for Italian premium wines’, Applied Economics, vol. 41, no. 17, pp. 2197-2209. Web.

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Chahal, M 2012, ‘Luxury fizz pops its sparkling magic in growing market’, Marketing Week (01419285), vol. 35, no. 48, p. 10. Web.

Clemente-Ricolfe, J, Escribá-Pérez, C, Rodriguez-Barrio, J, & Buitrago-Vera, J 2012, ‘The potential wine tourist market: the case of Valencia (Spain)’, Journal Of Wine Research, vol. 23, no. 2, pp. 185-202. Web.

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Ştefan, G, & Coca, O 2011, ‘The competitive environment’s analysis on the wine market’, Agronomy Series Of Scientific Research / Lucrari Stiintifice Seria Agronomie, vol. 54, no. 2, pp. 468-471. Web.

Taplin, IM 2012, ‘Innovation and market growth in a new ‘New World’ wine region: the case of North Carolina’, Journal Of Wine Research, vol. 23, no. 3, pp. 229-246. Web.

Wei, Z, & Xueguang, Z 2011, ‘Status Inconsistency and Product Valuation in the California Wine Market’, Organization Science, vol. 22, no. 6, pp. 1435-1448. Web.

This article explores the future of wineries and vineyards as event venues. The article was published in this month’s issue of “Smart Meetings”, an online event-planning magazine. The article is titled “Wine Not” and it is authored by David Vranicar, a regular contributor of the online publication. According to the article’s author, there are several vineyards and wineries across America that offer the perfect ambience for event destinations.

The article notes that vineyards and wineries offer refreshing, cheaper, and convenient destinations for events. The author of the article notes that there are several choices when it comes to event destinations. However, wineries and vineyards offer a specific atmosphere that is perfect for certain types of events. According to the article, events held at vineyards or wineries tend to be memorable and intimate. Therefore, the event’s participants can be able to form personal connections in a vineyard environment. The author also notes that a winery invokes creativity among event attendees. The article reiterates that there is a big difference between events held in conference rooms and those held in wineries. To illustrate his argument, the author then explores some options of winery venues that can act as suitable event destinations.

The article covers one of the latest trends in event management where event organizers are opting for more relaxing and creativity-inducing destinations. The boardroom and conference halls have been the popular destination choice for quite some time but events are shifting to alternative event destinations. This paper is a review on David Vranicar’s article about wineries being the new event destinations.

The first example of a winery venue is the Napa Valley look-alike region in the state of Michigan. The article notes that Napa Valley is famous for its world-class wine products. In the midst of Michigan is Blustone Vineyard. The vineyard is located in Leelanau County along the shores of Lake Michigan. The main attraction to Blustone Vineyard is its view, which is said to be similar to the ‘Napa Valley view’. Bluestone has two event venues one of which is a tasting room that is located on top of a hill overlooking a valley below it and a mountain on the other side. From the tasting room, one can see the nearby valleys adorned with vineyards. Another event destination within Michigan is Chateau Chantal.

According to the article, Chateau Chantal offers both event spaces and accommodation. The management of Chateau notes that “people can have their events in an environment where the boardroom meets the vineyard” (Vranicar 1). In addition, the management associates the beautiful scenery at Chateau with a flow of ‘creative ideas’. The main event venue at Chateau Chantal is the 2,000 square-feet hospitality room. According to the article, the hospitality room is suitable for a wide range of events including a fireside gathering or even a classroom-styled presentation. Furthermore, the winery provides an executive conference that accommodates a meeting of up to 15 people. The Chateau was also named as one of the most interesting wine-themed destinations in America.

The article explores the winery and vineyard options in Missouri. Even though Missouri is not synonymous with wineries and vineyards, the area has more than 120 wineries. The author also notes that Missouri lacks a reputation of being an outdoors area. However, the article notes that Missouri has impressive geography that is ideal for events. According to the article, Missouri’s vineyards provide an ‘ideal picturesque view. One expert notes that Missouri as an event destination provides “a great opportunity to work in a more relaxed atmosphere, where you get a different sense of place” (Vranicar 1).

The author remarks that when holding a meeting in the vineyards of Missouri, it is easy to focus on a certain topic and then enjoy the relaxing atmosphere when taking breaks. Examples of event destinations in Missouri include Les Bourgeois Vineyards in Rocheport and Hermannhof Winery. The author outlines other popular wine-themed destinations such as Napa Valley in California and the neighboring Oregon County. The article then concludes by noting that wineries provide a creative atmosphere for events and meetings.

Previously, wineries and vineyards only served as destinations where individuals went to sample wine. However, the author of this article notes that wineries provide a unique atmosphere that is great for event destinations. Before wineries were considered for corporate events, they were used for social events such as weddings. The main concern for wineries being event destinations is their association with alcohol/wine.

However, events that have nothing to do with wine can successfully take part in a winery. The popularity of wineries as top tourist destinations has also contributed to them being considered as suitable event destinations. Wineries offer an environment that is similar to resorts (Yuan 48). However, unlike resorts wineries provide cheaper and more relaxed event destination options. Investigating the suitability of wineries as suitable event destinations can form the core or part of my final project. There are various issues that need to be explored when it comes to the suitability of wineries as event destinations. Some of these issues include exploring which events are most suited for the winery scene and exploring which improvements can enhance the wineries’ event destination suitability.

Works Cited

Vranicar David. “Wine Not”. Smart Meetings. 48.1 (2014): 1-2. Web.

Yuan, Jingxue. “An Analysis of Wine Festival Attendees’ Motivations: A Synergy of Wine, Travel and Special Events.” Journal of Vacation Marketing 11.1 (2005): 41-58. Print.

Executive Summary

The paper focuses on two economic theories that play a major role in international trade—the theory of absolute advantage and the theory of comparative advantage. The critical examination of these theories has been conducted within a framework of wine production with an emphasis on the Australian wine industry. The paper has outlined the differences between the two approaches to trade. It has been argued that it is economically beneficial for a country to specialize in the production of a good that is associated with the lowest opportunity cost. The ever-increasing internalization of wine production has been attributed to the application of the theory of comparative advantage.

Transformation of the Global Wine Industry

The global wine industry has been substantially transformed by globalization and changing patterns of international trade. The wine-production evolution is driven by latecomers in the market such as Australia and the US whose shares in exports of the product in 2015 were 2.9 percent and 0.7 percent, respectively (Morrison & Rabellotti 2016). Wine production in these countries was facilitated by resource endowments, scientific approach, and, in cases like Chile and South Africa, by cheap labor (Morrison & Rabellotti 2016). As a result, leading Italian and French wine-makers who have 17.5 percent and 29 percent of European market share are facing competition from wine enterprises that operate in the international context (Rossi, Vrontis & Thrassou 2012).

This paper aims to critically examine the theories of absolute and comparative advantage of the Australian wine industry. The paper will also assess the large and continuing influence of these theories on the patterns of international trade.

Absolute Advantage

The theory of absolute advantage was developed by a Scottish economist, Adam Smith, in the late eighteenth century (Hill & Hutt 2016). In his magnum opus The Wealth of Nations, the economist exposed the shortsightedness of mercantilists who had regarded trade as a situation in which one party’s gains are equivalent to the other party’s losses. Smith proposed that countries were at variance in their ability to produce goods.

At his time, French wine producers were a part of ‘the most efficient wine industry,’ whereas the English had the most efficient textile industry, which prompted the economist to argue that ‘a country has an absolute advantage in the production of a product when it is more efficient than any other country in producing it’ (cited in Hill & Hutt 2016, p. 164). From this vantage point, it is apparent why Smith was a proponent of narrow specialization in the production of a certain good that could benefit countries engaging in trade (Hill & Hutt 2016).

To better understand the theory, it is necessary to consider the effects of trade between countries that have differences in their absolute advantage in the production of a product. Assume that Italy and Australia have the same amount of inputs that can be used in the production of either wine or dairy products. Australia can use all of its resources to produce either 20 units of dairy products or 10 units of wine.

Italy, on the other hand, can use all of its inputs for the production of either 10 units of dairy products of 20 units of wine. Both countries can produce some combination of wine and dairy products. It follows that Italy has an absolute advantage in the production of wine because the combination of the country’s resources will produce more units of the products. In contrast, Australia has an absolute advantage in the production of dairy products. By specializing in the production of a good in which they have an absolute advantage, the two countries can increase their consumption of both dairy and wine. In light of this information, it is clear why the economist opposed the proposition that there were winners and losers in trade.

Comparative Advantage

The theory of comparative advantage was put forward by a prominent English economist, David Ricardo, in the early nineteenth century (Hill & Hutt, 2016). The economist expanded Smith’s theory of absolute advantage and maintained that a country could benefit from engaging in international trade even though its goods fall outside the spectrum of its absolute advantage.

It means that even if a country’s trading partner is more efficient in the production of two products, the country should specialize in the production of a good in which it has a comparative advantage. Thus, drawing on the example outlined above, if Australia is less efficient than Italy in the production of both wine and dairy products, it should specialize in the manufacturing of a good that is associated with lower opportunity costs.

Opportunity cost is an economic measure that quantifies the cost of an option as the cost of the forfeited benefits associated with choosing the alternative (Keuschnigg 2012). Thus, if Australia can produce either 20 units of wine or 10 units of clothing, the opportunity cost of each unit can be calculated as follows: 10/20 or 0.5 units of clothing for wine and 20/10 or 2 units of wine for clothing.

Assume that Italian producers can turn their inputs into 25 units of wine and 15 units of clothing. It means that the opportunity costs of the production of clothing and dairy would be 25/15 or 1.66 units of wine and 15/22 or 0.68 units of clothing, respectively. Taking into consideration the fact that the production of wine is associated with lower opportunity costs for Australia, the country should devote its resources to the production of products to which they are best suited.

Patterns of International Trade

Australian foray into the global wine market has been on the rise since the 1990s (Fleming et al. 2014). A steady increase in the imported volume of the product can be ascribed to both the comparative advantage in the production of wine and the ever-decreasing costs of transportation. Currently, Australia is one of the largest exporter of the product in the world (Fleming et al. 2014).

According to Hakanson and Dow (2012, p. 763), globalization has substantially reduced ‘the costs of the search, negotiations, and information exchange preceding cross-border transactions.’ It means that the dislodging of dominant positions of France and Italy in the global wine market represents a shift in the patterns of international trade. The application of the theory of comparative advantage has resulted in the dispersion of the global export shares (Keuschnigg 2012).

During the last decades Argentina, Chile, and South Africa emerged as considerable players in the global wine industry, which shows that wine-producing economists are constantly fluctuating as a result of the growing export market penetration of latecomers (Fleming et al. 2014). It has to do with the fact that it is possible to increase a country’s welfare by engaging in mutually beneficial bilateral trade based on the comparative advantages of trading partners.

Conclusion

The paper has analyzed the theories of absolute and comparative advantage within the framework of wine production. It has been argued that the ever-increasing export value share of the Australian wine industry can be attributed to the country’s comparative advantage in the production of the goods and the diminishing costs of transportation.

Reference List

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Hakanson, L & Dow, D 2012, ‘Markets and networks in international trade: on the role of distances in globalization’, Management International Review, vol. 52, pp. 761-789.

Hill, C & Hutt, G 2016, Global business today, 9^th edn, McGraw-Hill Education, New York, NY.

Keuschnigg, M 2012, Comparative advantage in international trade: theory and evidence. Springer Science & Business, New York, NY.

Morrison, A & Rabellotti, R 2016, ‘Gradual catch up and enduring leadership in the global wine industry’, Research Policy, vol. 24, no. 1, pp. 1-14.

Rossi, M, Vrontis, D & Thrassou, A 2012, ‘Wine business in a changing competitive environment—strategic and financial choices of Campania wine firms’, International Journal of Business and Globalization, vol. 8, no. 1, pp. 112-130.

Analysis of Hunter Valley Wine Company’s Advertising Brief

Legal and ethical considerations about marketing alcoholic products to the consumer market

The company is faced with various consumer groupings, for example, young people, adults, the elderly, men and women and this creates an avenue for diverse and attractive business segments. Nonetheless, this market segmentation comes with difficulties with other groupings not intended by the company coming into play, for example, children.

This probably could come with injurious litigations against companies in the alcoholic beverage industry. There are cases of large corporations turning a blind eye to cases such as this and go-ahead to exploit this, and these results in unfair competition and unjust treatment of customers. The company should strive to adhere to the set-down legal age for drinking and to avoid huge lawsuits and fightbacks from consumer interest groups that heap pressure on them resulting in a drop in revenues (Donnelly, 1996).

Product characteristics

Wine connoisseurs and customers have certain characteristics they search for in a wine. These characteristics if identified and blended by the company well will result in a good wine that will be received well and will result in high sales for the company. These characteristics are for example aroma- wine should be able to sweep you off your feet just by putting the glass to your lips before you even taste it; appearance-a very vital but often forgotten component of wine that even some of the most experienced wine connoisseurs ignore; flavor- this is the climax of wine and what differentiates a good wine from a bad wine (Sissors, Baron and Sissors 2010, 16).

Customer characteristics and buyer behavior

Product characteristics influence consumer behavior. Apart from this, a customer’s personality also greatly influences their buying behavior depending on the variable aspects of the brand in the market (Surmanek 1996, 37).

Creative dimensions and aspects of the message

The message will be established based on the goals set out and the intended target audiences to be reached by the company. The message should address the key points brought out by the company’s goals: – Increase product awareness; growing the workforce (creating more employment); and getting more investors. Often the message is designed and given to the media, this helps in carrying out a better advertising campaign. In formulating the message several questions need to be answered; what makes the company unique and different from its competitors and what its target audience needs to be told of the company. Also, the company should be able to answer why it is important for it to undertake an advertising media campaign at this particular time (Kelley and Jugenheimer 2008, 53).

Suitable medium

Tradeshows/exhibitions- in regards to the product, this would probably be the best medium of advertising as it will give the company a chance to make last moment deals which are usually crucial. They also give the company a chance to show its prowess by how they set up the shows and exhibitions

Possible media vehicles

Here is a list of outlets that the company can use to carry out its advertising campaign: Radio, Television, Newspaper, Web advertising, Print advertising (billboards, signage, posters, brochures, and business cards, catalogs, newsletters, and so forth), Magazines, The yellow pages, Public transportation, Specialty advertising/branding items such as matchbooks, pencils, calendars, telephone pads, shopping bags (Surmanek 1996, 37).

In identifying and determining the appropriate media channel to use, the Hunter Valley Wine Company should put into consideration the cost and effectiveness of all media outlets present to it. There are also other vital factors to be considered such as the reach of the intended outlet; impact an outlet would have on the company’s intended target audience; cost per point of the outlet to be used; can the selected outlet be selective enough to a particular audience while still being effective; cost per thousand of the selected outlet and finally the frequency of the selected outlet (Surmanek, 1996).

Media Plan Outline

This is a guideline for a strategic plan for Hunter Valley Wine Company. The guideline will provide a walkthrough on the evaluation and later recommendations on the media advertising options viable for the Hunter Valley Wine Company to consider and probably adopt in the process carry out outreach to media outlets present within the area. The guideline gives an overview of recommendations presented to the Hunter Valley Wine Company and is not necessarily meant for adoption but to guide the company’s management on their decision on advertising their popular product, wine.

The evaluations and recommendations brought forward by this guideline are meant to propel Hunter Valley Wine Company above its competition and realize much higher sales and profits for the company. This guideline will look into three key areas in advertising media planning which include: 1). what are the goals the company wishes to achieve? 2). How does the company intend to achieve these goals- what will it do and how much is it going to cost the company. 3). How does the company measure the results obtained and determine if goals have been accomplished or not (Sissors, Baron and Sissors 2010, 16)?

Objectives and goals

The big question here is what the company is trying to achieve after a certain period. By evaluating the company, the Hunter Valley Wine Company will be able to find out its strengths and weakness and therefore have a clear picture of where it can capitalize on to realize its goals. Also, it is recommended to know whether the goals are short term or long term. This enables the planning for advertising is in sync with the company’s view of growth. The goals include

1. to grow the workforce and involve the community in the company’s programs and activities;
2. Encourage more new investors and existing stakeholders to participate more;
3. Increase awareness of its flagship brand and other products (Goodrich and Sissors 2001, 68).

Targeted audience

The audience being targeted will be determined by the set-out goals and objectives above. At this stage, the Hunter Valley Wine Company should identify its current consumer base, clients, and stakeholders to try to keep them from being taken by the competition. It is also vital to identify the new audience the company is trying to reach, new customers, and new investors. In Hunter Valley Wine Company’s case, the audience can be grouped into: customers, the community, prospective investors, and people who influence the wine industry (Katz 2003, 56).

Media list

For the company to be effective in its media campaign, it needs to identify and determine a complete and accurate list of media outlets in the area of its operation to approach. It is also vital to have contacts of specific reporters and departments within media organizations that are relevant and conversant to what the company intends to carry out in its media outreach. As the Hunter Valley Wine Company deals mainly in winemaking, then the reporters it should establish and maintain very close cooperation with are entertainment/food reviewers. The company should also establish and identify magazines, periodicals, and publications that are entertainment and food-oriented (Schultz and Barnes 1996, 27).

However, the message been put across has to be consistent with the company’s vision and values. It also has to be easily understood by the targeted audience to be effective. The messages designed by the company should be able to specifically address the different target audiences and elicit the relevant emotions in them as the company requires (Barban, Cristol and Kopec 1993, 107). Alternatively, the company can design different messages for the different audiences it is targeting. It is also important to note that, the company should as well come up with counter messages that its competitors may try and bring up to discredit it or sway its customers and stakeholders.

Reference list

Barban, A. M., Cristol, S., and Kopec, F. J., 1993. Essentials of media planning: a marketing viewpoint. 3^rd ed. New York: NTC Business Books.

Donnelly, J.W., 1996. Planning media: strategy and imagination. New York: Prentice Hall.

Goodrich, W. B. and Sissors, J. Z., 2001. Media planning workbook: with discussions and problems. 5^th ed. New York: NTC Business Books.

Katz, H. E., 2003. The media handbook: a complete guide to advertising media selection, planning, research, and buying, 2^nd ed. New York: Routledge.

Kelley, L. D. and Jugenheimer, D. W., 2008. Advertising media planning: a brand management approach, 2^nd ed. New York: M.E. Sharpe.

Schultz, D. and Barnes, B. E., 1996. Strategic advertising campaigns. 4^th ed. New York: NTC Business Books.

Sissors, J. Z., Baron, R. and Sissors, J., 2010. Advertising Media Planning, 7^th ed. London: McGraw-Hill.

Surmanek, J., 1996. Media planning: a practical guide, 3^rd ed. London: McGraw-Hill Professional.

Introduction

Wine production globally is a well-established industry operating for thousands of years. Wine as a beverage is made out of fermented fruit, popular across the world (What exactly is wine?, n.d.). Romania produced 5,088.2 thousand hl in 2018, marking the state’s efforts to increase its production capacity (APEV 2019a). Moreover, Robinson (2015, para. 5) refers to the country as “a land of hope” because it has more area under vine than any other Eastern European state, and wine production is a tradition that defines the state’s culture.

Wine production regions in Romania are Crisana and Maramures, Banatului Hills, Transilvanian Plateau, Muntenia, and Oltenia Hills, Sands, and other areas in the South, Dobrogea Hills, Moldavian Hills, and Danube Terraces (Winemaking in Romania, n.d.). The climate in Romania is a relevant factor for wine production, with an average temperature of 16℃ and the overall temperature ranging from 0℃ to 25℃ (Climate of the world: Romania, n.d.).

The annual rainfall in this state is estimated at 700 mm, while in the mountains, it can average at 1000 mm per year (Climate of the world: Romania, n.d.). The geographic region characteristics relevant to the wine production are the Carpathian Mountains and the Balck Sea.

Most notably, the soil composition of the foothills is suitable for growing vines (Everything you need to know about Romanian wine, n.d.). The Black Sea does not affect the environment significantly, allowing for a dry and continental climate. Potential weather hazards include freezing winter, rain during the flowering season, and harvest, which affect the taste of the grapes. This report aims to investigate the specifics of wine production in Romania, including a SWOT analysis, and present recommendations for a boutique wine producer.

Overview of Wine Production in Romania

Overview of Production Area

Wine production is an activity, sometimes referred to as vinification, which incorporates the processes of selecting fruit, fermentation, and bottling of the final product. In Romania, wine production is one of the significant driving economy sectors (Wine production in Romania, 2019). Romania is a relatively new state, which emerged in 1877 and entered the European Union (EU) in 2007. The wine production industry is one of the major economic sectors of the country, accounting for 30.4 million euros of profits in 2018 (APEV 2019a, APEV 2019b). The EU support and governmental programs that target wine production in the state allow Romanian wine exporters to flourish and develop their facilities.

The production area incorporates all the processes and elements of manufacturing that allow an organization to produce the final product, which in case of the wine industry, combines growing grapes, using fermentation to develop wine, and bottling the product. According to APEV Romania statistics, this state has the 5th position in the EU in regards to its areas under wine production and grape productions (APEV 2019a). Hence, the country competes with states such as Italy, Spain, France, Italy, and Germany in these domains. Concerning the wine production itself, this state holds the 6th place in the EU (APEV 2019b; APEV 2019c).

In 2018, the area under vine in Romania was estimated at 182.6 thousand hectares (APEV 2019a). Moreover, due to continuous funding from the EU, which is estimated at 47.5 million euros per year, the facilities undergo reconstructions, increasing their production capacity (APEV 2019a). In regards to the regional distribution of areas under vine, the majority of production occurs in Moldova, accounting for 45% of the production area, and Muntenia and Oltenia, that total at 29% of Romania’s wine production area (APEV 219c).

Manufacturing Approaches

A vineyard is an essential element of wine production since it is a plantation where the grape crops are harvested. Aspects such as elevation, history of previous plants, slope, and are essential for understanding the potential of a specific site.

The viticulture approach in Romania is connected to the state’s long history of harvesting grapes and producing wine. The report, written by the Agrosynergie EEIG (2018), reveals the structure of the sector. The report suggests that 25 significant producers control the market; their average turnover exceeds 1 million euros. Agrosynergie EEIG (2018, p. 2) states that producers sell-through “own wine shops, small supermarkets, and deliver their wine products through distributors,” including HORECA and online platforms. The majority of wine producers are small or medium-sized, do not have a certification or capacity to output large volumes of product.

Grape Varieties

Notably, the grape varieties described above are of high quality, yet the cost of them is lower when compared to grapes from other countries. In Romania, over the last fifteen years, the vineyards were modernized, and a large number of new ones were established, allowing to improve the quality and variety of the grapes (A1.14 What makes a Romanian wine special?, n.d.; Winemaking in Romania, n.d.; Romania, 2019). More specifically, the government and the EU funding programs provided financial support for vineries interested in improving their manufacturing facilities.

The grape varieties can be divided into the following categories – local or indigenous grapes and international grapes. The former group includes Fetească, Tămȃioasă Romȃnească, and Fetească Neagra (Everything you need to know about Romanian wine, n.d.). The former is the oldest variety of Romanian grape, which is used for dry red wines. The first two grape varieties are characterized by notable aromatic characteristics.

The latter refers to “Chardonnay, Pinot, Grigio, Sauvignon Blanc” (Everything you need to know about Romanian wine, n.d.). The following are the most common grape varieties in Romania – “Busuoaică de Bohotin, Crâmpoșie, Fetească albă, Fetească Regală, Frâncușă, Galbenă de Odobești, Grasă de Cotnari, Tămâioasă Românească, Zghihară de Huși,” while these “Băbească Neagră, Cadarcă, Creață de Banat, Fetească Neagră, Negru de Drăgășani, Novac, Plăvaie” are used for red wine (A1.14 What makes a Romanian wine special, n.d., para. 7).

Vinification

Vinification is the winemaking process that incorporates fruit selection and fermentation (Civit, Piastrellini, Curadelli, and Arena, 2018). Romania has an extensive history of wine consumption, which is a part of the state’s tradition, suggesting that wine producers possess unique outlooks on the vinification process. Ladau and Besiu (2015, p. 189) argue that the following aspects affect the wine production processes in Romania – “increasing efficiency and effectiveness of supply chain, development of a new segment of this market, based on market research, implementing mechanization processes and innovation at farm level.”

Production volume

In 2018, the winemakers produced 5,088.2 thousand hl, while in 2016, the output was estimated at 3,266 thousand hI (APEV 2019a). The following statistics allows one to understand the production volumes of the Romanian wine:

• In 2018, Romania exported over 17,927,352 liters of wine (APEV 2019a).
• The total revenue from wine export in 2018 was estimated at 30,440,632 euro (APEV 2019a).
• The top four countries that export the most significant quantities of Romania wine are the United Kingdom, Germany, Netherlands, and Spain (APEV 2019a).
• Out of the four major export destinations, the United Kingdom is the most important country for wine exports, with 4,380,985 liters resulting in sales of 7,634,907 euro in 2018 (APEV 2019a).

The production volume statistics suggest that for Romanian wine producers, export is an essential factor (APEV 2019a). Moreover, the primary destinations of wine export are states of the EU, with the exception of China, since Romania exports approximately 744,297 liters of wine totaling at 2,528,794 euros in sales (APEV 2019a).

Market Overview

The export of the Romanian wine can be divided into the intra-EU, meaning the export to other states in the Union, and outside the EU markets. Intra-EU exports account for 88.9% of all exports in liters and 82.1% of exports in euros (APEV 2019a). Despite this, the analysis conducted by Ladaru and Beciu (2015) suggests that Romania’s exports are much lower when compared to other countries producing wine. In the future, the amount of export for the wine will increase (Romanian wine exports for 2015 reach 14 million liters worth €24m, 2019; Lădaru and Beciu, 2015). This factor suggests that the country’s producer can continue expanding its sales channels by partnering with global trading companies.

The internal consumption of wine is estimated at 5,262.9 thousand liters for 2018 (APEV 2019c; Clissitt, 2018). Ladaru and Beciu (2015) state that the estimation for domestic consumption is 25 liters per capita. According to Veseth (2018), due to the fact that wine has been produced in this country for over six thousand years, this state is both a significant exporter and consumer of this product. Approximately 20% of the export accounts for the Romanian wine sold in the United Kingdom (Barbulescu, 2019). The other 68% is exported to “Germany, China, the Netherlands, Italy, Spain, the USA, Slovakia, Estonia, and Canada” with smaller countries accounting for the remaining percentages (Barbulescu, 2019, p. 137).

An essential factor that distinguishes Romanian wine from its competition is the price since this product is much cheaper than wines produced in other European states (Veseth, 2018). However, although the domestic consumption accounts for a large percentage of Romanian wine sales, the emergence of new vineries decreases the price of the products. Barbulescu (2019) argues that because of margins in the domestic market continuously decrease, export is important for Romania wine producers.

From a global perspective, Romania can increase its sales by exporting to non-EU countries, which is a worldwide trend for wine production. Ladaru and Beciu (2015) examined the globalization of the wine market and specifically the prospects of development for Romanian producers. The overall global production volume has been steadily increasing, including the price and volume indicators (Anderson, Nelgen, and Pinilla, 2017; Anderson, and Strutt, 2016 Navarro et al. 2017).

Ladaru and Beciu (2015, p. 189) state that the Romanian government supports the development of local producers and their export efforts, by allocating financial support for “promotion on third-country markets; restructuring and conversion of vineyards; harvest insurance, investment in enterprise and use of concentrated grape must allow for enrichment.” This means that the wine producers can rely on the government in their endeavors relating to increasing production capacity, exploring new niches, improving manufacturing practices, and exporting efforts.

SWOT

The previous paragraph highlights the potential of the Romanian market for export. Table 1 presents the SWOT analysis with the main elements that affect wine production in Romania. Many factors impact wine production and the output of vineyards. Notably, the OIV (2018) report on global viticulture, highlights the crisis of 2017 with extremely low harvests, which impacted the industry. However, as seen from the statistics explored above, Romania managed to increase its production volume since 2016 continuously.

In regards to weaknesses, it can be concluded that the Romanian wine producers suffer from a lack of knowledge in the areas of international trade and cooperation that would allow them to share the know-how and adopt best practices. One aspect of this is the certified production of wine, such as DOC and IG, which are the European classifications, referring to Controlled Designation of Origin and regional Wine (Official wine classifications, n.d.). Moreover, because the Romanian wine tradition has a long history, wine producers often overlook international standards, as “ vine is part of Romanians life, all traditions are related to wine” (“Why not Romanian wine?,” n.d.).

Next, as with any other wine producer, Romanian farmers are affected by weather conditions and can have a negative impact on the production capacity of the country. Additionally, the analysis of the export trends within the global wine market conducted by Ladaru and Beciu (2015) suggests that local producers have a competitive disadvantage when compared to other wine manufacturers. In terms of production output and business specifics, Romania currently is not a major global producer of wine, with five states accounting for 51% of the production and other countries for the remaining 49%, including Romania (OIV 2019 a; OIV 2019b). This suggests that the country’s producers may have difficulties competing on the global level, especially when considering political and economic instabilities, such as Brexit.

Among the strengths of the Romanian wine, perhaps the most notable is the high quality of grapes, discussed in the previous paragraph, and the low price. The Tămȃioasă Romȃnească grape was created to mimic the Muscat Blanc à Petit Grains and has comparable characteristics, used to produce white wines (Everything you need to know about Romanian wine, n.d.). The variety of the products sold by the Romanian wine producers is notable, as well.

Brexit is perhaps the most significant threat that the Romania wine industry faces. According to Barbulescu (2019) and Anderson and Wittwer (2017), approximately 20% of the wine export from the state is delivered to the United Kingdom. This export allows wine companies to ensure stability and support their growth over the periods of domestic market decline. Several economic effects that will impact the British economy are essential for wine export.

Firstly, the currency depreciation will lead to an increase in the price of wine for the consumers (Barbulescu, 2019; Office of National Statistics, 2017). In general, one can expect a 22% price increase per unit, suggesting that the demand for the product will decrease, affecting the Romanian exports. Anderson and Wittwer (2017) suggest a 28% drop in consumption rates as a result. Therefore, one can suggest that Romania manufacturers should expand their exports to other European and non-European countries, to account for the decrease.

Table 1. SWOT analysis for wine production in Romania (created by the author).

Advice for a Boutique Wine Producer

Production of boutique wine is more complicated when compared to mass production. Boutique wine can be defined as small vinification facilities, which usually output small quantities of product. Notably, the wine produced by such entities is often premium quality, sold for a price above average. Due to Brexit, Romanian wine producers will have to explore new niches for their products (Campos, 2016; Cantino, Giacosa, and Cortese, 2019; Peth, Drastig, and Prochnow, 2017).

One issue that will be examined in this paragraph is the marketing of the boutique Romanian wine, which has a reputation of being cheap, and the establishment of new trading agreements that will be used for distribution (Lewis, Byrom, and Grimmer, 2015; Oliveira M. and Duarte, 2016; Oliveira and Duarte, 2015; Veseth, 2018). This should be considered when developing a marketing strategy for the brand, as overcoming the stereotype of an inexpensive product can be challenging (Haros, 2015).

Firstly, the threats from the SWOT analysis suggest that the Romanian wine producers should dedicate more attention to exporting their products to European countries and other regions. To overcome the issue of tradition as opposed to production quality, the boutique wine producer must establish quality and safety processes. Based on the SWOT, this can be achieved by obtaining financial support from the government or the EU.

Additionally, this indicates that boutique wine producers should undergo DOC/IC classification to have better prospects of competing in this market since the majority of wine producers in Romania do not experience these procedures (Mărăcineanu, Nicolae, Carmen, and Căpruciu, 2018). The vineyards should avoid using hybrid products, instead of focusing on high-quality domestic grapes such as Fetească, Tămȃioasă Romȃnească, and Fetească Neagra.

Next, according to research by Beery and Trela (2015), which studies the example of Turkish boutique wine producers, marketing a boutique wine is more complex and requires significant investment. In the case of Romanian boutique wine, similar to the Turkish products, the main issue is the low price associated with the segment of the product (Wines of Turkey, 2017). Hence, the producer should be able to communicate the premium quality of the product through appropriate marketing strategies. Finally, the issue of the knowledge gap that will allow for successful production enhancement, export, and marketing can be resolved through education and participation in knowledge-exchange activities with wine producers from other countries. Alternatively, wine producers can hire specialists who have experience working in the wine industry outside Romania to help with marketing and export.

The target consumer and consumer segmentation are people in the United Kingdom, Germany, Spain, Italy, and other countries across the world. They have a sufficient knowledge of vinification, which helps them choose the best quality product. I would argue that within the contemporary globalized market, boutique wine producers should dedicate special attention to marketing their products, especially using social media and other capabilities of the Internet. Hence, the following summarizes the advice for boutique wine producers in Romania:

• Focus on export rather than the domestic market.
• Explore states that allow for large margins, as opposed to CIS countries (Veseth, 2018).
• Undergo DOC/IG certification.
• Use high-quality local grapes instead of hybrids.
• Exchange knowledge with other wine producers or hire experienced professionals.
• Use marketing to highlight the grape quality.

Reference List

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Agrosynergie EEIG (2018) Evaluation of the CAP measures applicable to the wine sector. Case study report: Romania. Web.

Anderson, K., Nelgen, S., and Pinilla, V. (2017) Global wine markets, 1860 to 2016: a statistical compendium. University of Adelaide Press: Adelaide.

Anderson, K., and Strutt, A. (2016) ‘Impacts of Asia’s rise on African and Latin American trade: projections to 2030’, World Economy, 39(2), pp. 172–194.

Anderson, K., and Wittwer, G. (2015) ‘Asia’s evolving role in global wine markets’, China Economic Review, 35, pp. 1–14.

Anderson, K. and Wittwer, G. (2017) ‘U.K. and global wine markets by 2025 and implications of Brexit’, Journal of Wine Economics, 12(3), pp. 221–251.

APEV (2019a) Romania: wine exports, 2018. Web.

APEV (2019b) Romania: wine imports 2018. Web.

APEV (2019c) The Romanian wine industry outlook 2018. Web.

Aurand, J.-M., (2018) State of the vitiviniculture world market. Web.

Baldwin, R. E. (ed.) (2016) Brexit beckons: thinking ahead by leading economists. London: Centre for Economic Policy Research.

Barbulescu, O. (2019) ‘Consequences of United Kingdom’s withdrawal from the European Union on the Romanian wine export’, Bulletin of the Transilvania University of Braşov Series V: Economic Sciences, 12 (61), pp. 137-142.

Beery, C., and Trela, B. (2015) ‘Using social media to market your winery’, Wine Industry Journal, Special Issue in Wine Marketing and Wine Business, 15(4), pp. 25-33.

Campos, N. F. (2016). Lousy experts: looking back at the ex ante estimates of the costs of Brexit. In Baldwin, R. E. (ed.), Brexit beckons: thinking ahead by leading economists (pp. 34-50). London: Centre for Economic Policy Research.

Cantino, V., Giacosa, E. and Cortese, D. (2019), ‘A sustainable perspective in wine production for common-good management: the case of Fontanafredda biological “reserve”’, British Food Journal, 121(2), pp. 259-274.

Civit, B., Piastrellini, R., Curadelli, S. and Arena, A. (2018) ‘The water consumed in the production of grapes for vinification (Vitis vinifera)’ Mapping the blue and green water footprint’, Ecological Indicators, 85, pp.236-243.

Climate of the world: Romania. Web.

Clissitt, C. (2018) The world’s biggest wine drinkers 2017. Web.

Costa J. M., et al. (2016) ‘Modern viticulture in southern Europe: vulnerabilities and strategies for adaptation to water scarcity’, Agriculture Water Management, 164, pp. 5–18.

Da Ros C., Cavinato C., Pavan P. and Bolzonella D. (2017) ‘Mesophilic and thermophilic anaerobic co-digestion of winery wastewater sludge and wine lees: an integrated approach for sustainable wine production’, J. Environ. Manage. 203, pp. 745–752.

Everything you need to know about Romanian wine (n.d.) Web.

Fraga H., García de Cortázar Atauri I. and Santos J. A. (2018) ‘Viticultural irrigation demands under climate change scenarios in Portugal’, Agriculture Water Management, pp. 196, 66–74.

Gilby, C. (2018) The wines of Bulgaria, Romania and Moldova. Oxon: Infinite Ideas Limited.

Haros, R. (2015) Wine branding: why it‘s important for the industry‘s growth and trends. Web.

Holmes, A. J., and Anderson, K. (2017) ‘Convergence in national alcohol consumption patterns: new global indicators’, Journal of Wine Economics, 12(2), pp. 117–148.

Karlsson, P., (2019) World wine production reaches record level in 2018, consumption is stable. Web.

Lădaru G. R., and Beciu S. (2015), ‘Trends of wine market in Romania: competitiveness and development opportunities in the context of markets globalization. Scientific Papers’, Series “Management, Economic Engineering in Agriculture and rural development, 15(2), pp. 189-192.

Lavrnić S., Zapater-Pereyra M. and Mancini M. L. (2017) ‘Water scarcity and wastewater reuse standards in Southern Europe: focus on agriculture’, Water. Air. Soil. Poll. 228, 251.

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Mărăcineanu, L., Nicolae, G., Carmen, P. and Căpruciu, R. (2018) ‘Tradition and quality of Romanian viniculture’, Annals of the University of Craiova, 23(5), pp. 1-10.

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Introduction

The following paper outlines the secondary research conducted for attaining information on the launch of a wine bar in London. The wine bar is to be launched in a profitable area of London which is predicted to become a posh and competitive place for established bars and restaurants. However as the development is still taking place in the region. The prices of the land and property are affordable despite the location being in London.

Another point in favour of the location is that it is located at near central London and is accessibility by commuters and professionals residing and working in the region. The company has been able to access secondary data in the form of study which depicts the demographic characteristics of the area and its vantage point as a business location as per the research. The paper analysis the study in terms of relevance to the business and its prospective launch and provides the recommendations which can aid the business in establishing itself in the stated location.

Data Sources and Type of Information

The research data that is available for the purpose of this paper was taken from a secondary research agency. The research agency deployed research agency to collect information through the process of interview based surveys form the local community in the region. The focal point of the questionnaire that was used in this study pertains to the crime and safety situation of the region and the demographics of the people residing and operating in the area.

The questionnaire provides a letter of intent on behalf of the research agency and the community forum which sponsored the research. The respondent however include people form various walks of life who are familiar with the area and can provide sufficiently comprehensive and accurate information on the region of Central London which is being targeted by the community forum and the research agency. The questionnaire that was used is developed in such a manner that it is simple to read and comprehend for the respondent./ moreover most of the questions are close ended to attain a relatively tabular and computable result while open ended question have been provided where more abstract information can be collected.

Analysis

The results of the data collection and analysis depict that the respondents that were interviewed through the questionnaire had been residing in the region for about 5 years. This shows that the people residing in the region have been doing so for a period of time and are satisfied with their location. the questionnaire also depicts that the region is close to the countryside and yet still it provides a myriad of facilities for the residents and people working in the region Moreover the respondents provided that the region is relatively quiet whole still being London and that its provides easy access to amenities I and around the region.

Moreover the families of the people have also been residing in the region for a long period of time as the crime rate is very low when compared to the rest of the London. The region also does not have any significant problem pertaining to crime and violence however people have notices youth and gang members on streets on a number of occasions and who sometimes indulge in violence. Moreover the region also has parking problems and limited bus service which cause some problem for commuters. The people in the region are satisfied with the demographic characteristics of the areas which have remained relatively the same over the period of time.

However the region is taking to increasing rates of crimes, which are still lower than the rest of the London. The main issues pertaining to crimes are caused by the youth and members of the youth gangs. The main crimes however pertain to vandalism of public and private property as well as petty theft. In most case however the crime was reported to Bus Company, the authorities and the headmasters of the schools to which the youths belonged to.

Recommendation

The region that is invested in by the wine and bar business is very suitable for the business as the local residents are satisfied which the area and its facilities. Moreover the crime rate is very low and the only disturbances that do occur are from the youths which pertain to petty theft and vandalism. Moreover the location is of prime importance as the business would be having a steady flow of local as well as tourist customers. The central London location also provides the prospective patrons of the wine bar with commuting access to other regions of London as well. As a result it is highly recommended for the business to open the wine bar in this location.

Conclusion

Deriving information through the data provided, it can be said the region where the business has invested in for the wine bar is relatively safe. The region provides different types of facilities to the people residing in the region and is much safe from heavy duty crimes. The crimes however which are faced by the residents in the region pertain to small petty thefts and vandalism of public property. These crimes are conducted by the youths in the region, which belong to local gangs.

However they are reported to the authorities and the respective schools to bring about action against them. Through the research data we have been able to determine that it is very safe and convenient for the business to launch a wine bar here. The youths will have to be dealt with in term of restricting their access to the bar and the protection of the bar against their vandalism. However the already satisfied people living in the region and the constant influx of commuters and professionals who work in central London to the region would be providing a profitable flow of customers for the business. Therefore the business should launch their wine bar in this region.

Executive Summary

This paper attempts to prepare a complete marketing plan for opening a new wine shop in San Francisco. Franchising is a method of marketing products and services where the franchisors grant the franchisees the privilege to carry out business in the name of the franchisor. The franchisor imposes obligations that the franchisee has to follow in the franchising business. There are different types of franchising like manufacturing franchising, commercial franchising, service franchising, etc. In this case, Wood Island is to acquire mixed franchising where franchising is acquired for both the products and services. The Product providing will be straightforward.

And also if provide great wine from around the earth. Give the locals and tourists of the areas a product offering of Australia’s vineyards as well as bringing in the best wines from other internationally known regions, such as France, Italy, and the United States. The paper discusses the situation analysis, market segmentation, and marketing mix. The paper also discusses the various recommendation for Wood Islands in concern of four Ps such as product, price, place, and promotion.

Introduction

The objective of this study is to offer a business plan for Wood Island for opening up their win shop in downtown, San Francisco. This business plan will cover product/service background, market analysis, and marketing recommendations to gain popularity of the product in the market. The market analysis covers the different phenomena present in the markets and also it consists of SWOT analysis. From France to San Francisco (United States) wine manufacturers have work on the talents of their intimates to make a product to be liked by the majority knowledgeable of pallets to amass and like a more stylish wine.

Product /Service background

Product offerings will be straightforward. Offer great wine from around the globe in one key location. The objective is to provide the purchaser an accurate flavor of local contributions at the same time as a combination with worldwide knowledge. And also products and services to its targeted customer with long-lasting quality and excellence. Customers are always happy to consume wine from Wood Island and also they are the most excellent trader of interior furniture with excellent craft. Various attractive shades of products and services, according to the wishes of the customer, are provided by the customer.

Various troubles linked with the Wood Island products are raising rivals, a decrease of woods resources, ecological troubles, and other communal and monetary troubles linked with the built-up of the Wood Island products. But if Wood Island is ready to manufacture the product with emerging trends as well as based on customer requirements, it will be a great opportunity for the firm to produce maximum revenue and Profit.

Wood Island wine frames are small and a sufficient amount to remain the wine exhibits noticeable, and the ideal stature for easy marker and reading. These racks are amazingly flexible storerooms and exhibit solutions. To overcome the troubles, Wood Island must be up to date to deal with current trends in the market according to the needs of the customer, as well as should take adequate actions to uphold the growth of wood plantations.

Market analysis

The market study is a significant part of the building marketing plan for Wood Island. It will help to analyze the conditions of the industry as well as the economic environment. Customers, competitors, costs, etc are some of the factors that need to be considered while performing the market analysis. And it should also meet the demands of the customers, their satisfaction, economic impact, etc which are very important for market analysis. “This Market Analysis on the Worldwide Wine Makers focuses on this rapidly evolving industry and analyzes the various aspects of the industry starting from a historical background check to an analysis of the major market trends, the market statistics such a production/consumption figures, focusing on the major producers and consumers, the competitive structure and status of the industry, and an in-depth SWOT analysis of the industry” (Market analysis-competition in global win market).

The global wine industry has to turn out to be progressively more internationalized and complicated, still more than the years, the marketplace has to turn out to be split, global, multi-lingual, working in a lot of currencies, and information exhaustive.

The market analysis will help to set up the extent and activities of Wood Island. Knowing the requirements of the customers will help in collecting the necessary information that can be used in future services of the company. Threats from the competitors can be a problem to the company. So new type of wine with most excellent flavor will attract the customers and try to obtain large turnover using less number of staff. Wood Island has developed to a large extent in last few years and findings of new markets are done and new shops are opening at various part.

Marketing segmentation

Market segmentation for Wood Island has benefited both the provider and the customers. It will help to increase customer loyalty as well as goodwill. To develop a trade process 4 P’s are essential. Some of the methods used to fragment the market of Wood island products. Australia has to turn out to be a novel, although still tough rivals in the wine business which is a cause for growth to the region in the appearance of a wine commercial store.

Product

The products and services offered by Wood Island are unique and very simple. The product should be made based on careful listening of customer’s requirements and to plan and perform based on great preparation and recreational functions. To maximize revenue, Wood Island must become accustomed speedily to varying market circumstances. The wood island products segment is one that always developing and practicing enlargement in numerous fields. To promote this enlargement, manufacturing leaders must assess requirements at all retail and extensive points. The product we are planning to arrange in wood wine rack.

The reason why we have selected this product is, it large method to attain architectural features. And also we can prefer this product from a diversity of fashions and classes which are fit to store the wine. No lawful confines are obstructing to developing the new area and the demographic and artistic ruling are extremely like to the United Nations. The wood wine rack provides an easy understanding of the wine with specific brand and details regarding the contents too.

Price

Wood Island must be very careful at the time of insertion of a low price strategy. The price of the product selling in Wood Island will vary according to the demands of the customers. The various constraints of the pricing policies are labor cost, taxes, difficulty to opening, product discrimination, and charge of product sources, etc…Price is charged under to that of the competitors. A free tasting facility is provided to support suggestions to travelers and a tough limited following. As the financial circumstances of the world are changing every day so it will endeavor to provide consumers the most rational pricing to sustain the revenue earning out of it.

Place

This decision comprises coverage of the market, logistics, selecting the channel for distribution, degree of service provided, etc. The distribution channels implemented for the product and services are different because of this inseparability. The organization is mainly relying deeply on third-party dispensers to confer cost, foundation new wines, and provide the wine commercial shop. We have searched for the best distributor in each area and feel we have found suppliers that will meet the demands and need attentively

Promotion

Wood Island products use various promotion strategies like media, TVs, radios, internets, tele-calling, face-to-face communication, Emailing and banners, etc. The company also used a multi-language campaign method to attract its targeted customers. The promotion strategy needs to be adapted to offer the familiarity of the products to its target market. The most effective media for promoting the product is the face to face communication. By way of giving a free sample to it, locals customers and also with particular reductions help to increase a well-built society following.

Conclusion

The study has presented strategies to open a new wine shop in San Francisco and also understands the various aspects of Wood Island to compete with its rivals. One of the major recommendations towards Wood Island is to become aware of the new trends in the market. Easy accessibility of retail and wholesale furniture wine shops leads to adverse effects. So Wood Island must take adequate step to prevent all these troubles and try to provide attractive flavors of the wine to its target and attracts its customers.

Works Cited

Market analysis–competition in global win market. Research and Markets. 2007. Web.

Introduction

Alcohol beverage is one of the most commonly used beverages across the world because of the ‘unique satisfaction’ it gives to human beings. As it has been revealed, the alcohol beverage industry is the most fragmented in terms of varieties of its commodities. In general terms, the alcohol industry produces three main categories of beverages namely: wines, spirits, and beer among others. In this respect, therefore, the general environment of the industry has a very significant impact on its performance and achievement of its laid goals and objectives. As the current world technology advances, the industry needs to incorporate modern technology techniques in the production of its commodities; to gain and maintain a good reputation in terms of quality and quantity production to meet the global market requirements.

To enhance efficiency and achievement of the laid goals and objectives, the industry needs to review its strengths and opportunities; as well as identify its threats and weaknesses. By so doing, the industry would be in a position to compete effectively in the current highly competitive global market dominated by innovations and technological advancements. More specifically, the industry requires pursuing attaining a strategic position that would make it achieve its laid goals and objectives within the current highly competitive and challenging environmental context. This paper will critically analyze the general environment of Global Wine and Spirits Giant Pernod Ricard Company and its impacts on the performance of the company in the Alcoholic Beverage industry.

Main Body

The general environment of the Global Wine and Spirits Giant Pernod Ricard Company consists of its components, cognitive maps, opportunities, and characteristics of its environmental analysis. More specifically, the general environment of the company covers all the aspects that affect the company’s performance; as it pursues achieving its general laid goals and objectives. As it has been revealed, the components of the Global Wine and Spirits Giant Pernod Ricard Company include its management personnel, its member mergers, and its financial and machinery resources.

Perhaps, the Global Wine and Spirits Giant Pernod Ricard Company has very competent personnel in terms of management. This is evidenced by its founder Pernod Richard, who has steered the company to high levels in terms of its performance in the alcoholic beverage industry. After the formation of the company in the year 1975, the company is described to have acquired a lot of strength from merging with other related companies which embarked an improvement in the company. The company’s rich resource base has also played a crucial role in propelling the company to higher levels in its performance. For instance, in the year 2005, the company acquired Allied Domecq for $14.1 billion; which was ranked as one of the top producers of famous brands of Vodka among others.

On the other hand, the industry environment of Global Wine and Spirits Giant Pernod Ricard Company has greatly favored its growth and development. As it has been found, alcoholic beverage is one of the fast-growing industries; following the current dynamic global society. The less restricting policies that exist in the industry, have greatly favored the development of the company in various ways. For instance, the merging policy of companies within the industry; which gives them higher potential in the exploitation of resources within the industry has seen significant growth of Global Wine and Spirits Giant Pernod Ricard Company. As it has been observed over time, they’re very low chances of substitute products in the industry of alcoholic beverages affecting the intake of wines and spirits among people. Based on this, the company has been able to produce large volumes of wines and spirits; without fear of market loss in the industry. As various economies of the world grow and develop, the buying and supplying powers of people have also been observed to increase as well. However, the industry has no entry barriers and thus the company still faces the threat of competition from new entrants into the industry.

The internal environment of the company comprises of its employees’ efficiency, the innovations, and technological advancement within the company financial capital resources the company has. On the other hand, the external environment of the company includes the political conditions, technological changes, sources of raw materials, socio-cultural forces, and demographic changes among others. In this case, the cognitive maps about the environment of the company should be pursued so as realize a strategic position in the accomplishment of its general set goals and objectives.

The internal environment of Global Wine and Spirits Giant Pernod Ricard Company is favorable in the sense that; its internal structure is well coordinated in ensuring the achievement of its goals and objectives. For instance, the company is described to be having highly qualified personnel in terms of management which propelled the company high in the production of high-quality brands of wines and spirits in the Southern America region. More so, the company’s decentralization plan by the company management has seen the expansion of its market which in turn has enhanced mass production; leading to economies of scale.

The strategic issues concerning the internal environment of the Global Wine and Spirits Giant Pernod Ricard Company have been found to revolve around its resources and the management personnel. For instance, the company has been found to have rich economic and financial resources; which have enabled it to acquire other reputable companies resulting in a higher income in the company. In this aspect, the cognitive maps associated with the internal environment include better management personnel and high-income flows; which would enhance a higher market command by the company for its products.

The external environment of the Global Wine and Spirits Giant Pernod Ricard Company has also favored its growth and expansion in which; has greatly impacted the general performance of the company. Pernod Ricard, who is the chief founder of the company, has been in constant touch with the outside world in pursuit of how to make the company more competitive in the global market. The political conditions across the world have been positive towards the alcoholic beverage industry and thus; Global Wine and Spirits Giant Pernod Ricard Company has not been facing any controversy from the government. This has enhanced its rapid growth and development in which the political environment of the company in a way motivated its expansion to capture a wider market in various parts of the world like the United Kingdom, France, Japan, and United States among others. More so, the positive demographic changes across the world have also played a crucial role in ensuring a wider market for the Global Wine and Spirits Giant Pernod Ricard Company’s products.

Further, the Global Wine and Spirits Giant Pernod Ricard Company has engaged in the formation of mergers with other related companies; which has enhanced its enormous growth and expansion in various aspects. More so, the expansion of the varieties of brands previously produced in the company has led to its higher sales income. For instance, in the years 1988, 1989, and 1993, the company merged with Irish Distillers, Orlando Wyndham, and Cuban Companies respectively leading to the formation of Havana club; which gained a lot of popularity in the market as a result of increased sales.

The Global Wine and Spirits Giant Pernod Ricard Company aim to ensure the company’s development through external growth; this could be achieved through the reduction of its debts. The company attained this by $4.59 billion from $8.10 billion within a period of11 months, in the year 2005 after the acquisition of Allied Domecq. Generally, the Global Wine and Spirits Giant Pernod Ricard Company has an advanced marketing and distribution network which has seen the company to higher business performance in the alcoholic beverage industry.

To ensure its prosperity in the industry, the Global Wine and Spirits Giant Pernod Ricard Company needs to analyze its strengths, weaknesses, opportunities, and threats. As it has been found, the company has various strengths which have propelled it very far in its performance in the alcoholic beverage industry. For instance, the company has been revealed to have a rich financial base which has enhanced its acquisition of other firms; making it more competitive in the industry. Further, the company has highly skilled management personnel; which has strategically planned for the best performance of the company.

The Global Wine and Spirits Giant Pernod Ricard Company is also faced with various weaknesses which have been barriers to its prosperity. For instance, the company has made very low innovations in its products which have consequently led to its low market capture across the world. More so, the company has a very low number of branches which has led to the acquisition of a low market size in the industry.

Further, the Global Wine and Spirits Giant Pernod Ricard Company has various opportunities that have put the company to a higher potential of prosperity. For instance, the world population has been increasing day after day which ensures a ready market for the company’s products. It has also been revealed that the Global Wine and Spirits Giant Pernod Ricard Company has a good marketing and distribution network which enhances its continuous ready market for its products.

Lastly, the company has been faced with various threats which pose danger to its prosperity. In this case, the company has been revealed to lack proper innovation and invention in its production which puts it in danger of lacking popularity once other related industries advance in that line of production. Generally, the company is in great danger of not being able to invent new products but rather relies on the acquisition of other firms in the industry.

The current strategic position of the Global Wine and Spirits Giant Pernod Ricard Company is that; it has established a strong position in various countries of its operations. This means that the company has localized its production occupying the leadership position and guaranteed sufficient sales. Further, the company has also established its decentralized structure in each country of its operations; leading to higher and stronger synergies between home and global brands.

Based on the current global requirements as a result of advanced technology and civilization, the company should pursue attaining a better strategic position to steer the company higher in terms of its performance. In this respect, therefore, the company should enter emerging markets and internationalize its production; to generate more income from the diverse world market. More specifically, the Global Wine and Spirits Giant Pernod Ricard Company should pursue acquiring the global market standards and expand its production to the main world market centers; to capture a larger market share for its products in the alcoholic beverage industry.

To achieve the above objectives, the company should create a ‘special research team’ which would research on potential market centers for its commodities across the world; for it to establish new branches in various parts of the world. More so, the company should aim at researching innovations and inventions; which would help improve its current products as well as create other better commodities.

Generally, it can be recommended that; the Global Wine and Spirits Giant Pernod Ricard Company should pursue establishing innovations and inventions in its production. This is because; through innovations and inventions the company would be at par with the immensely changing world to encompass the changing needs of people as well.

Conclusion

As it has been revealed, the Global Wine and Spirits Giant Pernod Ricard Company should review its environment, identify its strengths, weaknesses, opportunities, and threats and devise a strategic plan for it to secure a better business position globally. By so doing, the company would be in a position to compete effectively in the current technologically changing society.

Introduction

The company, which deals with wine production, was established by Robert Mondavi in 1966. He held the role of chairman until his retire in 2001. The company has enjoyed market share in the wine industry as one of the global inventive producers and makers of smooth wine. The company has been categorized as a modern wine producer, and this has enabled it make millions from sales and stability in the market. This report evaluates the changing structure and situational analysis of the company based on the threats and growth strategy.

Situational analysis of Robert Mondavi Company

Production of modern wine is mainly involved with large, extensive vine yards and manufacture of various labels of premium wines. For instance, Robert Mondavi wine company was established in Napa valley on a hundred acre farm. This gave the company an added advantage to compete for the market in the wine industry since the old wine producers had small vineyards. To add on, another advantage of Robert Mondavi Company over small companies is based on technology.

The establishment of a wine company on a large farm enables the management to invest in technology. For this reason, it is expensive for a small company to invest in technology when compared to large company. The company benefited from this investment since it significantly helped in production of quality products and enabled the reduction in costs of production. Use of machines in harvesting of grapes enhanced the company’s wine production hence consistency and stable market share. The company also has an advantage over small-scale companies because of its ability to produce wine in large quantity hence availability of stock for distribution in the ready market. This was easily achieved since the company maintained its quality in production. Small companies of old wine could not achieve production in large quantity while maintaining high quality products.

Over time, the structure of Robert Mondavi has been changing according to competition in the market. The success of the company in the industry relies entirely on the marketing approach. Robert Mondavi marketed its products by describing the product to opinion leaders enlightening them on the benefits for them to appreciate the product. This approach helped for the growth of the company since it offered a chance for promotion in consumer places such as restaurants where customers were offered the drinks for tasting, and also availed it to social events. The customer foundation was also strengthened by advertisements on both radio and televisions.

Competition from large companies

Success in the wine industry has attracted large companies such as Foster’s, Diageo and Allied Domecq companies to enter the market. Most of these companies are alcoholic beverages producers with many branches around the world. The entrance of large companies in the premium wines industry was a major threat to Robert Mondavi’s control in the market share. However, the companies employed strategies of acquiring the limited companies in the industry. These involved large expenditures to acquire most of the brands in the market. Conversely, Robert Mondavi concentrated on enhancing the quality of their existing brands. This provided the base of the company’s success since other companies had to market the acquired brands differently as their own hence consuming time. The position of Robert Mondavi enabled its growth and success in the wine industry as compared to the other companies.

The main strategy used by Robert Mondavi to expand in the international market was implementation of the industry consolidation approach. The company also got involved in international joint ventures abroad. This enabled the company’s growth since their partner had adequate research information in their countries. The products were also marketed partly in the of the original brand. Production of quality drinks in the new market was substantial for the expansion internationally.

Conclusion

The success of Robert Mondavi in the wine industry relies mostly on the quality and availability of the product. Production of brands in large quantity enabled the company to stay well above other companies in the market. The marketing strategies employed are also essential in the growth of the company. This enabled the Robert Mondavi to succeed as one of the largest companies in premium wine production.