Chataux Margaux Business Case

The winery industry can be categorized into red and white wine segments. The red wine segment, measured by tonnage of varietals crushed, has grown at a compounded annual rate of 4.7% for 10 years from 1989 to 1998, and a year over year growth rate of 8.2% from 1998 to 1999. Judging by the strong growth rate experienced in the red wine segment, it is reasonable to conclude that the red wine segment is in the growth phase of the life cycle model. In addition, production of red wine varietals which are relatively unknown such as syrah and sangiovese nearly doubled in a year from 1998 to 1999. The white wine segment, however, is at the mature phase of its life cycle as the segment shrunk slightly by 0.42% from 1998 to 1999. Overall, the industry is still at the growth stage lead by growth in the red wine segment.

The structure of the wine industry is quite different around the world. The barrier to entry is relatively higher in the New World than in the Old World. Referring to the market data on the level of concentration in 1998, people can see a few players dominate the markets in Australia and the U.S. while the level of concentration is quite low in Europe. Therefore, the rivalry in Old World is intense there.

In the world of increasingly global competition every nation want to prove its product as the best in the world. This phenomenon is called the competitive advantage of the nation, this can only be created and sustained by immense sense of product knowledge, competition domestically and internationally. Wine industry is the one which faces the competition between the traditional wine makers of the old world and the sophisticated wine producers of the New world. The healthy competition among the producers and suppliers makes the consumers successful by providing the best quality.

The premium wine segment is quite concentrated with high barriers to entry making mergers and acquisitions a strong and prevalent growth strategy. With industry analysts forecasting the demand for premium wine to grow at 8% to 10% per year, many former non-rivals are now becoming a threat. Jug wine producers are entering the premium market and beer and spirit producers

The buyer’s power within the wine industry varies between different places in the world. There are for example strategic differences between Europe and the “New World”. The “New World” includes countries like the US, Australia, Chile and South Africa. In Europe there is a big competition

From our group opinion we think that Chateau Margaux should not extend its product line. Chateau Margaux is connoisseur brand which has limited brand awareness and limited target group, which is the strong part that keeps Chateau Margaux stands on top rank wine in consumer mind. Extend the product line of Chateau Margaux could cause wrong perception among consumers. Moreover the product quality control for Chateau Margaux is highly strict and limited, so to add more product line on its regular basis production can cause the average quality of entire product drop down as well.

Bonny Doon currently has an enviable position in the 1990’s Californian wine-producing industry. The company has successfully differentiated itself from its competition and achieved a first mover advantage in terms of selling “undervalued” wines. However, due to increased rivalry and a changing and increasingly challenging market,

Since Cork’d inception in February 2006, the company was designed for and by wine lovers. Time showed that this industry had such a demand that needed more dedication and that is when

In 2001 there were over 1 million wine producers worldwide, and no firm accounted for more than 1% of global retail sales. Because of this, it would be nearly impossible for the Robert Mondavi winery to dominate sales in any region. Due to Mondavi’s efforts, the winery became one of America’s most innovative,

Not only does the U.S. produce wine to be sold in the U.S. but last year they exported around 403 million liters of wine, the majority was exported to Canada and the United Kingdom.

With the globalisation, world is becoming smaller day by day and “internationalism” of taste amongst the consumer is rising. This rise has made export of wines around the world more acute. This has let one product from one country available easily in another part of the world (McDougall, 1989).

Through heavily exporting to U.K and U.S, MontGras segmented and exposed to some of the top wine consumers in the world

Chateau Margaux is one of the five first-growth Bordeaux wine producer; it and has one of the finest names of Bordeaux and the number of drinkers worldwide is growing through the years. Chateau Margaux’s wines are used by the connoisseurs and luxury consumers. They are facing an uncertain future, because of losing market to New World producers (such as California, Australia, South Africa and New Zealand) which have lower prices and more accessible flavours. Nowadays wine drinkers are changing tastes, which could cause a big problem.

Bieler, Kristen Wolfe (2006), “Behind the [ yellow tail ]® Phenomenon: How It Happened and What’s Next?” Beverage Media Group, February, pdf download.

• Claret - is a name primarily used in British English for red Bordeaux wine. Claret derives from the French clairet, a now uncommon dark rosé, which was the most common wine exported from Bordeaux until the 18th • Sauternes - is a French sweet wine from the Sauternais region of the Graves section in Bordeaux. • Châteaux – is a manor house or residence of the lord of the manor or a country house of nobility or gentry, with or without fortifications, originally—and still most frequently—in