Chateau Margaux Essay

Bonny Doon Vineyards, a successful winery business based in Santa Cruz, California, has grown from selling 5,000 cases of wine a year in 1981 to 200,000 cases a year in 1999. To keep growing and be more profitable, the business must choose amongst three possible strategic directions. The first strategy is to start importing wines from Europe into the United States. The second alternative is branching into a retail outlet for unusual wines of great value, accompanied by a high level of service. Lastly, the business’ D.E.W.N could be expanded to include wines not made by the company itself but by other wineries that follow the same values and philosophy.

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.

Le Chateau is a leading Canadian specialty retailer that offers contemporary fashion apparel, accessories and footwear. Founded in 1959 by Hershel Segal, the retailer was originally named “Le Chateau Men’s Wear”. The name was

Smaller firms such as the family run operations in Europe may not be able to realize these same cost efficiencies. Furthermore, grapes represent 50 to 70% of a winemakers COGS, thus the competition for sourcing high quality grape growers is quite high. Just as Mondavi does for 75% of its purchases, most premium wine makers enter into long-term contracts with growers to not only ensure that their demand is met but also to make sure that they receive grapes that are consistent in quality.

The dynamics of the global wine industry are better understood through a brief history of wine as well as an overview of the wine making process. Some countries have longer historical and cultural ties with wine then others and that can affect the quality and perception of the product in the eyes of the consumer. Also, the conditions in which the wine grapes are raised and the processes used to make the wine can create a superior wine and therefore a competitive advantage.

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.

The case study Preserve the Luxury or Extend the Brand presents a fictional dilemma, based on a real company, faced by Chateau de Vallois, a prestigious and famous wine-producing estate in the Bordeaux region of France. De Vallois is a family owned and run business; part owners are Gaspard de Sauveterre - a 75-year old majority owner, and equal partial owners: Francois de Sauveterre – Gaspard’s son and the chateau’s CEO , and Claire de Valhubert – Garspard’s granddaughter. De Vallois had fallen into a slow decline under its previous owner, but Gaspard along with Jean-Paul Oudineaux, his estate manager, had restored the chateau and since then de Vallois had been steadily profitable

However, Bonny Doon is vulnerable and reliant on its suppliers, as 80% of the firm’s grapes are bought from external growers. Bonny Doon requires unpopular grape varieties and grapes that meet high quality specifications (which decreases agricultural yields and creates a trade-off for growers). They need to develop long-term relationships with the growers to ensure uniformity and high production quality with respect to the firm’s key product input: grapes. On the other side of the value chain, the firm has preferred small-medium sized distributors for their product. This has enabled them to retain higher profits, despite selling wine in smaller quantities.

The same concentration is happening in the “on-premises” buyers, where many large hotels and restaurants chains are purchasing wine centrally rather at locally, increasing their buyer power.

The second least important factor in Mondavi’s corporate strategy is the threat of substitutes. A substitute offering arises when there is a product in a different industry that can satisfy the same need as the product a company sells. If one looks at wine as an alcoholic beverage, there really is no substitute for wine, as beer and liquor are technically in the same industry. However, if seen as a luxury item that’s purpose is for the experience, there are some substitutes for wine. Examples include high end chocolates or cheeses, as customers might desire to be connoisseurs in these two items instead of wine. It would seem that the cost of switching to one of these products would be rather low for customers, indicating there could be some risk.

This case study discusses ordering and forecasting process of the wine company Club Français du Vin. As the name suggests, this is a French company that offers French wines to the consumers trough catalog offers. The main catalog is the Etiquette, which includes a selection of 30 to 40 wines that the clients can then choose and order by mail, phone, fax or by internet. The members also receive other two leaflets, La Selection (shows three recommendations for the season) and La Cave (consists of a list of wines and corresponding prices, that are available also – this are mainly leftovers from the previous season and are heavily discounted).

As the marketing manager of Bonatelli Wines, I have been asked to prepare a marketing program to establish Bonatelli Wines in a South East Asian Market in which I believe offers the best opportunity for expansion. Working with my team of staff members Maria, who is responsible for advertising and promotions, Thomas, who manages liaison with the current US distributors, and Rob our freelance web designer we will execute a marketing program that manages to compliment the objective of Bonatelli Wines.

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

Further, with fierce competition, P&G¡¦s primary outlet in France would be to reach the French consumers through Perfumeries; however, finding shelf space in these retail stores is nearly impossible. Tapping the European market could prove difficult and costly.