Entry Report to Chinese Wine Market

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 assignment for this week was to write a paper based on the case Global Wine War 2009: New World versus Old. We experienced that it was an interesting case considering both Porter’s five forces model and Resource-Based theory, because they give two different perspectives of competitive advantage: Outside in and Inside out. Besides that we could have a closer look at innovations and what they mean for the competitiveness in the world wine market. In this paper we make an effort in explaining what the main aspects

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.

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.

Haier (“the Company”) was China’s biggest white-goods producer and supplier in 1990s. In 1984, there was nearly 300 local producers in China market, most of which were producing poor quality goods. However, customers were willing to pay more for higher-quality products and reliable service. This need created an advantage for differentiation.

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

Many products we use today are made in China. Trade between Australia and China has heightened in the last couple of years. China has one of the world’s largest economies. It has an increasing role in shaping the world economy, accounting for a third of the increase in the world’s gross domestic product and imports for the period 2000 to 2003 (The Economist 2004). It is also home to a population of 1.3 billion inhabitants, consuming a variety of goods from food items to luxury commodities, toys, clothing, gifts, most car parts and many more things Australia benefits from. For non-agricultural goods, Australian import tariffs are generally low. The most notable exceptions are on motor vehicles and textiles, clothing and footwear imports.

1.Discuss critically the competitive advantages of New World wine producers and contrast these against their Old World competitors.

The United States wine industry is a 12 billion dollar industry and is composed of 7,000 wineries and around 1,800 different companies. The three major companies within the industry are Constellation brands, E&J Gallo, and The Wine Group Inc. The industry has made its way through the economic crisis at a better rate than some of the other U.S industries however in order for them to continue to see any type of growth it is important that they acknowledge their issues and find ways in which they can rectify them. The majority of the issues among the industry are problems that cannot be directly controlled by individual wine companies. Therefore it is imperative that wineries find away to use these issues to their

Producer to state-licensed wholesaler, state-licensed wholesaler to a state-licensed retailer, and state-licensed retailer is the only one allowed to sell directly to the consumer.

For the purposes of this case analysis of E. & J. Gallo Winery, the wine industry is composed of all alcoholic beverages that contain between eight and twenty percent alcohol by volume. This distinction is based on the assumption that beer and the typical malt liquor contain less than eight percent alcohol by volume. The twenty percent limit is a result of state and federal tax and licensing laws. The three top competitors that are identified in this case study are E. & J. Gallo, Canandaigua and Mogen David.

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

The last problem we highlighted concerns how to increase the number of customers in the mainland China market . First, we believe that the most relevant issue is a survey amongst customers on the Shanghai Tang brand perception and the 5 luxury brands in their top-of-mind, in order to analyze the competitors that the company has to face in the future.

This paper will outline an executive summary of a marketing strategy of a new wine brand to a targeted audience that will incorporate the buyers motivation, psychographics, and demographics. A description of the overall marketing strategy will include advertising, customer relationship manager and a Public Relations campaign. Finally, a an overall strategy to position the brand against the competition will be outlined.

To sum up, Audi’s marketing strategy in China is different from its strategy in other parts of the world. It typically focuses on high-end market for governmental and business use. Through examining its SPT strategies, it was found that Audi has a clear understanding of its targeting customers and has developed correspondent marketing strategies. Localization is a major theme in