Margaret Valley Wines Essay Example

  • Category:
    Marketing
  • Document type:
    Assignment
  • Level:
    Undergraduate
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5Marketing Margaret River Wines

MARKETING MARGARET RIVER WINES

Introduction

Established in 1967, the Margaret River Wine Region has grown to be among the most famous wine producers on earth. The region extends over 5,000 hectares of land and contributes about 3% of Australian wine grapes. About 20% of the country’s premium wine is produced in the Margaret River. The success of the region can be traced to Australia’s favorable climate that allows proper growth conditions (Webb et.al 2012).

However, the region has been experiencing low value and low volumes. The region has now become among the least profitable wine producers in Australia, recording losses in both 2014 and 2015 (Galbreath 2015). In fact, for both years, according to Winemakers Federation of Australia, only about 33% of the region’s vintages were profitable. Due to such low sales while other producers such as The Swan Region which reported 2% profitability in 2015, it is imperative that the Margaret River Region be marketed more in the European markets (Galbreath 2015). This paper presents an integrated marketing communications plan for the region.

Demographic opportunities

Generally, the European population is composed of an aging population. As such, there is less wine consumption. The aging population also leads to consumption of wine that is of high value (premium wine). The wine consumers of this age are usually high-class and sophisticated hence the consumption of high quality premium wine. On the other hand, Europe is believed

The EU region is the leading wine market globally. However, the region’s global exports have reduced significantly in terms of value. France alone has a market share of 35.5% while the rest of Europe has a market share of 36.5%; giving Europe a global wine market share of about 72%. Of these, Australia has a market share of 9.6% (Garcia et.al 2014). These statistics make Europe the most competitive wine market, hence the need to expand Margaret River Region’s market share in Europe.

Product analysis

The vineyard is among the top four most famous Australian wine producing regions. Margaret River’s main product is the cabernet sauvignon alongside producing Australia’s best Chardonnay. Other products include Shiraz, Merlot, sauvignon Blanc and Semillon; all having a significant global demand.

Labeled from vine to glass, Margaret River Brands are associated with ultra-premium and premium Australian wine. Packaging of the wines is congruent to the natural, pristine and beautiful environment. Packaging is done with care and thought; with highly recyclable or recycled contents. In essence, the region’s products look natural, elegant and simple (Delmas & Grant 2014). Cabernet Sauvignon and Chardonnay are excellent performers alongside Semillon and Blanc blends; contributing to the competitiveness and brand equity of Margaret River. (Boulton R. B et.al 2013)

Competitor analysis

France has been long the best wine producer in Europe, mostly dueling with Italy for the top spot. However in 2015, Italy was the best wine producer with 48.8 million hectoliters; 13% up from 2014 (Anderson 2015). France came second with 46.4 million hectoliters; down 1% due to a prevailing heat wave and inadequate rains during the year. Other significant wine producers in Europe include Romania (4 million hectoliters), Portugal (6.7 million hectoliters), Germany (8.7 million hectoliters) and Spain (36.6 million hectoliters) (Anderson 2015). For Australia and most of the other producers, The U.S, U.K, Hong Kong and china are the main target markets. Margaret River accounts for only 3% grapes production but has a 20% share in the Australian premium wine production; which has a global share of about 9% wine production.

Target market

Due to the European economic excellence, the population is regarded as high class, sophisticated, elegant, and wealthy. This target market can afford a significant level of luxury. In the case of Margaret River brands, this is the population that will afford to spend on high quality premium and icon wines. (Demossier M. 2012)

SWOT ANALYSIS

STRENGTHS

The region is debt free

Dedicated professional staff in the wineries

The Margaret River brand is excellent

The Australian climate if favorable for growth of grapes and vines

weaknesses

need for support from the local government

there is lack of cohesion and certainty in the region as a result of excessive programme elements

Opportunities

It is possible to include all the stakeholders in the ownership of the region

The region’s brand equity can be used fully to attract tourists and co-producers for better sales and production of premium wine.

It is possible to include the local residents in creating a sense of ownership for Margaret River as well as demand for the wine (Mitchel et.al 2012).

Less wine consumption globally.

Harsh climatic conditions such as the heat waves and inadequate rainfall experienced in France during 2015 (Harding 2015)

Limited community support

Creative

Advertisement 1:

Ad in Emirates, Etihad, Qatar, and Cathay Pacific first class. Elegant, clean images with copy “First class wine”.

Advertisement 2: Ad and sponsorship at the Ascot racecourse near London. Elegant, clean images with copy “the bets are off”, and “always the winner”.

Advertisement 2: Ad and sponsorship at an elite fashion show. Elegant, clean images with copy “the finest accessory”.

Costed budget

200,000 Australian dollars

Ad and sponsorship at the Ascot racecourse near London

800,000 Australian dollars

Ad and sponsorship at an elite fashion show

500,000 Australian dollars

Distribution

Premium airlines constitute the target market group of high class, sophisticated, elegant and wealthy people. This will ensure that the premium and ultra-premium brands reach the target market in the planes. Moreover, having tasted the quality wine, the consumers will further market the brands to their friends and/or continuing taking the wine off-board. Sponsoring and advertising in elite events ensures that the elite group is reached while creating brand awareness among event attendees.

Situational analysis

Having outlined Margaret River’s background, competition, target market and climate as well as SWOT analysis, it is imperative to evaluate the region Porter’s Five Forces;

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Bargaining power of customers

Customers have high bargaining powers due to;

Existence of many sellers and wines;

Customer behaviors are changing as wine is becoming more fashion driven;

There is consolidation, rationalization and subsequently less fragmentation of wholesalers and retailers in Australia (Lockshin & Corsi 2012).

Bargaining power of suppliers

Moderate due to factors such as varying vintages and access to high quality fruits.

Threat of substitutes

As Australian drinking habits are changing, consumers are shifting from beer towards wine consumption on a domestic basis.

Threat of new entrants

Very difficult to enter the Australian wine industry due to consolidation issues. For example in the year 1996, ten of Australia’s major companies controlled 84% of the gape crush, four of them being in control of 75% of domestic brand sales (Lokshin & Corsi 2012).

Tough competition in the industry resulting from the decreased rates of wine intake in other countries such as Chile and France that allowed for exportation.

Changes in regulation

There are more prohibitive rules about alcohol and driving.

Economic trends

The good economic trends in Australia are due to;

A major growth in the local and international industry.

Fast growing demand of wine by consumers from non-traditional markets.

Australian wines are sold at higher prices in other countries than wines from other countries like France and Italy.

Social pressures

People should practice taking at least a glass of wine daily for health purposes

Technological advances

Moderate

Large-scale suppliers produce high quality wines by using more scientific procedures of making wine.

Branding

Margaret River brands are already associated with ultra-premium and premium wines. The wines, especially the cabernet sauvignon and Chardonnay will have additional labels of clean and elegant. This will add to the present from vine to glass making the wine look more attractive and sending the message of the best products from Margaret River.

Packaging

Alongside branding the wine as premium, elegant and clean, packaging will have to be in a way that is not at the expense of such branding. With rising competition and demand for premium wine, packaging should also resemble the brand in the premium, elegant and clean design. Alongside such design, Margaret River should continue using lighter than the traditional glasses as well as recycled and recyclable packaging materials.

Positioning

Margaret River wine is usually considered as ‘new world wine’. This is in complete contrast with wine brands such as French Wine which may be regarded as ‘old world wine’ with high levels of prestige and authenticity. Margaret River wine is high quality and even enjoys brand identity of premium and ultra-premium wines. However, it lacks that prestige and authenticity. With the new adverts, distribution, packaging and branding; premium elegant, clean, Margaret River wine should be positioned in the European markets as prestigious and authentic.

Reference list

Anderson, K., 2015. Changing varietal distinctiveness of the world’s wine regions: Evidence

From a new global database. Journal of Wine Economics, 9(03), pp.249-272.

Boulton, R.B., Singleton, V.L., Bisson, L.F. and Kunkee, R.E., 2013. Principles and practices of

winemaking. Springer Science & Business Media.

Delmas, M.A. and Grant, L.E., 2014. Eco-labeling strategies and price-premium the wine

industry puzzle. Business & Society, 53(1), pp.6-44.

Demossier, M., 2012. lifestyles: the case of wine. Culinary Taste, p.93.

Galbreath, J., 2014. Climate change response: Evidence from the Margaret River wine region of

Australia. Business strategy and the environment, 23(2), pp.89-104.

Garcia, F.A., Marchetta, M.G., Camargo, M., Morel, L. and Forradellas, R.Q., 2014. A

Framework for measuring logistics performance in the wine industry. International Journal of Production Economics, 135(1), pp.284-298.

Harding, J., 2015. The Oxford companion to wine. Oxford University Press, USA.

Lockshin, L. and Corsi, A.M., 2012. Consumer behaviour for wine 2.0: A review since 2003 and

future directions. Wine Economics and Policy, 1(1), pp.2-23.

Mitchell, R., Charters, S. and Albrecht, J.N., 2012. Cultural systems and the wine tourism

product. Annals of Tourism Research, 39(1), pp.311-335.

Webb, L.B., Whetton, P.H., Bhend, J., Darbyshire, R., Briggs, P.R. and Barlow, E.W.R., 2012.

Earlier wine-grape ripening driven by climatic warming and drying and management practices. Nature Climate Change, 2(4), pp.259-264.