Winery Simulation, Research Paper Example

Chateau Bergat Merveille

Introduction

The name that I have chosen for my New World winery is Chateau Bergat Merveille. The winery will be located in California. This location was chosen because the terrior is closest to that of the French land where the original winery is located. Chateau Bergat has a nearly perfect balance of merlot and cabernet-franc and is considered to be a fine wine.

Chateau Bergat Merveille

This wine consists of 50 percent Merlot, 40 percent Cabernet-francs, and 10 percent Cabernet-Sauvignon (Borie Manoux). The vineyard area is 3.5 ha (Borie Manoux). Ground characteristics include “limestone, clay, and iron layers” (Borie Manoux). Annual production averages at 12,000 bottles (Borie Manoux). The average vines used to create the wine are 40 years old (Borie Manoux). Fermentation occurs between15-20 days (Borie Manoux). The wine matures in oak barrels for 14-16 months (Borie Manoux).

Marketing Strategy & Analysis

In the United States, the wine industry is constituted of approximately 1,800 companies with combined annual sales revenue of about $12 billion. Industry concentration is characterized by fifty major companies with more than eighty percent of market share (Hoovers 2010). Demand for wine is primarily driven by the restaurant and hotel industries, correlated to the level of business entertainment spending, and consumer income. Profitability depends on production volume and sales price. Translation of cost mitigation to consumers is directly dependent upon the volume of crop sales and production, and in the case of smaller wineries, distribution channels may also impinge upon price point.

An economy of scale, the US wine industry is driven by several strong regional production areas, and especially the West Coast of the country; where the states of California, Oregon and Washington have significant vinter production. Small producers compete with big-volume suppliers through vintage of high quality wines that can then be sold at a premium price. As the industry is capital-intensive, with average annual revenues per worker at about $370,000, translation of costs to consumers may run high.  Chateau Bergat Merveille’s challenge is to coordinate partnerships with large and mid range volume producers that also offer ‘luxury’ quality wines. In 2009, the California vinters shipped approximately $467.7 million gallons (196.7 cases) of California wine to the U.S. wine market with a modest .02% increase to the prior year. Estimated retail value of those sales was about $17.9 billion, a reduction of 3% as U.S. consumers ‘traded down’ to lower priced wines in response to caution over spending (The Wine Institute 2010). This is not to say sales from all wine sources did not benefit, as the national market consumed steadily with an increase of wine sales to the U.S. from all production sources—California, other states and foreign producers—grew 2% to 767.4 million gallons (322.8 million cases) in 2009.  At the international level, California wine shipments actually decreased by 1.2 % to 563.5 million gallons (237.0 million cases). According to the Nielsen Company, a global provider consumer information and analytics, growth overall all is seen with the American wines, while foreign wine volume was flat. In short, the United States revealed the most promising market for California’s wine expansion strategy, while the European Union with its decreased imports by 22 percent to $380 million in winery revenues in 2009 compared to 2008 stagnated. Wine revenues in other regions in 2009 are as follows: Canada, $242 million, -7%; Japan, $79 million, +28%; Hong Kong, $47 million, +84%; and China, $36 million, +64%.

The overall marketing strategy will consist of several steps. The first step will involve evaluating the market factors of strengths, weaknesses, opportunities, and threats. (See table below for additional information)

Taking these factors into consideration, the winery will develop a comprehensive marketing strategy that involves hotel marketing, online advertising, bar and liquor store marketing, and of course guided tours of the winery’s main facility.

Label

According to U.S. laws, all wine labels must follow certain requirements. The label must identify the brand name, class, alcohol content, the name and address of the bottler, quantity of contents, a declaration of sulfites, government health warning, and sometimes dietary information (Professional Friends of Wine). Aesthetically speaking, wine labels should be pleasing to the eye and should convey a message that describes the story behind the wine.

Conclusion

Chateau Bergat Merveille moves toward expansion of wine segments in the United States and elsewhere like Australia and New Zealand that are comprised of avid consumers of both national and foreign wines, the company also looks to two major trends within the market that reflect both: 1) the gender flux within market segmentation indicative of a split between men whom consume for health purposes (American Heart Association 2007, and Barclay 2009), and women whom purchase based on preference (Matasar 2006); and 2) green consumerism that has affected selection within the wine market according to organic elements and inclusion of codes of sustainable winegrowing on brand labels, and in particular in the U.S. and South Pacific consumer and industry segments (Wine Institute 2010). While consumers traditionally have based wine purchase on things like occasion, taste, quality, price and packaging, one mitigating factor which is third-party recommendation has been tossed into a new marketing mix predicated upon environmental factors, and in general health. Unlike decades past where wine fulfilled an advertising idiom related to prestige and wealth, it is now health and affordability at the least cost to the planet that wineries like Chateau Bergat Merveille must consider.

Bibliography

Campbell, G. and Guibert, N., 2007. Wine, Society, and Globalization: Multidisciplinary Perspectives on the Wine Industry. New York: Palgrave Macmillan.

Consumption by Country (2010). Wine Institute. Retrieved from: http://www.wineinstitute.org/files/PerCapitaWineConsumptionCountries.pdf

Consumption By Volume (2010). Wine Institute. Retrieved from: http://www.wineinstitute.org/files/WorldWine%20ConsumptionbyVolume.pdf

DATAMONITOR: Bacardi Limited. Bacardi Limited SWOT Analysis, Apr2010, p1-8, Chart. Available at: http://www.barcardilimited.com

Chateau Bergat. (n.d.). Borie Manuox . Retrieved August 2, 2010, from www.borie-manoux.com/uploads/media/bergat_en.pdf

Consumerism | Wine Label Basics. (n.d.). Professional Friends of Wine. Retrieved July 31, 2010, from http://www.winepros.org/consumerism/labels.htm

Distillers & Vintners Industry Profile: Global; Mar2010, p1, 35p, 19 Charts, 13 Graphs Drinks: Feature Analysis, 2010. MarketWatch: Global Round-up, Apr2010, Vol. 9 Issue 4, p41-43, 3p

Giuliani, E. Et al. (2010). Who are the researchers that are collaborating with industry? An analysis of the winesectors in Chile, South Africa and Italy. Research Policy, Jul2010, 39 (6):748-761.
Giuliani, E. Et al. (2010). Who are the researchers that are collaborating with industry? An analysis of the winesectors in Chile, South Africa and Italy. Research Policy, Jul2010, 39 (6):748-761.

Light Wine Intake Is Associated With Longer Life Expectancy In Men, 2007. American Heart Association, 1 March 2007. Available at: http://www.supercentenarian.com/archive/wine.html

Matasar, Ann B., 2006. Women of Wine: The Rise of Women in the Global Wine Industry. Berkeley: University of California Press.

Piercy, Nigel F., 2008. Market-Led Strategic Change: Transforming the Process of Going to Market. Oxford: Butterworth-Heinemann.

The ‘Green Buying’ Influence on Consumer Wine Purchases: California Wine Leading the Way in Sustainable Winegrowing, 2010. Wine Institute. Available at: http://www.wineinstitute.org/resources/consumerfeaturestories/article335

The Wine Industry report (2010). Hoovers. Retrieved from: http://www.hoovers.com

Women Spur New Trend In Wine Marketing: California Women in Wine Move into the Marketplace. Wine Institute. Available at: http://www.wineinstitute.org/resources/consumerfeaturedstories/article334

World Vineyard Acreage by Country. Wine Institute. Available at: http://www.wineinstitute.org/files/WorldVineyardAcreagebyCountry.pdf

World Wine Production by Country. Wine Institute. Available at: http://www.wineinstitute.org/resources/worldstatistics/article87