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Global Strategy
000130502
2. Problem Statement
Instead of selling the third wine to other wine merchants by bulk,
making the third wine one of the companys main products could mean a
greater amount of revenue and making a greater number of customers loyal
to the brand. However, it the third wine was to be a product, several
questions had to be answered such as: What should be its brand image
relative to the chteaus first and second wine? What price should the
consumer expect to pay for a bottle? How was supply going to behave
throughout the years and could it be matched with demand?
What
investments and new costs this project represented for the company? One
critical point to take into consideration was the France and the so called Old
World countries were losing wine market share to the New World countries
such as New Zealand, Argentina, Australia and South Africa. This was
concerning, since connoisseurs and sommeliers would turn to these new
products instead of the old fashioned ones.
3. Analysis
3.1 The wine market - let us talk economics.
In the year of 2013, the wine industry made around $105-110 billion in
revenues per annum with an estimated production of 30 billion bottles
worldwide. Since few entry barriers existed to get into the wine industry,
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Global Strategy
000130502
4. Recommendations
So, first of all who should be the main buyers of Corinne
Mentzelopoulos astonishing third wine? I consider that Chteau Margaux
should remain true to its traditional markets and sell the third wine to its core
Global Strategy
000130502
Global Strategy
000130502
additional land. If this proves to be insufficient, then the final step would be
to buy an entire estate and increase supply that way.
As the owners of Chteau Margaux said:
every vintage is like the IPO of a new company We have to decide how
many share to put up and what price.
And so, with their new product they face a most similar situation: they will
have to experiment with how many shares should be sent to the market,
and at what price.