Introduction and background
Pure Premium Wine is a wine-producing organisation situated in McLaren Vale, South Australia, and established in 1984. The organisation offers a variety of wine collections, including range Chardonnay, Cabernet Sauvignon, Grenache, GSM, Shiraz. According to the 2020 profile of the venture, the same has been exporting wine in Australia with 32,000 cases, the United Kingdom with 4000 cases, Singapore with 1500 cases, and New Zealand with 1500 cases. The organisation could not find any further growth potential in the aforementioned markets, thereby it intends to extend its exporting market further in order to achieve its objective of increasing annual export sales of 7,500 cases by the end of year 2025, and therefore five markets, including China, India, Sweden, Netherlands, and the United States are to be evaluated in order to identify the most appropriate market for entering.
Market evaluation
China
| Customer | It has been identified that Chinese people do not prefer to drink any kind of alcohol at home, but they prefer drinking only in restaurants or bars in the presence of a company (Author, 2020).It has additionally been recognised that Chinese people often take down alcoholic beverages as shots and rather than enjoying it slowly. |
| Product | China is primarily a rice-wine consuming country.Granite wine is considered to be a luxury in China.1,760 million litres wine consumption has been identified as per the survey in 2018 (Author, 2020). |
| Timing | During recent times, the Chinese community has made drinking alcohol to be a part of social etiquette or s strict rule in some societies.Following these particulars, consumption of alcohol or wine has increased to some extent in China. |
| Competition | The biggest wine-producing company in China has been examined to be Changyu Pioneer Wine Ltd., Yantai China.The Chinese wine market is largely dependent upon this particular wine company with the reputation and cost factor it possesses. |
| Finance | According to a recent survey, the growth of the Chinese market grew by 4.7% with regard to the volume of 545,9 million liters (Galati et al., 2018). 14% to 20% wine tariff was removed over 4 years when ChAFTA agreement came into force. |
India
| Customer | Youths in India can be identified to be the strongest customer base depending upon their craving for variety in liquor.With the population in urban areas, the customer base for wine can increase by time.Wine has been examined to be popular among women and youth. Therefore this can be identified to be a new market segmentation. |
| Product | Increasing demand for a variety of wine can be dignified to be an opportunity for the products in the Indian market.However, according to a recent examination, the Indian wine market mostly receives its products locally and only imports value-added wines (Indianwineacademy.com, 2020). |
| Timing | Following the recent market study, it has been identified that the demand for wine and a variety of the same is increasing day by day. Therefore, it can be recognised as a good market penetration opportunity for wine-makers. |
| Competition | The existing wine brands have acquired a strong portion of the current wine market in India. Therefore, in order to introduce a new wine-producing company or brand, the same has to cope-up with the strong competition with regard to the same. |
| Finance | It has been recognised that the revenue record from the Indian wine market plays a vital role in the gross revenue of the country, and the price varies based on the market environment (Indianwineacademy.com, 2020). |
Netherland
| Customer | Consumers in the Netherlands are becoming more conscious about the reduction of their alcohol consumption. This resulted in a mentionable drop in the customer base of the country. |
| Product | The dominance of red wine in the Netherlands has been over by the recent decade.The liquor products are being introduced following the health-conscious nature of the target customers in the region under consideration (Euromonitor.com, 2020). |
| Timing | For many years the wine experts in the Netherlands have anticipated a trend with regard to the trend towards the forfeited wines with high quality (Euromonitor.com, 2020).During recent decades, a negative impact on the Wine market of the Netherlands has been identified that caused a drop in alcohol consumption by the consumers. |
| Competition | The private labels, as of the brand reputation in the Netherlands, acquired a high position in the Wine industry by time. Therefore, it poses the highest competition for outsider wine producers. FGL has been recognised to possess the highest and strongest brand player in the considered wine market.Dutch consumers seek for variety, and the local wine producers have adopted such demand for introducing new varieties in order to maintain their customer engagement. |
| Finance | The financial status of the wine industry in the Netherlands is entirely dependent upon the local wine producers, and the same offers an affordable price for their products to the consumers therein. |
Sweden
| Customer | Swedish people consider the consumption of wine to be one of their cultural etiquettes. Therefore, the customer base for the wine industry in Sweden is strong.The customer base of the Swedish wine industry is additionally loyal and engaged to the products, and at the same time, they seek variety. Therefore it can be identified to be an opportunity for the industry (Soosay et al., 2016). |
| Product | Variety in the product is most desired in Sweden due to the high demand and larger customer base.In order to successfully penetrate into the Swedish market, the wine-maker must establish its brand position beforehand. |
| Timing | With the growing demand for wine in Sweden, it can be identified to be a great opportunity to enter the market.However, with the global pandemic of COVID-19, the market entry must include strong strategies and make good trade relations with the region. |
| Competition | The existing wine brands have established their brand position in the market, and the same can pose strong competition for the PurePremium. |
| Finance | The price of wine in the Swedish market can pose a threat to its sale. It has been identified that the price of wine in Sweden is higher than in the other regions.However, it is a good strategy to make revenue out of the same by setting an affordable price in comparison to the competitors. |
USA
| Customer | The wine industry in the United States has a loyal customer base with its ages-old demand for alcoholic beverages.Customer loyalty can be identified to be a success factor for the wine-makers in the US wine industry (Waldrop, McCluskey and Mittelhammer, 2017). |
| Product | The wine industry in the US is large and highly fragmented. A variety of wine is always desired by the customers in this region.The demand of customers is satisfied by different wine brands by offering them a variety of products. |
| Timing | In recent times, focusing on the COVID-19 outbreak, the consumption of wine has been affected. However, the loyal customer base is still engaged with their demand for a variety of brands. |
| Competition | With regard to the longstanding existence of the wine industry in the US, a number of different wines making companies have established their respective positions. Therefore, the competition is considerable in this case. |
| Finance | The US market has been identified to make a notable revenue out of its wine industry, contributing to the gross revenue of the nation. There are 405,000 cases of wine marketing in the US as of the survey executed in 2018. |
Rejected Markets
China
I am rejecting this market because:
- Chinese people do not prefer to drink any kind of alcohol at home, and therefore it reduces a particular volume of the customer base. Besides, Chinese society does not prefer alcoholic beverages like the other markets into consideration. Therefore, the demand is lower.
- The political relationship and uncertainly of the same between Australia and China have been identified to be a threatening factor to the trade relations between these two nations. Therefore, it will affect the considered business plan.
- Chinese wine market poses another threat to the marketing plan as Chinese consumers have been identified as preferring Chinese wine over the other imported brands.
India
I am rejecting this market because:
- Societal and political obligations affect the demand for alcoholic beverages in India. For instance, in some of the states, it is not permitted to sell or consume alcoholic beverages, and on the other hand, certain religions restrict people from consuming alcohol.
- It has been identified that the Indian wine market demands locally produced wine and only imports value-added wine products. Therefore, it may affect the entrance of the new venture into such a market.
- The number of legally major aged consumers in India is lower than the minor population. Therefore, it affects the customer base and the gross sales rate of wine.
Netherlands
I am rejecting this market because:
- The health-conscious nature of Dutch wine consumers affects the sales of wine in the Netherlands.
- Drop in the demand for red wine has been identified as having a negative impact on the sales rate of wine in the Netherlands.
- The private labels with regard to the brand reputation in the Netherlands have been identified as having a higher position in the Wine industry by the time that can act as a strong competition to the new company.
Selected Markets
The United States
I am selecting this market because:
- The loyal customer base in the US has been identified to open opportunities for the wine industry with regard to the enhancement of their financial and market growth.
- It has been examined that the consumption of alcohol is higher in the US than that of the other countries under consideration.
- Despite the high competition of competitors in the US wine industry, it has been identified that the number of different opportunities available in the aforementioned market can help the considered company to make its position therein.
- The US market has a high number of cases on wine sales that can be noted as a positive factor in this case.
Sweden
I am selecting this market because:
- It has been identified that people in Sweden considered the consumption of wine to be the cultural etiquette, and therefore demand for wine in Sweden is constant.
- The customer base for wine in Sweden is strong and loyal; at the same time, they welcome new brands for experiencing variations.
- There are opportunities with regard to the pricing and financial gain in Sweden that can help the organisation in ensuring marketing opportunities.
Conclusion
In an evaluation of five different markets, it has been identified that three of them do not offer sufficient factors that can ensure the entrance of PurePremium in the newly identified market and the rejected markets. Therefore, it includes India, China, and the Netherlands. On the other hand, the US and Sweden have been indentured to be the selected markets for expanding the exporting market of PurePremium based on the aforementioned evaluation.
New Export Markets Sales Volume Projections by Wines in three price ranges of $110, $150, $180
| Market | 2021 | 2021 | 2023 | 2024 | 2025 |
| Market USA | |||||
| $110 | $ 100,000 | $ 150,000 | $ 200,000 | $ 250,000 | $ 300,000 |
| $150 | $ 150,000 | $ 170,000 | $ 200,000 | $ 230,000 | $ 250,000 |
| $180 | $ 90,000 | $ 100,000 | $ 110,000 | $ 150,000 | $ 180,000 |
| Total | $ 340,000 | $ 420,000 | $ 510,000 | $ 630,000 | $ 730,000 |
| Market Sweden | |||||
| $110 | $ 90,000 | $ 100,000 | $ 110,000 | $ 120,000 | $ 150,000 |
| $150 | $ 80,000 | $ 90,000 | $ 100,000 | $ 120,000 | $ 130,000 |
| $180 | $ 100,000 | $ 150,000 | $ 200,000 | $ 250,000 | $ 300,000 |
| Total | $ 270,000 | $ 340,000 | $440,000 | $ 490,000 | $ 580,000 |
| GRAND TOTAL | $ 610,000 | $ 860,000 | $ 950,000 | $ 1,120,000 | $ 1,310,000 |
References
(Author), M., 2020. GRIN – Entering The Wine Industry In China. [online] Grin.com. Available at: <https://www.grin.com/document/187541> [Accessed 10 July 2020].
Euromonitor.com. 2020. Wine In The Netherlands | Market Research Report | Euromonitor. [online] Available at: <https://www.euromonitor.com/wine-in-the-netherlands/report> [Accessed 10 July 2020].
Galati, A., Tinervia, S., Tulone, A., Crescimanno, M. and Rizzo, G., 2018. Label style and color contribution to explain market price difference in Italian red wines sold in the Chinese wine market. Journal of international food & agribusiness marketing, 30(2), pp.175-190.
Indianwineacademy.com. 2020. [online] Available at: <https://www.indianwineacademy.com/Comprehensive_Study_IWM_Reference_Section.pdf> [Accessed 10 July 2020].
Soosay, C., Nunes, B., Bennett, D.J., Sohal, A., Jabar, J. and Winroth, M., 2016. Strategies for sustaining manufacturing competitiveness: comparative case studies in Australia and Sweden. Journal of Manufacturing Technology Management, 27(1), pp.6-37.
Waldrop, M.E., McCluskey, J.J. and Mittelhammer, R.C., 2017. Products with multiple certifications: insights from the US wine market. European Review of Agricultural Economics, 44(4), pp.658-682.
