Failure of a Wine Closure Innovation:

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  • Topic: Marketing, Wine, Crossing the Chasm
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The Failure of a Wine Closure Innovation: A Strategic Marketing Analysis Wayne J. Mortensen, Faculty of Business and Law, Victoria University of Technology, PO Box14428, Melbourne City MC, Victoria, 8001, Australia, +61 3 9688 4526, Wayne.Mortensen@vu.edu.au Brian K. Marks, Faculty of Business and Law, Victoria University of Technology, PO Box14428, Melbourne City MC, Victoria, 8001, Australia, +61 3 9688 4101, Brian.Marks@vu.edu.au

Abstract

In the wine closure industry cork remains the dominant bottle sealing technology with a market share of around 90 per cent. Our research analyses the screw cap wine seal’s development and original introduction within Australia in the 1970s. It identifies some fundamental reasons for failings in the initial commercial launch. The Australian wine industry played a leading role in developing a French prototype screw cap wine seal. Local piloting and testing occurred followed by a market launch. Unfortunately for screw cap change agents, the new closure was largely seen as a failure in its initial introduction. The screw cap was withdrawn from many of the target market segments that it was launched within. Rogers' (1995) innovation diffusion model assists in identifying several underlying factors responsible for the customer’s rejection of the new screw cap seal. In particular, these were the failure to effectively demonstrate the relative advantage of the screw cap seal to consumers and to address the complexity and incompatibility of the seal with established user traditions. The industry was therefore unable to achieve a ‘critical mass’ of adoption other than in the budget wine or food service segments. The additional application of Moore's (2001) adaptation of the technology adoption life cycle model reveals that the failure of the screw cap was also attributable to a lack of an effective industry marketing strategy that would overcome this identifiable consumer resistance. In particular, it lacked a strategy to manage the transition dynamics between the early and mainstream markets. By analysing the nature of the innovation and uncovering the adoption hurdles, we can identify reasons for the closure’s failure in terms of penetration across market segments. We conclude by outlining why the strategic marketing management adopted by the screw cap manufacturer and winemakers did not address the issues inherent in introducing this new product.

Introduction The cork manufacturing industry is a significant industry. It is estimated that the annual production of cork wine stoppers is nearly 13 billion per year and generates approximately one billion Eurodollars for cork manufacturers each year. Portugal and Spain control over 80 per cent of the world’s production of cork, with Amorim being the largest producer at about

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three billion corks per year. Wine corks are the most profitable of the numerous products derived from the cork oak tree (Natural Cork Quality Council, 2002). In contrast, the screw cap wine seal has a very small percentage of the Australian wine closure market, which prior to 2000 was largely in catering (such as airlines) and lower priced wines (Leahy, 2000). While cork is a natural product, it does have some inherent deficiencies. Cork closures exhibit two major drawbacks; oxygen leakage and cork taint. Both affect the drinking quality of the wine. In the 1970’s Australian winemakers were concerned with the perceived increasing incidence of cork taint. The amount of wine being adversely affected by taint is a contentious issue: According to the cork manufacturers, the figure is 1.5-1.7%; Stephanie Toole of the Mount Horrocks winery in Clare Valley believes 5% of her Riesling is severely tainted and a further 10% slightly spoiled. Professor Christian Butzke of the Department of Enology and Viticulture at U.C.Davis in California estimates that five percent of US wine is tainted with TCA from natural cork. Steve Pannell of the big Australian wine company BRL...
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