▪ Financial Overview
▪ Proposed Strategy
▪ Risks and Contingencies
MontGras, a medium-size Chilean winery, has to formulate an export strategy. It has to decide whether to emphasize the U.S. or U.K. markets, which also offer different positioning and pricing proposals. It has twice failed to penetrate the U.S. market, because distributor relationships fell through, and is deciding between two new potential partners. In the United Kingdom, it is offered participation in a supermarket promotion that will boost volumes but at the expense of price maintenance.
Current market situation
▪ Wine market is shifting from old-world wine to new-world wine ▪ New world wine exports is expected growth at 18.3% per year ▪ Increasing consumption per capita consumption in UK and US ▪ Level of consumption of wine below $5 is on the decline World wine business is uncounted $150 billion in consumer value and $60 Billion in wholesale value. Chile 10th wine producer country due to climate enjoys more regular harvest then the Old World countries, but its wine is perceived as the low quality, because country of origin determines quality. In the New World wine industry, main player is Californian E&J Callo, with the 1.5 % world wide market share. Chile as a low developed countries group member is an agrarian country tries to penetrate markets in developed countries where there is a shift to service from the industry.
The export for Chile was survival not only because of overproduction in the country of the origin, I think one more aspect is population characteristics-as main major dimension in economic forces, their income and purchasing power creates market more attractive, as we know Asia, Europe are big emerging markets. (BEM)
We see from the case government’s role is promotional. Montgras and in general, medium †sized and small companies needs assistance in international marketing then the big companies, because they have more resources. Government export promotion programs are design to deal major barriers: • lack of motivation
• lack of info
• Operational based resource limit.
Export Marketing planning requires a knowledge of 1)the structure of competition and its types and 2)the action companies recognizable international marketing.
|Strengths |Weaknesses | |Largest winery boutique in Chile |-Exports to US dropped about 130,000 to 8,394 cases over 4| |Differentiation: Focus on export quality wines |years | |Estimated 117,125 sales to United Kingdom in 2001 |-Two previous unsuccessful partnerships in the US | | | | |Opportunities |Threats | |-Promotions in UK supermarket chains to increase sales |-Intensifying global competition due to overproduction. | |volume |-Chilean wines perceived as low-price alternative due to | |-Joint venture between two US importers to penetrate US |grape oversupply. | |market |-Deals with UK supermarkets could threaten distributor’s | |-New marketing channels: “Wines of Chile” campaign |long-run position | | |-40 more Chilean wineries exporting to the US since 1995. |
Export to UK and US
Offer two types of products
Mid-Low End: MontGras Reserva
High End: DeGras