Pestle Analysis: Brazil Wine Industry

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  • Topic: Wine, Penfolds Grange, Australian wine
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  • Published : July 11, 2011
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BRAZIL PESTLE ANALYSIS

MANAGEMENT 100 – ASSESSMENT 1

1. INTRODUCTION

The purpose of this report is to provide Penfolds Winery all the information needed by the company to expand its business interests into Brazilian wine market. The data will be gathered through extensive research of the Brazilian wine market and an internal analysis of Penfolds winery to discover the what the company has and what it needs to have in order for the Brazilian enterprise to be successful. The recommendation will be based on a SWOT analysis of the company and a PESTL analysis of Brazil, which will provide enough information for the company to begin its expansion into the Brazilian market. The end result is the establishment of a Penfolds vineyard in Brazil to exploit the tropical soil and choice grapes grown there and combine them with grapes from Australian grapes using Penfolds winemaking philosophies.

Penfolds is one of Australia’s oldest wineries and was founded by Dr. Christopher Rawson Penfold in 1844. The Mackgill estate was purchased by the Penfold family and it comprised of “500 acres of the choicest land” (http://www.penfolds.com.au).

In the beginning, Penfold produced fortified wines for his medical patients as he was a firm believer in the “medical benefits of wine” (http://www.penfolds.com.au). The years progressed and Penfolds winery expanded (mostly due to the management skills of his wife, Mary Penfold). By 1870, Penfolds winery produced a variety of wines for general consumption.

Today, Penfolds Grange product is internationally renowned and Robert Parker, the world’s most influential wine critic stated that Grange is a “leading candidate for the richest, most concentrated dry table wine on earth” (Self published newsletter, The Wine Advocate) The ingredients for a quality Penfolds wine would be the choicest grapes from several vineyards combined to produce a beautiful wine that is a collector’s item in the international wine market. The skills needed for this company include Penfolds winemaking philosophy - “which has had a profound effect on the Australian wine industry” (http://www.penfolds.com.au). 2. Political Environment

1. Government Stability

Brazil composed of twenty-six States, one federal district (which contains the capital city, Brasília) and municipalities. The form of government is that of a federation republic, with a presidential system. The current president of Brazil is Dilma Rousseff. The president is both head of state and head of government of the Union and is elected for a four-year term, with the possibility of re-election for a second successive term. (https://www.cia.gov/library/publications/the-world-factbook/geos/br.html)

2. Government and Contribution
The government’s contribution in promoting stability is to stick to the fundamentals of economic policy, based on the three pillared policy of inflation control, a floating exchange rate, and keeping a budgetary surplus Brazil has undergone a significant move towards modernization and a reduced role for the government in the economy.

As Brazil's domestic economy has grown and diversified, the country has become increasingly involved in international economic and trade policy discussions. In contrast, in consideration of the state and federal officials, a foreign firm can own the company 100%. The absence of government share of corporate power is an incentive to management.

3. Analysis
Due to the growth in Brazil’s domestic economy, Brazil has increased its involvement in international economic and trade discussions.

“Over the last three years, Brazil has imported approximately 6.5 million cases (12 bottles of 750ml each) of wines per annum, which represents US$196 million FOB of annual imports on average.” (http://www.austrade.gov.au/default.aspx?ArticleID=8457) Australia represents one percent of the total wine imports into Brazil. Due to this very reason it...
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