Wine Industry

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Analyses
Definition of the problem

Laurel Green Wine group is a Californian wine company positioned as tone of the four main USA producers. Nowadays, Laurel Green Wine wants to extend their green wine product to other markets. As the Asian and European markets are already dominated by French or Italian origin wines, Fontys Venlo team recommended entering the Canadian market. This market choice was taken due to the fact that most of the Canadian territory and weather is not as suitable for harvesting grapes as in other countries, like for example the USA; therefore there is a need for importing wine from other regions. Furthermore, Canadian operations have a lower productivity level compared to that of their much larger Californian or Australian rivals, forcing Canadian wineries to produce in small quantities of top quality premium wines, leaving gaps in the markets. PESTEL

Political| Tax policy Labour lawEnvironmental lawTrade restrictionsTariffsPolitical stabilityGoods and services Health and education Infrastructure of nation| Econonomical| Economic growthInterest rate (affects a firm´s cost of capital-business grows and expands)Exchange rate (affects the cost of exporting goods and supply and price of imported goods)Inflation rate| Social| Cultural aspects (significant increase in red wine consumption)Health consciousness (consumption of one glass per day of wine is good for heart condition)Population growth rate (wine consumption in Canada is expected to growth 19% by 2014)Age distribution Career attitudes (vintners have being trained in the leading winemaking, education centers in Europe and California)Safety – hazard analysis critical control (food safety program for Canadian wine sector)Sustainability (this factor ensure that products are produce in a fashion that minimizes environmental impact and this leads to growing area for R&D, technology and collaboration)| Technological| Researched and development activity (the new technology in terms of booth equipment and process is continually being adapted) AutomationRate of technological change (change to screw caps instead of sealed with cork event for premium wines)Cost, quality and lead to innovation (some wines are being bottled in soft inert plastic bottles or in tetra-pack, restricted to lower price)| Ecological| Weather (the climate limitations-33% domestic production)Climate (climate change that makes changes in the raw materials flavor)| Law| FTA - Free Trade Agreement (Bilateral import-export of products)Taxes for alcoholic beverages (produce domestically at the points of shipment to provincial liquor board, where houses or industry-owned stores)Regulation (the government is responsible for regulating and controlling the sale of liquor with their respective jurisdictions)|

Porter 5 forces
1 Rivalry among competing firms in the wine industry

Criteria:
* Industry’s competitive structure: There is a fragmented structure where no single company is able to influence the direction of the overall industry, yet a few competitors belonging to “high quality wine regions” have been able to consolidate the industry. [+/-] * Number of firms present in the market: Large number of firms. [+] * Level of product differentiation: Mainly when it comes to quality. [+/-] * Industry’s demand: A growing demand could be assumed, due to the fact that the wine market is considered a “growing business” in comparison to other types of liquor like spirits, beer or champagne (Laurel Wine Group case study). [-] * Exit barriers: The costs of leaving the market could be considered as medium, due to the fact that some of the machinery used is specialized, but other is not. As a result, some of the assets could be sold to other industries in case of leaving the market. [+/-] * Possibility of brand loyalty: Due to the nature of the product, if a consumer is satisfied with the quality, then there is a there is a possibility for him/her of...
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