PBC Project HvA

Topics: Wine, Oenology, Brand Pages: 27 (7693 words) Published: February 25, 2014

Table of Contents

1. Executive Summary
Chateau Margaux is one of the highest quality wine producers on the planet with a retail price of above a 100$. In total there are three harvests: The 1st one, which is the most qualitative wine, the 2nd one, which usually also goes through as a top notch Margaux and the 3rd harvest, which does not get sold as a Margaux because the quality usually has detoriated. In this case this is not the situation as the quality of the 3rd batch can be compared to a 2nd harvest wine and thus has the potential abillity to still be sold to consumers. In general terms, wine consumption in France has been declining due to the shift in consumer consumption and the replacement of consumption of wine by fruit juicez and frizz drinks and the emphasis of the French government that alcohol is a large threat. The US has a rapidly growing wine market and is expected a 16% growth up until 2016. Moreover, 13% of all worldwide consumed wine is consumed by Americans, this is because 45% of all American adults drink wine. Evidence indicates that the Eastern part of America are more interested in imported wine rather than domestic wines and this gave perspective to start exports to the state of New York to begin with. As we are expanding to the U.S. we will have to go through a 3-tier system. The decision is made to focus on two groups: the baby boomers and the millinialists, this is underdivided in the image seekers and enthusiast segments. This can be divided into restaurant consumers and retail consumer and Margaux in this case will choose for selling to retailers. This is also because 60% of total wine consumption in the US takes place at home and 20% in restaurants, bars and lounges. Moreover, retailers will only earn a 30% margin whereas restaurants earn a 60% margin. Chateau Margaux has three direct competitors: E&J Gallo Winery, The wine group and Constellation. The main one of these three is Constellation as they also are established in New York and is the largest premium wine producer in the world. The introduction of the third wine should allow consumers to understand the magic of Château Margaux and therefore will be named “Esprit du Château Margaux.” Where Esprit refers to spirit. Despite the high prices; the third wine should let the consumers understand what the magic of Château Margaux is all about. Therefore the name of the new wine will be “Esprit du Château Margaux”. Esprit means spirit and this brand name will inform customers about all the values of the product and of Château Margaux For promotional purposes a special tasting week is organized and an attempt is made to get into Parker’s newsletter which in turn leads to increasing brand awareness. The estimated average of a 3rd wine production is 25% of the total production. This is dependent on the weather circumstances. Eventually, a goal is set to reach a 6150$ annual net profit.

2. Introduction
Chateau Margaux produces one of the highest quality wines in the world. These high quality types of wine are sold with prices above a 100$ in retail stores. After launching two successful wine brands, Margaux is considering to launch the third one. Unfortunately, Margaux is unable to maintain the same quality even though it is a premium brand. Factors such as turbulent weather circumstances are affecting the harvest. The expectations are different as well in comparison to the first two wines. The third wine should be repositioned before it is going to be launched and the retail price should be lowered without negatively affecting the brand value.

3. External Analysis

3.1 Market analysis
World's largest wine consumers
Percentage of wine consumers
France & US
Italy & China
UK & Russia
Spain & Argentina
Source: Morgan Stanley
Wine was considered as a part of people’s life on a daily basis. However, wine consumption in France is declining due to the shift in consumer...
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