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GEEN0041 Strategy And Management

tag 0 Download 4 Pages / 808 Words tag 21-10-2020
  • Course Code: GEEN0041
  • University: University Of Strathclyde
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  • Country: United Kingdom

Questions:-

Mini Case 8

Differentiation in the wine industry: an Australian success story

Successful differentiation needs to be based on what customers value.

By 2001 the traditional dominance of French wines in the UK had ended, with sales of Australian wine outstripping them for the first time. By 2000, Australian wines accounted for 19.5 per cent of UK wine sales in terms of value (up 25 per cent over 1999), with French wines showing a steady decline. And for wines over £5.00, Australian wine had already overtaken French wines. In the prestigious 2000 wine sampling contest in London, the Australians had won awards for three-quarters of the wines entered.

However, many wine experts still regarded Australian wines as inferior to French wines. For example, in some top London restaurants such as Le Gavroche, Australian wines were not served because they believed that customers preferred the quality of French wine over 'something more than a chemist's blend' (FT, 11 February 2001). Whilst French wine still tended to be favoured for eating out, Australian wine was favoured by take-home drinkers -and 84 per cent of all wine sold in the UK was drunk at home.

The success of Australian wines with retailers was put down to several factors. The quality was consistent, compared with French wines that could differ by year and location. Also, whilst the French had always highlighted the importance of the local area of origin of the wine within France, Australia had, in effect, 'branded' the country as a wine region and then concentrated on the variety of grape - a Shiraz or a Chardonnay, for example. This avoided the

confusing details of the location of vineyards and the names of chateaux that many customers found difficult about French wines. Terry Davies, managing director of Beringer Blass, explained: 'you can pronounce the name on the bottle on our wines', the inference being that people often could not on a bottle of French wine.

Historically the European wine makers had also focused on their home markets. This was particularly the case in Italy, but French pro­ducers also tended to assume that consumers overseas would buy wine in much the same way as in France. This was changing, how­ever. French wine makers were becoming less insular. Caroline Gilby, a consultant to the industry, explained that one well-known Chablis producer had spent time working in Chile, the US and Australia before taking up his present job. 'Wine makers interested in quality will have travelled. That's quite a change and it has started to happen only in the last five years.' Mike Paul of Destination Wine also believed that 'there are signs that there could be a backlash from the old world as France and Italy get their act together' (FT, 3/4 March 2001).

Questions

  1. What other reasons might account for the suc­cess of Australian wines?
  2. What would you advise French wine producers to do to counter the Australian success?
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