MRKT20057 Global Business Marketing

Introduction

In this report, the focus is on the strategic analysis of Yellow Tail Wine in the United Kingdom. The external environment of the United Kingdom can impact on the marketing of Yellow Tail. In this report, external environment analysis focusing mainly on political, environmental, socio-cultural and technological factors has been discussed. Yellow Tail Wine is an Australia based wine manufacturer and Marketing Manager of this company wants to market the products in the United Kingdom. Therefore, the highlight of the report is to analyse the external environment factors in the marketing of wine in the United Kingdom.

Background information of the product

Yellow Tail is a family-owned winery and it is located in the small country town of Yenda. Now, Yellow Tail Wine is made by the sixth generation of the Casella family. In the year 1957, the founders of Yellow Tail Filippo and Maria Casella came to Australia Sicily. The founders of Yellow Tail had winemaking philosophy at its heart and they brought family and friends together on any occasion (Yellowtailwine.com, 2018). Yellow Tail has its vineyards in the Riverina region in New South Wales. Yellow Tail Wine has talented winemaking team and they put expertise to deliver the taste and quality to the customers. Casella family uses the Italian heritage and modern Australia attitude to create the wine which can appeal to everyone. Yellow Tail has its own specific label and colour of the wine and based on the varieties of grapes, Yellow Tail provides different types of wines, namely Riesling, Moscato, Semillon, Pinot Gris, Chardonnay, Merlot, Pinot and Grenache (Yellowtailwine.com, 2018).

Background information of United Kingdom

According to the report published by WSTA (Wine and Spirit Trade Association), wine is the most popular alcoholic drink in the UK for the adults and the UK population think that wine is taxed high in the UK. Almost 60% of the alcoholics choose a wine to be their favourite and there are almost 30 million of the regular wine consumers (Nibusinessinfo.co.uk, 2018). The UK is in Europe and wine sells high in the winter-based country like the UK. In the UK, vineyards are growing as it is one of the diverse and influential in the world. The UK is a good choice for doing business as the UK is ranked 7^th in ‘ease of doing business’ and it is ranked 8^th in the index of economic freedom (Jawad & Naz, 2018). The United Kingdom provides the advantage of lower Corporate Tax and economic growth is modest.

Political factors of the UK

The UK is the epicentre of modern parliamentary democracy and the UK's political condition has been tumult after the 2016 referendum on leaving European Union. The UK is the military and economic power and the head of the state is Queen Elizabeth II. At present the Prime Minister of the UK is Theresa May and she supports the Brexit. The World Bank released the data that the UK scored maximum 1.04 and minimum 0.12 in global political stability index and it proves the fact that the UK provides average political stability (Valeriani & Vaccari, 2016). The recent incident of Brexit created chaos in the political condition and the government needs to change some basic rules of doing the business. The UK falls in the infrastructure investment for doing the business after the Brexit. In the UK, diverted profit tax (DPT) applies 25% and in the UK, a number of payments of taxes per year are 8.0 (Montgomerie & Büdenbender, 2017). In the UK, the company's total share of taxes is 30%. In the UK, VAT (Value added tax) is applicable and the standard rate of the VAT is 20%. In the UK, a company has to follow the Patent Act 1977, the Trademark Act of 1994 and the Design Act 1949 (Gilinsky et al., 2016). Yellow Tail organisation has to follow the copyright in the UK and the 3 key elements of the business have to be followed which are acceptance, consideration and intention of making a contract. In the UK, Government developed Tier 1 immigration so that the entrepreneurs may come across the globe (Howley & Van Westering, 2017). In the UK, Fortified wine is taxed as £2.89 per 75cl and cider is taxed as £0.42 per 27.5cl (Nibusinessinfo.co.uk, 2018). Yellow Tail can market the products in the UK as the government provides a chance to expand the business in the UK.    

Economic factors of the UK

GDP of the UK touched the figure of $2.936 trillion at the beginning of the 2018 and the GDP rank of the country is 5^th (Guerrero et al. 2018). GDP growth of the country was 0.4% during the second quarter of 2018 and the growth of the GDP has been slowed after the Brexit. GDP per capita income of the UK is $ 44,177 and GDP per capita rank of the country is 22^nd (Jawad & Naz, 2018). An inflation rate of the country UK is 2.4% and the average gross salary of the people in the UK is $513 on a weekly basis. Lower GDP growth of the UK leads to a critical condition for the industries. Foreign investment in the UK has been lowered by almost 80% and The UK received around $20 billion.

Foreign Direct Investment	2015	2016	2017
FDI inward flow (million in $)	32,720	196,130	15,097
FDI stock (million in $)	1,407,998	1,475,560	1,563,890
FDI inwards	6.8	57.9	n/a
FDI stock (% of GDP)	49.2	45.5	n/a

Table 1: FDI in the UK

(Source: Hall et al., 2017)

In the UK, the wine industry is worthy of £17.3bn in economic activity and it supports the job of the 270,000 employees. Wine industry contributes the £8.7 billion to the public finances as well (Anderson & Nelgen 2017).

Socio-cultural factors of the UK

The current population of the UK is 65 million and the people of the UK mostly speak in the English language. Australian people also speak in English language and major religion is Christianity. Yellow Tail will not face issue regarding the religion and language barrier when the management of Yellow Tail will expand the market in the UK. According to Hofstede model, power distance equation of both Australia and the UK is the same as the people of both countries think that inequality of power still persists. In case of the individualism both Australians and the English score high as they both are in the society where the degree of interdependence maintains among the members. Life expectancy rate in the UK is 78 for the men and 82 for the women; therefore, the people can consume the products till the late of their life (Bailey et al., 2015). As the consumers, wine consumption is the highest in the UK and the people spend money on consuming the wine in the pub, bars and in open stores. In the UK, wine selling has been increased by 11% as the English people like to purchase the wines in high quantity. The preference of the UK people is changing as the people liked to purchase whiskey in previous time; however, the people are buying wine more. Most of the frequent purchasers of the wine in the UK are the baby-boomers along with millennials. As stated by Atkins & Bowler (2016), in the UK, the recent trend of consuming New World wine is becoming a fashion in the UK. Yellow Tail produces the New World wine and there is a huge potential to sell the products in the UK.

Technological factors of the UK

The UK is a developed country and the scientific development in the UK is exceptional. Technological advancement in the UK has a long history and it produces the significant development in many fields. Wine industry follows the technological advancement as this process of wine production starts with sorting the grapes in vines and it ends with bottling of the wines in the firms (Rai & Kumar 2015). Various types of steel winery equipment are necessary for the wine firm as bucket shape long distilleries provide scope to produce wine. In the wine firm, fruition science is used to measure the development of the grapes and use the grapes for winemaking purposes. In the UK, technologies are used in the vineyards and in the manufacturing plants of wine. Yellow Tail uses technologies and Yellow Tail can use the social media and online technologies to attract the customers in the UK. In the UK, almost 85% adult population use the internet through mobile and desktop (Humphreys & Carpenter, 2018). It will be easier for the company to attract the customers and the company can use supply chain technologies to track the suppliers and distributors. In the UK, wine manufacturers use wine tasting software using the barcodes (Lu et al., 2018). Yellow Tail can use the power of social media technologies to improve the taste of wine by asking the real-time feedback from the consumers. 

Conclusions

It has been noted that Yellow Tail can market the wine products in the UK as the UK is strong in politics and laws. However, in recent time, after the issue of Brexit, the UK has been facing the geopolitical issue from the European Union. GDP growth is slow in the UK; however, the disposable income and per-capita income of the UK people is high. Therefore, the chance of selling wine is high. The UK adults like to purchase wine as 60% of the UK adults choose a wine from other alcoholic drinks. Technological superiority can speed up the wine manufacturing technique and Yellow Tail can use the online platform to market the products in the UK. 

Reference List

Anderson, K., & Nelgen, S. (2017). Global wine markets, 1961 to 2009: a statistical compendium (p. 468). University of Adelaide Press.

Atkins, P., & Bowler, I. (2016). Food in society: economy, culture, geography. Abingdon: Routledge.

Bailey, L., Griffin, C., & Shankar, A. (2015). “Not a good look”: impossible dilemmas for young women negotiating the culture of intoxication in the United Kingdom. Substance use & misuse, 50(6), 747-758.

Gilinsky Jr, A., Newton, S. K., & Vega, R. F. (2016). Sustainability in the global wine industry: concepts and cases. Agriculture and agricultural science procedia, 8, 37-49.

Guerrero, M., Cunningham, J. A., & Urbano, D. (2018). The economic impact of entrepreneurial universities' activities: An exploratory study of the United Kingdom. Research Policy, 44(3), 748-764.

Hall, C. M., Sharples, L., Cambourne, B., & Macionis, N. (2017). Wine tourism around the world. Abingdon: Routledge.

Howley, M. & Van Westering, J., 2017. Wine tourism in the United Kingdom. Wine tourism around the world, 175-189.

Humphreys, A., & Carpenter, G. S. (2018). Status Games: Market Driving through Social Influence in the US Wine Industry. Journal of Marketing, 3(3), 34-56.

Jawad, M., & Naz, M. (2018). Pre and post effects of Brexit polling on United Kingdom economy: an econometric analysis of transactional change. Quality & Quantity, 1-21.

Lu, Y., Roskilly, A. P., & Ma, C. (2017). A techno-economic case study using heat driven absorption refrigeration technology in the UK industry. Energy Procedia, 123, 173-179.

Montgomerie, J., & Büdenbender, M. (2017). Round the houses: Homeownership and failures of asset-based welfare in the United Kingdom. New Political Economy, 20(3), 386-405.

Morrison, A., & Rabellotti, R. (2017). Gradual catch up and enduring leadership in the global wine industry. Research Policy, 46(2), 417-430.

Peng, M. W. (2016). Global business. London: Cengage Learning.

Rai, A. K., & Kumar, A. (2015). Continuous measurement of suspended sediment concentration: Technological advancement and future outlook. Measurement, 76, 209-227.

UK wine industry overview. (2018). Retrieved from https://www.nibusinessinfo.co.uk/content/uk-wine-industry-overview

Valeriani, A., & Vaccari, C. (2016). Accidental exposure to politics on social media as online participation equalizer in Germany, Italy, and the United Kingdom. New Media & Society, 18(9), 1857-1874.

Yellow Tail wines - Great Australian wine. (2018). Retrieved from https://www.yellowtailwine.com/our-story/