There are several reasons as to why the United Kingdom is an excellent market for Yellow Tail wine to venture. For instance, there are various trade routes that link the UK market which makes it viable for Yellow Tail to establish its businesses and curve a market share in the wine industry. More so, United Kingdom has a higher per capita income which implies that people have enough money to spend on imported and luxurious products. Also, the majority of key players in the wine industry in United Kingdom are from other nations such as USA, Australia and Italy (Wilson & Phillips, 2016). This means that there is opportunity for non-domestic players to thrive in the wine market in the UK. The United Kingdom market has evolved and the wine culture continues to grow making the region a great place for Yellow Tail to enter the market. However, there is relatively low per capita consumption of wine that can be overlooked as a result of wine sales being higher than the average population consumption (Ritchie & Valentin, 2011). Further, it is estimated that the European wine market is estimated at 26 billion dollars distributed though the retail industry.
Various market condition in the United Kingdom makes it viable for Yellow Tail to establish its business in the market. Among the conditions that support the selection of the market such as political environment, economic environment, social, technological, legal as well as financial aspects ("[ yellow tail ] Facts - Deutsch Family Wine & Spirits", 2018). The political environment supports wine retail industry in the United Kingdom. The political ground has made it possible to trade by easing trade barriers which can allow Yellow Tail to do well. Moreover, Britain is a powerful economy that will guarantee support for the wine industry. Besides, based on the perception that links wine with luxurious products, it makes the market selection favorable. Living healthy is a concern among social spheres and people are encouraged to take alternatives to alcohol and wine happens to be an alternative product (Holden, Hawkins & McCambridge, 2012). Direct exporting is the best strategy for the business to enter the United Kingdom market. Yellow Tail can export the wine directly to the market and use existing distributors and retailers to push the products through attractive commissions.
The company’s competitive advantage is based on a concept developed in a book by Chan Kim “Blue Ocean Strategy”. This strategy that the company adopted considered various challenges that hindered the company entrance to the US market. As a result, the company differentiated itself from other competitors. The differentiation strategy was centered on alternatives to wine as well as the market that did not consume wine to enter the market. The company eliminated the traditional rules for competing in the industry. As a result, factors that intimidated customers such as aging, tanning and complexity were replaced with different qualities of wine ("Creating Value on the Vine: A [yellow tail] Case Study", 2018). The company reduced the choice by limiting consumer choice to white and red wine. Yellow Tail can also establish itself in the UK market as a friendly wine compared to other companies. Yellow Tail can increase its competitive advantage by shifting pricing strategy through focusing on user experience which is centered in ease of selection, adventure and sense of fun. The company’s competitive advantage will play a significant role in shifting the perception of wine from a luxury product to a social drink that is accepted by everyone.
The packaging strategy used by the company suggested that the company was going to adopt a premium pricing strategy which would mean that the company would sell its product higher than its competitors. However, the company adopted a different pricing strategy by making their products cheaper. The company recognized that most company’s sold their products at an average price of 5.99 dollars. Based on this analysis and Australian dollar trading at 0.57 AUS, it implied that that the market for the company was much more accessible and bigger for the company to supply ("Bulk order: How Australia’s Casella Family Brands cracked the US wine market", 2018). Yellow Tail should aim at using this pricing strategy in the United Kingdom market if it is looking to enter the market smoothly and out do the competition. By pricing the wine products cheaper than others in the market, the company is likely to increase its sales in the United Kingdom. This pricing strategy is crucial for the business to immediately start making profits in the first year of operations.
The company’s promotional strategy is pegged on the concept of making wine a product that is consumed by everybody through encouraging demand amongst consumers (Thach & Olsen, 2004). As a result, the company managed to increase the demand for the product which thereby reduced marketing costs. The company used a differentiation marketing strategy which is also significant in establishing its presence in the UK market. The company cuts huge costs associated to marketing by promoting the business using the retail shop employees to promote the wine which will also work in the UK Market. Besides, the company is known to organize wine tasting events for their customers to create awareness ("Head to tail via the marketing mix Marketing-Part 5", 2018). This promotion strategy can also be replicated in the UK market as a strategy to enter and dominate the market. Also, the company has an innovative packaging strategy that is essential for promotion. The simplicity in packaging by using similar bottles in packaging both red and white wine helps to promote the company and can be used in promoting the wines in the UK market.
The distribution strategy that is adopted by the company and significant to enter the United Kingdom market is centered on good relationships with the distributors. Good relationship with distributors has encouraged the company to perform relatively well amidst all laws that govern different market segments. The company has established over 20 international supplies with whom they have good relationship that makes it possible to distribute their products to different markets. The company takes advantage of the distribution through targeting global distribution management which is linked to order fulfilment capabilities. The distribution software that the company uses communicates back-end supply to front-end sales which is significant in ensuring that the company’s product is visible not only in shelves but also in bars, pubs, clubs and hotels (Varsei & Polyakovskiy, 2017). This distribution software can be replicated in the UK Market in order to ensure that the company understands various aspects of the business to be able to maximize the areas with more demand while improving distribution in the areas with less awareness and relatively low volume of sales. Therefore, Yellow Tail should mimic the distribution strategy to realize better results in the UK market.
Casella wines than owns the Yellow Tail brand can establish itself in the UK market by following the same strategies that it used to establish its dominance and gain competitive advantage in the US wine market. The company is forced to promote its products as a social drink as a result of accessibility gained by its distribution strategy. More so, the company cemented its position in the market by introducing new experience in the wine industry by converting non-customers to customers ("Supply chain solution for Casella - Inside FMCG", 2018). Through this strategy, the company can curve a significant market share by targeting non-consumers of wine in the UK market. Besides, instead of the company focusing on fighting the competition, it changed the rules and aligned the company’s objective with innovation, satisfaction, pricing strategy among other associated strategies to position itself in the market and compete favorably. This strategy can be equally replicated in the UK market as an entry strategy to compete with existing players in the industry. The strategies that the company used in the United States helped the company to create a demand for their products which can also be replicated in the UK market.
[ yellow tail ] Facts - Deutsch Family Wine & Spirits. (2018). Retrieved from https://www.deutschfamily.com/the-deutsch-family-our-brands/yellowtail-facts/?age-verified=91e972362c
Bulk order: How Australia’s Casella Family Brands cracked the US wine market | Campden FB. (2018). Retrieved from https://www.campdenfb.com/article/bulk-order-how-australia-s-casella-family-brands-cracked-us-wine-market
Creating Value on the Vine: A [yellow tail] Case Study. (2018). Retrieved from https://www.processexcellencenetwork.com/innovation/articles/creating-value-on-the-vine-a-yellow-tail-case-stud
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Holden, C., Hawkins, B., & McCambridge, J. (2012) Cleavages and co-operation in the UK alcohol industry: a qualitative study. BMC public health, 12(1), 483.
Ritchie, C., & Valentin, D. (2011) A comparison of wine drinking behaviours in young adults in the UK and France. In 6th Academy of Wine Business Research International Conference, Bordeaux, France.
Supply chain solution for Casella - Inside FMCG. (2018). Retrieved from https://insidefmcg.com.au/2015/07/14/supply-chain-solution-for-casella/
Thach, E. C., & Olsen, J. E. (2004). The search for new wine consumers: Marketing focus on consumer lifestyle or lifecycle. International Journal of Wine Marketing, 16(3), 44-57.
Varsei, M., & Polyakovskiy, S. (2017) Sustainable supply chain network design: A case of the wine industry in Australia. Omega, 66, 236-247.
Wilson, J. & Phillips, S.S. (2016) UK Wine Market Report 2016 Retrieved from: https://gain.fas.usda.gov/Recent%20GAIN%20Publications/UK%20Wine%20Market%20Report%202016_London_United%20Kingdom_2-19-2016.pdf
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