Crafting Winning Strategies in a Mature Market : The Us Wine Industry in 2001 Case
Autor: kusumo18 • October 3, 2016 • Case Study • 407 Words (2 Pages) • 2,156 Views
Crafting Winning Strategies in a Mature Market : The US Wine Industry in 2001 case
- How attractive is this industry (based on Porter 5 forces analysis)
- Threat of new entrants : HIGH
New entrants have low barriers to entry, and also easy entrance for new wineries to the wine market.
- Bargaining power of buyers : HIGH
More wineries are entering the market because of low-priced grapes.
Production surpass consumption by 15-20%
A lot of consolidation between retailer and distributor
Switching cost is low
- Bargaining power of suppliers : LOW
Wine producers that having their own vineyards try to control from the operation from production line into distribution.
Inexpensive options for wine machinery
Easy availability of land
Suppliers > consumers
Switching cost is low
- Threat of substitutes : HIGH
Approximately there are only 10% who categorized as wine regular customer.
46% preferred beer or spirits.
35% consumed alcohol beverage but not wine
low switching cost
- Competitive Rivalry : HIGH
Number of US wineries increased more than 400%
Downward pressure on price and margins
Large companies spent around 40% as their marketing and distribution plan
Over-supply of wine to the market
- Following the logic of competitive strategy, should a company enter this industry and if yes, what should their strategy be?
Based on the porter 5 forces, if the company doesn’t have any differentiation than the competitor then the company should not enter wine business. The new company should try to create a blue ocean strategy such as untapped market demand and unknown market space, rather than competing in red oceans that already overcrowded. Basically, the new entrant should expand and create a new market rather than targeting the 10% regular wine customer. To achieve this, new company should work on several things :
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