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Marketing Strategy

Romanian Wines in the U.S. Market. Marketing Strategy. Otilia Flandro. VIN. VIN. Recession and competition from import wines decreased local demand. EXPORT. Increase in i nterest to export to foreign markets. Second largest wine consuming country (volume).

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Marketing Strategy

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  1. Romanian Wines in the U.S. Market Marketing Strategy Otilia Flandro

  2. VIN

  3. VIN Recession and competition from import wines decreased local demand EXPORT Increase in interest to export to foreign markets Second largest wine consuming country (volume) Open to foreign wines regardless of country of origin

  4. VIN The challenge: finding and creating demand for the product Marketing is a crucial complement to successfully entering the US market

  5. VIN

  6. VIN • Industry

  7. VIN • Reasons to enter: • Creative nature • Glamor • Family tradition • Extremely competitive • Wines are thought of as pretentious External threat: beer, liqueur • Surviving in this industry is tough • Perceived intricacies of choosing a wine • Uncontrollable forces of nature: • Disease • Frost • Predators Relatively low barriers of entry Craft and tradition • Multinational companies • Small vineyards Money &

  8. VIN The “wine belt” is the stretch of land around the globe between 35th and 51th parallel of north and south latitude where the climate is favorable for growing wine grapes.

  9. VIN Within the wine belt, the industry distinguishes between two major regions: Old World New World O N N O N N N

  10. VIN The Old World-New World division does not include emerging wine producing countries such as China and India and does not account for particularities of Eastern European countries. Old-Old Old-New New-Old New-New N O N O N O O N N N N

  11. VIN The competitive landscape is dominated by Italy and France who have been battling for the top position in wine production. Romania fell below the 12th position in 2010 Source: OIV 2011

  12. VIN Germany and United States consume more than they produce Significant consumption-production gaps in China and Russia growing middle and upper-class is increasing demand for wine Source: OIV 2011

  13. VIN The top three producers are also the top exporters Australia surpasses USA, Argentina, and China in export Moldova, Romania’s neighbor is a Top 12 exporter Export Production Source: OIV 2011

  14. VIN • Romanian Wines

  15. VIN • 1947–1989

  16. VIN Efforts to revitalize wine industry: Little industry support from the Romanian government Bureaucratic and slow to process external funds USAID European Union Ceased because of the threat of competing with US wines Directed to vine replanting; no marketing and business development tools

  17. VIN • Domestic entrenchment Global economic crisis Export Decreasing internal demand

  18. VIN Romanian ethnic communities Italy, Spain Bulk wine Blended and sold as table wine Export Communist block countries China, Russia Distant markets where country image is neutral United States

  19. VIN • Research Method

  20. VIN • Interviews United States 2011 Romania 2010

  21. VIN • Findings

  22. VIN • Farming practices • (not using pesticides, natural yeasts) • Fit with the wine list/selection • Fit with the image establishment • Brand names trusted for their quality *based on survey results

  23. VIN Average shelf price: $10 *Boutique price

  24. VIN A good wine stays with you, it’s memorable …speaks for the place where it’s from…it speaks for terroir, tradition, weather Our customer is more important than our idea of good wine A good wine is dry, full body, slightly fruity Source: Interviews and survey

  25. VIN “Navigating “ wine list categories Why is it important? Demand for variety is seasonal Pop culture can create demand for a varietal

  26. VIN • Story • Word of mouth • Tastings • Writers/Bloggers • Shelf talkers • In-store expert advice • In-store newsletter • Naming • Packaging • Shelf placement

  27. VIN Beautiful mountains, pastoral setting, lively folk music, friendly people, medieval castles, gypsies Very poor country, Old world charm Castles, Transylvania, Dracula 3rd world country, former communist block country Gypsy, untouched countryside, embroidery, folk art, lambs wool, pork products, castles Gymnasts Source: Survey

  28. VIN Source: Survey

  29. VIN New-New World Old-New World New-Old World Old-Old World Source: Survey

  30. VIN • Chardonnay, Zinfandel type • Would taste like other countries • More like a German wine Source: Survey

  31. VIN • YES • Curiosity • Openness to trying new things • A price low enough to permit experimentation • Previous experience with Romanian wine, mostly based on travel to Romania • A recommendation • NO • Lack of information about Romanian wines • Bias about the region • Low quality of Romanian wines available on the US market through ethnic distributors Source: Survey

  32. VIN • The restaurant segment looks more promising for the Romanian wines compared to wine retail stores • Boutique retailers who are focusing on a limited, unusual selection of wines are intrigued by the obscurity of Romanian wines • Only 17% of the consumers purchase wines once a month or more often at boutique wine shops Source: Survey

  33. VIN Consumers are willing to pay less for a bottle of Romanian wines Source: Survey

  34. VIN • Reasons: • Consumers like simplicity • Purchase based on variety • Strategy proven to be successful by Australia (Shiraz), Germany (Riesling) • One grape variety • Trend setters “Hipsters” • Domestic grape • Always looking for new things • Reason: • Differentiation • Success of the Malbec Curiosity Mainstream consumers curious to try something unusual

  35. VIN Reasons: Effect on: Result: Importers Exclusion of small producers Economies of scale Price Quality Overpriced wines Monopoly Price Oxidized wine Shipping conditions Quality Consistent supply Relationships with retailers and distributors Distribution Entrenchment in ethnic community Focus on the ethnic consumer Price Quality Lack of cooperation Abuse from Communist forms of cooperatives Relationships within the industry

  36. VIN • Recommendations

  37. VIN • Competitive advantage stands in differentiation • Domestic grapes intrigue the consumer • Consider shortening the names of varietals • 3 tier distribution system • Offer marketing support • Building relationships with retailers

  38. VIN • Romania is tightly associated with countries in its geographic proximity • Good quality wines produced by small vintners do not have a chance to be tasted on the US market • Economies of scale may drive down significantly the cost of import to the US • Build trust and a trade platform between US and Romanian partners

  39. VIN • Proved to be a successful strategy for countries like Argentina or Australia • Glass pour may represent a good opportunity to try a wine without committing a bottle • Full control of quality and quantity • “Experimentation price” for a bottle of wine is less than ten dollars • Organize Eastern European or Romanian wine festivals • Work with bloggers • Refrain from gimmicks

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