Chateau Margaux: Launching the Third Wine

Problem Statement

Since the 2009 vintage had a widely great reputation, under this circumstance, it extends a significant issue for Chateau Margaux. Should the exception wine from 2009 be sold in bulk or under its own brand?

Background

Chateau Margaux is one of the five most famous Bordeaux Chateaus. It was established in 16th century by the Lestonnac family. Chateau Margaux owned almost 250 hectares of land, among those lands, 80 hectares for red wine and 12 hectares for white wine. While there was a decline in Bordeaux wines, Chateau Margaux was purchased by a successful entrepreneur Andre Mentzelopoulos in 1977. Unfortunately, Andre Mentzelopoulos died before he can enjoy the harvest of Chateau Margaux in 1980, his 27-year-old daughter, Corinne Mentzelopoulos inherited the business in winemaking.

Situational Analysis

Analyzing the customer

The demand for wine was highly uneven all over the world. The old-world customers, such as people from France, Italy and Portugal, consumed most of wine until 2012. The reason caused this phenomenon is because it was already a kind of tradition that wine is a common part of everyday meal in most of European countries. However, there was an increasing number of new world customers recently. It was different from old world countries to drink wine. In new world countries, it was more occasion-driven, and mostly consume wine in restaurants instead of home. In some place like US, UK or Australia, consumers tended to be older, higher income or education levels.

Although China was the lowest capita wine consumption in exhibit 2, it was increasing dramatically. Drinking wine is becoming a popular trend in China, and as a result of it, it increased more than triple by contrast to US market. Besides that, Hong Kong eliminated all taxes and restrictions on importing wines, it caused a huge increase in demand. For instance, in 2012, China became the fifth largest wine consumed county with almost 2 billion bottles. Different from western countries, Chinese consumers used to buy great wines for an important occasion or as a gift to others. In China, situation like this is very common, it not only shows the respect to others, and the person who offer great wines also had a sense of pride inside.

Need analysis

People who often purchase luxury brand wines mostly are lack of wine knowledge. Those people need the wine to indicate their wealth and stature, so they focus on best brand image, which mostly happened in China and Russia. Apart from those customers, more customers emphasize on taste and quality. In another word, most customers want the best price/performance ratio wines.

Decision making process analysis

The first step of customers decision making process is to recognize their needs. In old world countries, it was already a tradition or custom for them to drink wine in daily meals, but in new world countries it was still occasion-driven. After customers recognize their needs, they will search information and compare alternatives. During this part, influencers become very important to customers, because customers will not totally understand the differences between wines until they actually taste it, even they did a lot research. The influencers would be their friends who give advice to them, salesperson in a wine shop or some critics’ article in a wine magazine. Finally, the costumer will make their final decision of what company will satisfy their needs.

Analyzing the context

Demographic environment

Customers from different regions have different preferences. In most European countries, customer used to drink wine as a part of their daily meal, it was easy for Chateau Margaux to introduce their 2009 third wine to those places, because basically everybody drinks wine. However, in US, UK or Australia, wine consumers tended to be more sophisticated and a lot of them are females. It requires Chateau Margaux to educate those people what they are paying for and why those people should choose Chateau Margaux’s third wine. To the emerging market like China and Russia, people who are affordable to consume wines will purchase the best one they can. It would be an excellent choice for Chateau Margaux because of its excellent brand.

Economic environment

Since the price of Chateau Margaux third wine will not be as cheap as normal third wine, US, Australia and most European countries are developed countries, which are considered to be wealthy, it would be smart choice for Chateau Margaux to lunch their 2009 third wine there, economically. However, Chateau Margaux might experience a boost in sales in the second and third world countries when the product first entered, but it will not be consistent due to the market there is not strong enough economically to afford that excessive cost. There are exceptions which are countries like China, Russia, and India. Not only because of they had a preference on brand image, more importantly, there is a huge gap between the rich and poor in those countries. When we are looking at GDP per capita, it might be pretty low comparing to developed countries, and seems like they cannot afford it, but one thing need to be noticed is rich people there are very rich, and those people are exactly the wine consumers. So, the market in countries like that are also strong.

Socio-cultural environment

The effect of socio-cultural environment for Chateau Margaux is complicated, because both of the existing cultural and future trend has some advantage and disadvantage for the wine industry. Some existing cultural like European people drink wine as a part of their daily meal is helpful for Chateau Margaux to introduce new product to the market. But, the rest of the world are consuming wine occasionally, in another world, the demand is not that high in other places. However, future trend like women prefer drinking red wine and some place has a huge increase in demand which will make up the market for Chateau Margaux. Some other future trends are harmful to the business. For example, people are bored of Bordeaux brand, or people prefer non-alcohol beverages. It is critical for Chateau Margaux to adjust their strategy while they are launching its third wine, because socio-cultural environment is like a double edge blade for the company, it will either help the company become successful, or hurt the company with a market failure.

Political/legal environment

Places like France and Hong Kong are definitely the best place to launch Chateau Margaux’s third