marketing strategy
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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). - PowerPoint PPT PresentationTRANSCRIPT
Marketing Strategy Otilia Flandro
Romanian Wines in the U.S. Market
OutlineStudy Purpose
Industry
Romanian Wines
Research Method
Findings
Recommendations
VIN
Introduction
Recession and competition from import wines decreased local demand
Second largest wine consuming country (volume)
VIN
EXPORT Increase in interest to export to foreign markets
Open to foreign wines regardless of country of origin
IntroductionVIN
The challenge: finding and creating demand for the product
Marketing is a crucial complement to successfully entering the US market
ObjectivesDetermine what are the drivers for wine sales in the US retail and
distribution
Define Romania’s image in the US
Determine the US consumer’s perception about Romanian wines
Determine purchase intent and price point for Romanian wines
Define distribution barriers and opportunities for Romanian wines in the US
Make recommendations
VIN
OutlineStudy Purpose
Industry
Romanian Wines
Research Method
Findings
Recommendations
VIN
Industry
Wine industryVIN
External threat:beer, liqueur
Extremely competitive
Surviving in this industry is tough
Relatively low barriers of entry
Reasons to enter:• Creative nature• Glamor • Family tradition
Uncontrollable forces of nature: • Disease• Frost• Predators
Small vineyards
Perceived intricacies of choosing a wine
Multinational companies & MoneyCraft and tradition
Wines are thought of as pretentious
ClimateVIN
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.
Old World vs. New World VIN
Within the wine belt, the industry distinguishes between two major regions:Old World New World
N
N
NN
O
O N
New classificationVIN
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 O NO N
N
N
NN
O NO
Lead producersVIN
Source: OIV 2011
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
Production vs. consumptionVIN
Source: OIV 2011
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
Lead exportersVIN
Source: OIV 2011
The top three producers are also the top exporters
Export Production
Australia surpasses USA, Argentina, and China in export
Moldova, Romania’s neighbor is a Top 12 exporter
OutlineStudy Purpose
Industry
Romanian Wines
Research Method
Findings
Recommendations
VIN
Romanian Wines
Romanian winesVIN
Pre-Communism Romanian wines
served and appreciated at the royal courts of
Europe
CommunismQuality of the wines
produced was sacrificed over high
yields
Post-CommunismMajor set back and
overinflated perception of the quality
1947–1989
Post-Communist RomaniaVIN
Bureaucratic and slow to process external
funds
Efforts to revitalize wine industry:
USAID European Union
Little industry support from the Romanian government
Directed to vine replanting; no marketing
and business development tools
Ceased because of the threat of competing
with US wines
Current situationVIN
Sweet wines
Bad country reputation
High domestic
consumption
Lagging business practices
Domestic entrenchment
Global economic crisis
Decreasing internal demand
Export
Export opportunitiesVIN
Export
Romanian ethnic
communities
Bulk wine
Communistblock
countries
Distant markets where country image is neutral
China, Russia
United States
Blended and sold as table wine
Italy, Spain
OutlineStudy Purpose
Industry
Romanian Wines
Research Method
Findings
Recommendations
VIN
Research Method
Research methodVIN
Research
Qualitative
- 4 experts in retail - 2 distributors
- 7 producers - 4 industry experts
Quantitative
- Web survey - 81 respondents
Survey
United States 2011
Romania 2010
Interviews
OutlineStudy Purpose
Industry
Romanian Wines
Research Method
Findings
Recommendations
VIN
Findings
Drivers for sales in the USVIN
Grape variety
Taste/Quality
Price
Other factors:
• Farming practices (not using pesticides, natural yeasts) • Fit with the wine list/selection• Fit with the image establishment• Brand names trusted for their quality
Grape variety
Taste
Quality Price
Brand
Country of o
rigin
Region
Packaging
Vintage
94% 91%84% 81%
62% 59%
44%39%
29%
Factors considered when making a wine purchase*
*based on survey results
PriceVIN
$50-$60*Recession
$10-$20*
*Boutique price
Average shelf price: $10
Good wine:VIN
A good wine is dry, full body, slightly
fruity
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
Source: Interviews and survey
Grape varietyVIN
Why is it important?
“Navigating “ wine list
categories
Demand for variety is seasonal
Pop culture can create demand
for a varietal
Tools to sell a wineVIN
Shelf talkers In-store expert advice
Packaging
Naming
Shelf placement
In-store newsletter
Tastings
Story
Writers/Bloggers
Word of mouth
Perceptions about RomaniaVIN
Beautiful mountains, pastoral
setting, lively folk music, friendly
people, medieval castles, gypsies
Castles, Transylvania,
Dracula
Gypsy, untouched countryside,
embroidery, folk art, lambs wool, pork products, castles
Very poor country,
Old world charm
3rd world country, former
communist block country
Gymnasts
Source: Survey
Perception about Romanian winesVIN
1 2 3 4 5 6 7
1
2
3
4
5
6
7
ArgentinaAustralia
Chile
France
Germany
Greece
Hungary
IndiaChina
Italy
Moldova
New Zealand
Romania
South AfricaSpain
USA
Price
Qua
lity
The size of the bubbles represents availability. Widely available wines have a larger bubble.
Source: Survey
Perception clustersVIN
Source: Survey
1 2 3 4 5 6 7
1
2
3
4
5
6
7
ArgentinaAustralia
Chile
France
Germany
Greece
Hungary
IndiaChina
Italy
Moldova
New Zealand
Romania
South AfricaSpain
USA
Price
Qua
lity
New-New World
Old-New World
New-Old World
Old-Old World
Expectations about style of winesVIN
Earthy Full bodied Fruity Dry Light bodied Sweet Oakey
47% 45%
29% 29%20% 18%
8%
What are your expectations of Romanian wine in terms of style?
Source: Survey
• Chardonnay, Zinfandel type• Would taste like other countries• More like a German wine
Purchase intentVIN
Extrem
ely Likely
Likely
Somewhat L
ikely
Undecided
Somewhat U
nlikely
Unlikely
Extrem
ely Unlikely
13%
20%
29%
20%
4%
13%
3%
If available, how likely are you to buy Romanian wine?
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
Purchase by locationVIN
Restau
rant
Groce
ry store
Neighborhood liq
uor store
Chain liq
uor store
Boutique wine re
tailer
Discount r
etaile
r
Ethnic S
tore
68%
41%
26% 25%17%
9%2%
Frequency of purchase by location (once a month or more often)
• 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
Price pointVIN
under $5
$5 to $7
$8 to $10
$11 to $15
$16 to $20
above $20
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Price consumers are willing to pay for a bot -tle of Romanian winePrice consumeers cosidered to be reason-able for a standard bot -tle of wine
Source: Survey
Consumers are willing to pay less for a bottle of Romanian wines
OpportunitiesVIN
“Hipsters”
One grape variety
Domestic grape
Curiosity
Reasons:• Consumers like simplicity• Purchase based on variety• Strategy proven to be
successful by Australia (Shiraz), Germany (Riesling)
Reason: • Differentiation• Success of the Malbec
Always looking for new things
Mainstream consumers curious to try
something unusual
Trend setters
Focus on the ethnic consumer
BarriersVIN
Lack of
cooperation
Distribution
Monopoly
Consistent supply
Economies of scale Quality
Importers
Exclusion of small producersPrice
Shipping conditions
Price Overpriced wines
Oxidized wine
Relationships with retailers and distributors
Quality
Reasons: Effect on: Result:
QualityPrice Entrenchment in ethnic community
Abuse from Communist forms of cooperatives
Relationships within the industry
OutlineStudy Purpose
Industry
Romanian Wines
Research Method
Findings
Recommendations
VIN
Recommendations
Recommendations for Romanian producersVIN
Focus on cultivating domestic grapes
Work with reliable distributors who are willing to invest in promoting Romanian wines on the
US market
• 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
Recommendations for export associationsVIN
Collaborate with other countries on building a favorable image in the US
Open collaboration between small vintners in order to reduce trans-Atlantic
transportation costs
Collaborate with consulates and other official economic development bodies
representing Romania in the United States
• Build trust and a trade platform between US and Romanian partners
• 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
• Romania is tightly associated with countries in its geographic proximity
Recommendations for distributors and marketersVIN
Focus on one grape
Focus on restaurant and bar outlets
Vertically integrate import and distribution in order to assure quality and quantity
Introduce wines at shelf prices under ten dollars to allow experimentation
Inform the consumer
• 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