Wine Marketing Research and Segmentation Term Paper

Excerpt from Term Paper :

The statistics show that the table wine enjoys the largest popularity of all wines. Table wine is not just a tasty, but also handy. Its level of alcohol is reduced compared to the other two types, which explains why its consumption in litres is higher than for the other types.

From this point-of-view, virtually all European countries qualify as exporting countries, although their wine consumption in general is higher in the southern and western part of the continent.

Wine variety: semi-dry/semi-sweet/sweet/dry should come second as it reflects the European attitude towards the different types of table wine. The statistics show that different countries in Europe have different tastes when it comes to wine variety.

From this point-of-view, given that semi-dry and semi-sweet wines are popular in Europe as their taste is not extreme so it satisfied a wider range of tastes, El chileno branco qualifies as a popular product. Moreover, the export regions should be restricted to the western, southern and northern part of Europe as the income level is higher in these regions.

Price should be the third criterion taken under consideration. The Chilean wine has a good price/quality ratio and it can be exported to any region in Europe. However, in France the consumers are more sophisticated, which means that the Chilean company may have to allocate a larger amount of resources to increase costumer awareness.

From this point-of-view, the southern part of Europe qualifies as the most indicated export market for the Chilean wine. Spain and Italy are traditional wine drinkers and the wine prices are medium to low as a consequence of more reduced customer sophistication.

In terms of market demographics, the Western part of the continent is a more appropriate market for the Chilean wine producer as the population's per capita income is higher than the central and eastern part of Europe and this translated into higher returns.

The market competition should be taken under consideration as well when entering a new market. A market that is very concentrated is a mature market that is likely to offer few opportunities for exporters in terms of returns. Moreover, exporters with little experience in the European markets, such as the Chilean producers are likely to pay a premium price for their "liability of foreignness" (Zaheer, 1995). Thus, France is a market where only an experienced exporter would have good chances to succeed.

From this point-of-view, the southern and central part of Europe qualify as good exporting markets. The consumers come in a large number and there are not particularly sophisticated and the producers are not used to develop unique product characteristics to gain competitive advantages.

3. Pest opportunities

The European Union block has a stable political outlook, which makes all 27 members qualify as an exporter market for the Chilean wine.

From the economic point-of-view, the Western part of Europe offers more opportunities to exporters as these countries are more developed. The supply chains are more oriented towards trade, bureaucracy is reduced and the population income is higher, which translates into higher returns.

From the social point-of-view, most Europeans are wine drinkers. However, the wine drinking habit is higher in the Mediterranean part of the continent, UK and Germany, which are also high income countries. The French consumers are more sophisticated and a large part of them prefer national products, so France is a market that doesn't qualify for an initial exporting operation. Later on, as the exporter gains experience with the European way of doing business and its consumers, France can be taken under consideration.

The technological factors have an impact on the logistics surrounding the distribution process. The Mediterranean countries, UK and Germany have similar technological levels. The differentiation should be made based on several other factors, such as wine prices and from this point-of-view, Spain and Italy are favored. Moreover, these countries are both geographically and culturally closer to Chile. Italy and Spain are both coast countries, which translates into lower transportation costs and both countries are Latin. However, Spain is likely to be a better market for the Chilean wine, because it also has the language advantage - Spanish. Also, Spain is closer to Chile than Italy and its wine prices are slightly lower.

Reference List

Comtrade - United Nations Commodity Trade Statistics Database Statistics Division, http://comtrade.un.org/

European Commission - EC, 2005/2006. Agriculture and Rural Development - Wine Consumption. http://ec.europa.eu/agriculture/markets/wine/facts/index_en.htm

European Commission - EC, 2002. Overview of the Wine Market. Tender AGRI/EVALUATION, http://ec.europa.eu/agriculture/eval/reports/wine/2.pdf

Green, R., Zuniga, R.M. & Pierbattisti, L. 2003. Global Market Changes and Business Behavior in the Wine Sector. Economie et Sociologie Rurale, Cahier n" 2003-02.

International Organization of Vine and Wine - OIV, 2004. Situational Report for the World Vitivinicultural Sector in 2004. http://news.reseau-concept.net/pls/news/p_entree-i_sid=&i_type_edition_id=20508&i_section_id=&i_lang=33

Zaheer, S. 1995. Overcoming the Liability of Foreignness. Academy of Management Journal, vol. 38(2): pp. 341-363.

In Europe, the three major consumer markets are France, Italy and Germany. Spain, UK and Romania are behind these three. However, these latter ones are very scattered across Europe, which may translate into high distribution costs.

FIG. 2 - DEVELOPMENT of the WINE PRODUCTION and CONSUMPTION in the WORLD (1.000 HL)

FIG. 4 - PRICE of RED TABLE WINE - 1994-2004

The 10-year trend shows a red wine price increase for all three countries, with France leading the way. In Spain prices fell in the last 5 years, although consumption maintained.

FIG. 5 -…

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