Wine Marketing: Segmentation and Export Strategy in Europe
This paper examines wine marketing strategy with a focus on entering European markets. It begins by outlining the structure of the global wine market and its key sub-segments, then applies demographic, cultural, and psychographic criteria to segment European consumers. The analysis evaluates world wine production and consumption trends, including the growing share of New World Wine Group producers such as Chile. Price segmentation, wine variety preferences, competitive dynamics among major multinational wine companies, and a PEST framework are all used to recommend Spain and Italy — particularly Spain — as the most suitable initial export markets for a Chilean wine producer seeking to establish a foothold in Europe.
- Marketing Research and Segmentation: Wine market structure, segmentation methods, and targeting
- Market Identification and Global Trends: Global wine production, consumption, and Chilean market entry
- Market Segments: Price, Variety, and Demographics: Price tiers, wine types, and European demographic breakdown
- Competition in the European Wine Market: Major multinational wine companies and distribution trends
- Criteria Ranking for Market Entry: Ranked criteria guiding Chilean wine export decisions
- PEST Analysis and Export Recommendations: Political, economic, social, and technological export factors
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What makes this paper effective
- Grounds strategic recommendations in concrete market data, citing sources such as OIV, Eurostat, and the European Commission to support claims about production, consumption, and pricing trends.
- Applies multiple analytical frameworks — demographic segmentation, price analysis, competitive mapping, and PEST — in a logical sequence, moving from broad market identification to specific export recommendations.
- Connects abstract frameworks to a specific product portfolio (named Chilean wine brands), making the analysis practical and applied rather than purely theoretical.
Key academic technique demonstrated
The paper demonstrates the effective integration of secondary market data with strategic frameworks. By layering segmentation variables (price, variety, demographics, competition) and then synthesizing them through a PEST lens, the author produces a ranked, evidence-based recommendation. The use of Zaheer's (1995) "liability of foreignness" concept to caution against entering France shows how a single theoretical reference can anchor and justify a strategic choice.
Structure breakdown
The paper opens with an overview of wine market theory and segmentation methodology, then moves to global production and consumption data. It narrows progressively — from global trends, to European price and variety segments, to competitive analysis of major multinationals, and finally to ranked criteria and a PEST assessment. The conclusion names Spain as the optimal first export market, supported by arguments about language, geography, price levels, and cultural affinity.
Marketing Research and Segmentation
The wine market is typically composed of interconnected sub-segments with overlapping tendencies. The wine market differs from other agricultural product markets because it is more vertically differentiated — meaning it is easier to rank wine products according to objective criteria than it is for traditional agricultural goods. For instance, the high-quality, high-price segment is very heterogeneous, showing increased product differentiation, whereas the low-quality, low-price segment is more homogenous, as it is not particularly focused on quality criteria (European Commission, 2002).
A complete market analysis should identify those markets where individuals both drink wine and are willing and able to purchase the company's wine. At this stage, the focus should be on market characteristics such as market size, growth, and accessibility. The next step is to use market demographics (e.g., age, gender, income), cultural characteristics, and psychographic factors (lifestyle, attitudes) to segment the market. Finally, a market analysis should take into account the competitive outlook, including information about competitors' pricing, distribution, product offerings, and promotion — the 4Ps — along with their strengths and weaknesses as revealed through a SWOT analysis.
Correct segmentation is essential for effective market targeting. It allows companies to focus their resources and competencies on a specific group of consumers and optimize their results. For instance, a company that knows exactly which consumer group it is targeting can create strategic promotional campaigns tailored to that group's characteristics. Once market targeting is established, product positioning must place products in consumers' minds and hearts.
Market Identification and Global Trends
World wine consumption has remained largely constant over the last ten to fifteen years. However, production in the New World Wine Group (NWWG) — comprising Argentina, Australia, Chile, New Zealand, South Africa, and the USA — has strengthened considerably (OIV, 2004).
The EU15 remains the major wine-producing region in the world, and according to the European Commission (2002), variations in global wine production are significantly influenced by EU15 output. The European wine sector accounts for 68% of the entire global value, representing approximately $200 billion.
Chilean wine enjoys a relatively good reputation in European countries, as many Chilean exporters have already entered these markets and created product awareness among consumers. In the UK and Germany, for example, the market share held by European wine producers has declined in favor of NWWG producers. NWWG wine — which includes Chilean production — grew by over 10% in the last decade, following an upward trend. This suggests that European consumers are both willing and able to purchase Chilean wine.
In Europe, the three major consumer markets are France, Italy, and Germany. Spain, the UK, and Romania follow behind these three. However, the latter group is geographically dispersed across the continent, which may translate into higher distribution costs.
A ten-year price trend (1994–2004) shows a red wine price increase across all three major producing countries, with France leading. In Spain, prices fell over the last five years of that period, although consumption remained stable. White wine prices fluctuated more than red wine prices over the same period. France again led price increases, while Spain maintained relatively stable pricing.
References
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.
Zaheer, S. (1995). Overcoming the liability of foreignness. Academy of Management Journal, 38(2), 341–363.
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