Preserve the Luxury or Extend the Brand

Case 1: Preserve the Luxury or Extend the Brand

SWOT Analysis

STRENGTHS

• Long-term track record in wine quality and reputation
• Estate has maintained its terroir with ideal soil and microclimate, thus harvesting top-quality grapes used in producing wines
• Long-standing relationship with negociants which bottles bought wine before selling to distributors and importers (wife of Francois is from an important negociant family since 1739 with experience in distribution)

WEAKNESSES

• Limited market to those who can afford luxury wines only and cannot be sold directly to visitors in the chateau
• Winemaking expertise is limited to using only home grown grapes
• Reliant on negociants under centuries-old arrangement in the distribution of their wines thus no expertise in distribution, marketing, and advertising to direct customers

OPPORTUNITIES

• Can command top prices for its wines because of their high reputation on wine quality
• Sales is guaranteed with presence of negociants since these special merchants will still buy the total output even during bad years to maintain relationship
• Entry of new generation (younger wine-drinkers) of wine-drinking enthusiasts and new wine-drinking trends
• Expansion to international markets
• Possibility of direct selling as another method of product distribution aside from current set-up through negociants

THREATS

• Other top traditional Bordeaux estates have already started direct selling
• Entry of less expensive and lower quality winemakers that may capture the market of next generation wine drinkers

Porter’s Five Forces Model > in the context that they will accept Claire’s proposal to enter new market (affordable segment)

1.        Threat of New Entrants - LOW

-  Lands in Bordeaux are very expensive for new entrants including expansions. New entrants may opt to buy land outside France however to be successful, they need to have the expertise and wide network to operate effectively in an international business landscape